A former BlackRock stock chief shares the No. 1 quality he's looking for in stocks right now — and 5 companies that fit the bill

• Former BlackRock stock strategist Bob Doll warns of a high-risk bull market with potential downside.
• Market risks include valuations, speculation, inflation concerns, and a potential earnings pullback.
• Doll suggests investing in high-ROE stocks, like major US banks.

Crossmark's chief investment officer Bob Doll says stocks are in a "high-risk bull market."

"Those words are chosen carefully," the former BlackRock chief US equity strategist told Business Insider on Thursday. "Bull market obviously means the path to least resistance is higher, so you have to be involved," he continued, but said that market conditions are ripe for a pullback.

Doll said that high valuations and investors' penchant for speculation at the moment make downside risks potent. Two of the biggest potential catalysts, he said, include earnings starting to underwhelm or the Fed suddenly taking a more hawkish stance if inflation remains elevated.

"Should the two conditions, either of them, fail, the high risk means the downside could be noticeable," he said. "We obviously saw that, almost a year ago now, that 20% decline in kind of six, seven weeks."

Thursday offered a glimpse of what weaker earnings can do to stocks in this environment, as Microsoft shares fell 12% after investors weren't satisfied with the firm's performance as it dumps money into its AI projects.

And while Wednesday's Fed meeting did little to dent investors' outlook, a small tick up in inflation could mean trouble ahead, Doll said.

"What I am concerned about with the inflation rate is if it rounds to 3% instead of 2% this year," he said. "The market is, in my view, discounting a decline in the inflation rate, and if it doesn't happen, and it stays closer to 3, could there be a risk of a few points in PE [ratios], which would be painful."

What to look for in stocks, and 5 top picks

To stay insulated from these risks, Doll said the top quality he's looking for in stocks today is high-free cash flow levels, as measured by return on equity. Focusing on this metric means owning efficient companies that generate strong profits.

"If I can have above average return on equity and below average price of free cash flow, I think I have a recipe to do OK in a crazy environment," Doll said.

The market sector that's most ripe with high-ROE stocks picks is financials, Doll said. He said there are four stocks in particular that fit the bill and that he's betting on: Bank of America (BAC), JPMorgan (JPM), Wells Fargo (WFC), and Citi (C).

"The big banks are prototypical examples," he said.

"Among the banks, they have, the best balance sheets," he continued, adding that "they tend to be cheaper than the other parts of the financial sector."

All four of the stocks are negative so far in 2026. Shares of Citi have vastly outperformed the other three over the last 12 months, returning 42%. The State Street Financial Select Sector SPDR ETF (XLF) has underperformed the S&P 500 in the last year, gaining just 4%.

Outside of financials, Doll said he likes biopharma company Gilead Sciences (GILD). The firm has free cash flow of $1 billion, Doll said.

The stock is up 14% in 2026, and up 46% in the last year.