Deutsche Bank Adds 5 Large Cap Leaders to Conviction List

Print Email

With the last quarter of 2017 underway, and a rash of third-quarter earnings ready to hit the tape, many of the top firms we cover here at 24/7 Wall St. are making some changes to their list of top stocks to buy. With the markets continuing to print new all-time highs, it makes sense for the big banks and investors to review their ideas and the thesis behind them, and make changes, which could include taking off both winner and losers.

In a new report, the analysts at Deutsche Bank make some big changes to the firm’s Conviction List of top stocks ideas> We screened the list for some of the biggest market capitalization companies and found five top stocks to Buy that make good sense for growth portfolios now.

Facebook

The huge social media leader has continued to post gigantic numbers, and it is the top pick in internet media for 2017 at Merrill Lynch. Facebook Inc. (NASDAQ: FB) operates as a mobile application and website that enables people to connect, share, discover and communicate each other on mobile devices and personal computers worldwide.

Its solutions also include Instagram, a mobile application that enables people to take photos or videos, customize them with filter effects, and share them with friends and followers in a photo feed or send them directly to friends; Messenger, a messaging application for mobile and web on various platforms and devices, which enable people to reach others instantly, as well as enable businesses to engage with customers; and WhatsApp Messenger, a mobile messaging application.

Deutsche Bank feels that Facebook’s long-term forecasts are more easily attainable, especially as the company continues to grow and employ new platforms for online advertising. Wall Street estimates are likely moving higher for 2018 as the company ramps monetization in Instagram, including Stories ads, rolls out more Facebook original video content, begins to monetize Messenger and sees slightly lower than forecast operating expense and capital expenditure growth.

The Deutsche Bank price target for the stock is $220. The Wall Street consensus target is $194.77. Shares closed trading on Tuesday at $171.59.

HP

This is the printer and personal computer businesses of the old Hewlett-Packard. HP Inc. (NYSE: HPQ) provides products, technologies, software, solutions and services to individual consumers and small- and medium-sized businesses, as well as to the government, health and education sectors worldwide.

The company’s Personal Systems segment offers commercial personal computers (PCs), consumer PCs, workstations, thin client PCs, tablets, retail point-of-sale systems, calculators and other related accessories, software, support and services for the commercial and consumer markets.

The Printing segment provides consumer and commercial printer hardware, supplies, media, scanning device and software and services, as well as LaserJet and enterprise, inkjet and printing, graphics, and software and web services.

The Deutsche Bank report noted:

As a legacy tech company exposed to end markets that are challenged for growth, we believe HP Inc. should trade at similar valuations to other legacy hardware peers. This peer group includes names like IBM, Hewlett Packard Enterprise, NetApp, Cisco and Xerox. Based on peer group valuations, we believe the company should trade at 13x our fiscal year 2018 earnings per share, which is in line with the peer group. With shares trading below these levels, we rate the company a Buy.

HP investors receive a 2.58% dividend. The $24 Deutsche Bank price target compares with a consensus estimate of $21.81. Shares closed trading Tuesday at $20.57.