They never saw it coming, a Trump victory, and the Republicans holding both chambers of Congress. The good thing for investors is the Republican leaders in the House and the Senate probably will keep things from getting out of control, and the push by President-elect Trump for growth initiatives and tax cuts should help power old-school large cap growth stocks. That is a good thing for long-term investors with total return portfolios.
We screened the UBS research universe for large cap growth stocks that pay dividends and that are rated Buy. We then screened for stocks that have been hit harder than some of their peers and may have bigger upside potential for investors now.
This iconic blue chip industrial was on a roll but has sold off 15% since July and is giving investors a nice entry point. General Electric Co. (NYSE: GE) is a highly diversified, global industrial corporation. Its businesses are organized broadly under six segments: GE Capital, Energy Infrastructure, Aviation, Healthcare, Transportation and Home & Business Solutions. Its products and services include power generation equipment, aircraft engines, locomotives, medical equipment, appliances, commercial leasing and personal finance.
The company recently announced a huge deal to combine GE’s Oil & Gas business and Baker Hughes to create a leader in oil and gas equipment, technology and services. It will have $32 billion in revenue and can leverage GE’s digital and technology expertise and Baker Hughes domain knowledge, capabilities and presence in oilfield services.
Most on Wall Street are very positive on this deal, which comes on the heels of a failed attempt by Halliburton to buy Baker Hughes. The UBS analysts note that the merger brings what they term as “pure play value, synergies, digital opportunities, perhaps most importantly, earnings accretion.” Also note that the CEO Jeff Immelt recently bought another 50,000 shares of the company’s stock.
GE investors are paid a very solid 3% dividend. The UBS price objective for the stock is $34, and the consensus price target is $32.21. Shares closed on Friday at $30.71.
This leader in semiconductors is working hard to scale away from dependence on personal computers. Intel Corp. (NASDAQ: INTC) designs, manufactures and sells integrated digital technology platforms worldwide. The company’s platforms are used in various computing applications comprising notebooks, two-in-one systems, desktops, servers, tablets, smartphones, wireless and wired connectivity products, wearables, retail devices and manufacturing devices, as well as for retail, transportation, industrial, buildings, home use and other market segments.
The company also provides communication and connectivity offerings, such as baseband processors, radio frequency transceivers and power management integrated circuits, and tablet, phone and Internet of Things solutions, which include multimode 4G LTE modems, Bluetooth technology and GPS receivers, software solutions and interoperability tests, as well as home gateway and set-top box components.
Intel reported third-quarter growth in sales, but data center sales came in below expectations for the tech giant and clouded otherwise overall solid growth. A new partnership with Microsoft for virtual reality and a consistent shift away for reliance on chips for personal computers keep the stock a compelling buy. A stunning 82.4% of Intel sales come from overseas, the lion’s share of it in Asia, where the chips that it produces are used in personal computers, tablets and other personal electronic devices.
Intel investors receive a solid 3% dividend. UBS has a $40 price target, in line with the consensus target of $40.26. The shares ended Friday at $34.61.