Merrill Lynch Has Top 10 Stock Ideas for Q2

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As incredible as it may seem, the first quarter is already history, and it’s time for Major League Baseball. The markets had another very solid quarter, although all the gains came in January and February as March was essentially flat. The Nasdaq was the big first-quarter winner, up a strong 9.8%. The S&P 500 gained 5.5%, and the venerable Dow Jones Industrial Average gained 4.6%. As we start the second quarter, many of the top firms we cover on Wall Street are out with their top ideas for the next 90 days.

In a new research report, Merrill Lynch is out with its top ideas for the second quarter. It includes eight stocks to buy and two that are expected to underperform. We focus on the long ideas, and at first glance, they look like outstanding picks for growth stock accounts.

BWX Technologies

This is an under-the-radar stock with solid upside potential. BWX Technologies Inc. (NYSE: BWXT) primarily supplies U.S. submarines and carriers with naval nuclear reactors and associated nuclear fuel and refueling services, as well as other nuclear components. Merrill Lynch sees the company as a significant beneficiary of U.S. investment to support a 355-ship Navy.

The Merrill Lynch price target was recently raised to $55 from $43, and the Wall Street consensus target is $53.83. The shares closed Monday at $47.20 apiece.

Cigna

This is a solid value buy in health care sector. Cigna Corp. (NYSE: CI) is one of the largest providers of managed care services in the United States. Originally a property and casualty insurance company founded in 1792, Cigna is now largely focused on the health care business, offering HMO and indemnity products, as well as having meaningful international, life and disability operations.

Cigna shareholders are paid a tiny 0.03% dividend. Merrill Lynch has a $179 price objective on the shares, and the consensus target price is posted at $167.92. The stock closed Monday at $149.39 a share.

CSX

This one of the top railroad stocks and is a top idea for investors looking to the transports. CSX Corp. (NYSE: CSX) provides rail freight transportation over a network of approximately 21,000 route miles and 36 terminals (and 57 intermodal terminals) across the eastern half of the United States. It controls 4,071 locomotives and 216,000 rail cars on its network (over half are not owned or leased by CSX at any given point), and it has nearly 30,000 employees.

CSX shareholders receive a 1.55% dividend. The $56 Merrill Lynch price objective compares with the posted consensus target of $52.60. The shares closed most recently at $46.60.

Flowserve

This company should get a boost from an improving economy and the proposed infrastructure build. Flowserve Corp. (NYSE: FLS) is a Texas-based supplier of pumps, valves, seals, automation and related services, primarily for the oil and gas, power and chemical industries. Flowserve operates under three segments: Engineered Products, Industrial Products and Flow Control.

Investors in Flowserve receive a 1.6% dividend. The Merrill Lynch price target is $63, while the consensus is lower at $52.60. The stock closed most recently at $48.15.