BANK OF AMERICA: Buy these 26 small and mid-size stocks now to take advantage when they beat Wall Street's expectations for the second quarter

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With stocks at all-time highs and investor jitters similarly elevated, the next few weeks of earnings reports could be a make-or-break moment for the market.

Wall Street expects a huge rebound from the depths of last year's economic shutdown. If corporate America can live up to the Street's projections, stocks seem likely to build on their recent gains. If that doesn't happen, the combination of disappointing results and slower growth in the next few quarters could lead to more selling.

Jill Carey Hall, Bank of America's head US equity strategist and head of US small/mid cap strategy, says that lately, earnings and expected earnings are playing an even bigger part in stock performance than they usually do.

"Estimate Revisions — a cyclical Growth factor — outperformed more than any other Growth factor in 1H," she wrote in a recent note. "Stocks with the highest Estimate Revisions and Estimate Diffusion were +35-36% and those with the biggest Earnings Surprise were +25%."

Those effects were also visible in single day returns, as Carey Hall noted that for small-caps, "surprises mattered more." In that part of the market, companies that topped expectations did better the following day relative to their benchmark than large caps that beat estimates.

With that in mind, Carey Hall compiled a list of 26 small and mid-cap stocks that Bank of America believes will beat expectations. These "Buy" rated companies beat analysts' first-quarter projections for both earnings and sales, and BofA thinks they will match or beat expectations on both earnings and sales in the second quarter as well.

The 26 stocks below are ranked from lowest to highest based on a comparison of Bank of America's estimates to the Wall Street consensus. That comparison, called a Z score, measures how many standard deviations above consensus the BofA estimates are.

Ticker: FIVE

Sector: Consumer discretionary

Market cap: $10.5 billion

Expected report date: September 2

Earnings Z score: 0.0

Source: Bank of America

Ticker: CNXC

Sector: Information technology

Market cap: $8.24 billion

Expected report date: September 30

Earnings Z score: 0.2

Source: Bank of America

Ticker: HIW

Sector: Real estate

Market cap: $4.9 billion

Expected report date: July 27

Earnings Z score: 0.2

Source: Bank of America

Ticker: FSLR

Sector: Information technology

Market cap: $8.8 billion

Expected report date: July 29

Earnings Z score: 0.3

Source: Bank of America

Ticker: AMN

Sector: Healthcare

Market cap: $4.6 billion

Expected report date: August 5

Earnings Z score: 0.3

Source: Bank of America

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