After a steady climb through much of July, the stock market has shown signs of cooling in early August. Mixed economic data, including a softer-than-expected jobs report, and renewed concerns about inflation have introduced a dose of caution among investors. Still, the broader uptrend is holding, with both the S&P 500 and Nasdaq in positive territory for the year.
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Against this backdrop, Bank of America sees five key factors aligning that could set the stage for the market’s next leg higher. These include a ‘political will’ to drive short-term strength ahead of next year’s midterm US elections; the impact of the recent ‘Big Beautiful Bill’ on U.S. manufacturing; the likelihood of substantial economic stimulus in Europe, particularly from Germany; a surge in capital expenditures on Wall Street, especially among the ‘Magnificent 7’ hyperscalers; and finally, BofA’s proprietary ‘regime indicator,’ a historically accurate set of predictive signals that is starting to show signs of a recovery in the making.
With those drivers potentially in play, BofA’s analysts are sharpening their focus on the stocks they believe are positioned to ride the next wave. Two names in particular stand out, and we’ve turned to the TipRanks database to see what sets them apart. Let’s dive in.
Brown & Brown (BRO)
We’ll start in the insurance industry, where Brown & Brown is a specialist in risk management. The company has been in business since 1939 and is based in Daytona Beach, Florida. Brown & Brown offers policies across a wide range of categories, including property & casualty, employee benefits, and personal insurance. Its specialties span dealer services in the automotive industry, enterprise-scale risk solutions, and even tribal policies tailored to the specific needs of various Indian tribes.
From those modest beginnings, Brown & Brown has evolved into a major industry player. It now employs over 17,000 people across more than 500 locations and has extended its presence to nearly 20 countries. Backed by $4.8 billion in annual revenue and a market cap exceeding $30 billion, the company is firmly established as a force in the global insurance landscape.
Brown & Brown released its 2Q25 results on July 28, posting several encouraging data points. Quarterly revenue came in at $1.3 billion, slightly ahead of estimates and up 9.1% year-over-year. Adjusted diluted EPS also impressed, climbing 10 cents from the prior year to reach $1.03, 4 cents above consensus.
However, those solid headline numbers weren’t enough to satisfy the market. The stock fell as investors reacted to a weaker GAAP EPS of $0.78, down 13% from the year-ago quarter, and signs of margin compression. Organic revenue growth slowed to just 3.6%, raising questions about the quality of top-line expansion, which appeared heavily acquisition-driven. Broader industry challenges, such as softening insurance rates and mounting cost pressures, added to investor unease.
For Bank of America analyst Joshua Shanker, this pullback may present a compelling entry point. He argues that Brown & Brown remains fundamentally strong, even if the stock has underperformed.
“BRO shares have fallen 26% since April 2, while the S&P 500 has appreciated 12%. This would represent one of the most significant periods of snap underperformance in BRO’s history. The stock is now trading near trough valuations relative to the insurance broker peers whereas it has typically traded at a thick premium. Our EPS forecasts run ahead of consensus, and we believe that 2Q25 results have reset the outlook to a more steady-state growth rate. With material upside to our price objective, we believe investors should buy shares of Brown & Brown,” Shanker opined.
That bullish stance is underscored by his new Buy rating and a $130 price target, implying a potential upside of ~42% over the next year. (To watch Shanker’s track record, click here)
Shanker’s optimism aligns with a broader, albeit more cautious, sentiment on Wall Street. Brown & Brown has earned a Moderate Buy consensus rating based on 12 recent analyst reviews, which include 5 Buys, 6 Holds, and 1 Sell. The stock currently trades at $91.80, and the average price target of $111.40 suggests room for a 21% gain in the year ahead. (See BRO stock forecast)
Surgery Partners (SGRY)
The next BofA pick we’ll look at, Surgery Partners, works as an adjunct in the healthcare field, providing surgical facilities and ancillary services in 200 locations in more than 30 states. The company acts as a link between providers and patients, offering expertise in general surgery, hand surgery, dermatology, oncology, plastic surgery, and anesthesia, to name just a few of the specialties available.
The company got its start in 2004, and today works through a network of partnerships with healthcare systems, surgical hospitals, ambulatory surgery centers, and physician practices. Surgery Partners has more than 4,000 affiliated physicians, and sees more than 600,000 patients annually – and has achieved an impressive patient satisfaction rate of 94%.
Surgery Partners went public in 2015, and since then has built itself up into a $2.87 billion player in the healthcare sector. Last year, the company brought in $3.1 billion in total revenue, a 13.5% gain from the $2.7 billion generated in 2023. The increase reflects rising demand for quality healthcare services.
Looking at the company’s most recent quarterly results, Q2 2025, Surgery Partners delivered $826.2 million in revenue, marking an 8.4% year‑over‑year increase, and slightly beating forecasts by $9.24 million. Adjusted EBITDA rose 9% to $129 million, yielding a 15.6% margin. The company posted an adjusted EPS of $0.17, exceeding analyst forecasts by $0.03.
Despite these solid results, the stock has remained range-bound for most of the year, held back by concerns over slowing case volume growth and cautious full-year guidance. But for Bank of America analyst Joanna Gajuk, the current share price has opened a window of opportunity.
“We rate SGRY Buy given the strong tailwinds for Ambulatory Surgery Centers (ASCs) while the stock is trading at a depressed multiple: 10x 2026E EBITDA less NCI, below the historical average of 14x and below the 14x multiple on the recent ASC platform deal (AmSurg) takeout… Being a low-cost setting (40-50% lower vs inpatient), ASCs are the beneficiaries of payors (including Medicare) pushing utilization to outpatient. The aging demographics are also driving ASC vols (utilization increases with age). Meanwhile, ASCs are a lower capital intensity business compared to acute care hospitals, yielding higher returns on invested capital,” Gajuk noted.
Her bullish stance is backed by a $28 price target, implying a potential one-year upside of ~25%. (To watch Gajuk’s track record, click here)
Overall, Wall Street echoes a similar sentiment. Surgery Partners holds a Moderate Buy consensus rating, based on 11 recent analyst reviews that break down to 8 Buys and 3 Holds. With shares currently trading at $22.41, the average price target of $30.90 suggests a potential gain of ~38% in the year ahead. (See SRGY stock forecast)
To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a tool that unites all of TipRanks’ equity insights.
Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.