With earnings for the third quarter all but over, and the fourth quarter of 2016 already half done, many of the top companies we follow on Wall Street are making some changes to the lists of their high conviction stock picks for clients. With the market continuing to trade to near all-time highs, it makes sense to examine the lists and make some changes as the rest of the year could have additional volatility. While the political cycle should quiet down with the election over, rising interest rates could prove to be very volatile component.
In a recent research note, the analysts at Merrill Lynch make a big move by adding a top consumer goods stock and a life sciences company to the firm’s well-respected US 1 list of stocks to Buy, while removing a utility stock. We cover these new changes, and we also take a look at a couple of the top technology companies in the portfolio.
This top life sciences company was added to the US 1 list, and it is a favorite across Wall Street. Danaher Corp. (NYSE: DHR) is now one of the largest and most diversified life sciences companies. Its products include analytical instruments and consumables for life sciences research, diagnostics, dental instruments and consumables, as well as equipment and services used in water quality testing and product identification. The company is known as having leading brands across many verticals, with a strong management team and a record of superior execution.
The Merrill Lynch team had this to say in a research note:
We believe that Danaher is one of the better positioned life sciences diagnostic tools companies following the US election given higher industrial exposure. There are several near-term catalysts and the company has multiple levers to combat uncertainty.
Shareholders are paid a small 0.65% dividend. Merrill Lynch raised its price target for the stock to $93. The Wall Street consensus target is at $88.88. The shares closed Tuesday at $79.63.
This company has benefited from the strong housing market and also was added to the US 1 list. Mohawk Industries Inc. (NYSE: MHK) is a leading building products company, manufacturing and selling flooring products such as carpets, rugs, ceramic tile, wood, stone, luxury vinyl tile and vinyl flooring. The company believes it is the world’s largest flooring company, with operations in 10 countries.
The company recently reported solid earnings, and the Merrill team raised their EBITDA estimates for 2016 to 2018. They also are expecting execution at the company to stay positive, and they think that attractive mergers and acquisition possibilities may present themselves and add even more upside to estimates.
The Merrill Lynch price target is $235, and the consensus target is right in line at $235.17. The shares closed yesterday at $197.16.