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  • China’s economy is beginning to heal following the coronavirus outbreak, and Bank of America says it’s setting a blueprint for what industries and companies in the US can recover first from the domestic outbreak.
  • Strategist Savita Subramanian maes 12 stocks that operate in industries that could bounce back soon and look inexpensive.
  • She also named eight others that could be overpriced.
  • Visit Business Insider’s homepage for more stories.

Even as the US economy gets historically bad, investors are getting more optimistic about stocks.

They’re betting on the eventual recovery, and Savita Subramanian — Bank of America’s head of US equity and quantitative strategy — says that China is a major reason they’re so hopeful. Its economy is starting to bounce back after the country got control of the coronavirus outbreak.

That means China could be a template for the rebound in the US — whenever it comes — and Subramanian is using that to help traders invest.

“China demand (based on fundamental industry-specific measures like bank loans, coal consumption, etc.) has largely recovered to 2019 levels,” she wrote in a recent note to clients. “Air freight, food and e-commerce demand are notably above trend, whereas movies, airlines, hotel and leisure are still below trend.”

While the market has staged a big and broad rally, Subramanian says that if the pattern from China’s recovery is applied to the US, it helps make it clear which industries should heal first and which will take longer. Applying that to stocks, it shows some companies are inexpensive and have more potential for big rallies, while others are very optimistically priced.

The implication is that airlines, banks, independent power, real estate, steel, and integrated oil and gas companies could outperform the market, while companies in movies and entertainment, internet and catalog retail, metals, food and consumer staples, and drugmakers all look more expensive and risky.

The following 20 companies all operate in the industries Subramanian says are most promising — but that doesn’t mean they’re all going to outperform.

Based on individual factors like their recent performance and balance sheets, she divided those companies into 12 stocks to buy and eight companies to sell.

STOCK TO BUY 1: Southwest Airlines

Southwest Airlines




Markets Insider



Ticker: LUV

Sector: Industrials

Market Cap: $14.8 billion

2020 Performance: -52.9%

Source: Bank of America

STOCK TO BUY 2: Citigroup

Citigroup




Markets Insider



Ticker: C

Sector: Financials

Market Cap: $96.8 billion

2020 Performance: -43.9%

Source: Bank of America

STOCK TO BUY 3: Fifth Third Bancorp

Fifth Third




Markets Insider



Ticker: FITB

Sector: Financials

Market Cap: $12.1 billion

2020 Performance: -43.3%

Source: Bank of America

STOCK TO BUY 4: Truist

Truist




Markets Insider



Ticker: TFC

Sector: Financials

Market Cap: $47.7 billion

2020 Performance: -37.5%

Source: Bank of America

STOCK TO BUY 5: NRG Energy

NRG Energy




Markets Insider



Ticker: NRG

Sector: Energy

Market Cap: $8.3 billion

2020 Performance: -18.1%

Source: Bank of America

STOCK TO BUY 6: Vistra Energy

Vistra Energy




Markets Insider



Ticker: VST

Sector: Energy

Market Cap: $9 billion

2020 Performance: -21.3%

Source: Bank of America

STOCK TO BUY 7: CBRE Group

CBRE




Markets Insider



Ticker: CBRE

Sector: Real estate

Market Cap: $13.5 billion

2020 Performance: -33%

Source: Bank of America

STOCK TO BUY 8: Exxon Mobil

Exxon




Markets Insider



Ticker: XOM

Sector: Energy

Market Cap: $188.1 billion

2020 Performance: -36.3%

Source: Bank of America

STOCK TO BUY 9: Apache

Apache




Markets Insider



Ticker: APA

Sector: Energy

Market Cap: $4.6 billion

2020 Performance: -53.4%

Source: Bank of America

STOCK TO BUY 10: Pioneer Natural Resources

Pioneer Natural Resources




Markets Insider



Ticker: PXD

Sector: Energy

Market Cap: $13.6 billion

2020 Performance: -42.3%

Source: Bank of America

STOCK TO BUY 11: Hess

Hess




Markets Insider



Ticker: HES

Sector: Energy

Market Cap: $14.1 billion

2020 Performance: -29.9%

Source: Bank of America

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STOCK TO BUY 12: Chevron

Chevron




Markets Insider



Ticker: CVX

Sector: Energy

Market Cap: $175.8 billion

2020 Performance: -22.7%

Source: Bank of America

STOCK TO SELL 1: American Airlines

American Airlines




Markets Insider



Ticker: AAL

Sector: Industrials

Market Cap: $4.2 billion

2020 Performance: -66.3%

Source: Bank of America

STOCK TO SELL 2: Comerica

Comerica




Markets Insider



Ticker: CMA

Sector: Financials

Market Cap: $4.6 billion

2020 Performance: -54.7%

Source: Bank of America

STOCK TO SELL 3: US Bancorp

US Bancorp




Markets Insider



Ticker: USB

Sector: Financials

Market Cap: $50.8 billion

2020 Performance: -42.2%

Source: Bank of America

STOCK TO SELL 4: Newmark Group

Newmark




Markets Insider



Ticker: NMRK

Sector: Real estate

Market Cap: $578.3 million

2020 Performance: -73.4%

Source: Bank of America

STOCK TO SELL 5: Southwestern Energy

Southwest Energy




Markets Insider



Ticker: SWN

Sector: Energy

Market Cap: $1.5 billion

2020 Performance: +24%

Source: Bank of America

STOCK TO SELL 6: Range Resources

Range Resources




Markets Insider



Ticker: RRC

Sector: Energy

Market Cap: $1.5 billion

2020 Performance: +23.5%

Source: Bank of America

STOCK TO SELL 7: Cabot Oil & Gas

Cabot Oil & Gas




Markets Insider



Ticker: COG

Sector: Energy

Market Cap: $8 billion

2020 Performance: +16.6%

Source: Bank of America

STOCK TO SELL 8: Marathon Oil

Marathon Oil & Gas




Markets Insider



Ticker: MRO

Sector: Energy

Market Cap: $4.4 billion

2020 Performance: -58.9%

Source: Bank of America

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