The one great thing for investors is that four times a year, at different intervals, public companies report earnings and give forward guidance. This gives those that own stocks a regular look at how things are going, and how they should look going forward. For the most part, third-quarter earnings have come in solid and, despite the market’s nervousness over the election, with super-low rates it still looks like stocks are the best avenue for investors.
In a recent research note from Merrill Lynch, the analysts are very positive on four companies that appear to be hitting on all cylinders now. Three are top technology stocks, and one is a maker of telecom and electronic components. All are rated Buy at Merrill Lynch, and all have their price targets raised.
This high-profile old-school software company makes sense for growth accounts. Adobe Systems Inc. (NASDAQ: ADBE) operates in three segments. The Digital Media segment provides tools and solutions that enable individuals, small and medium businesses, and enterprises to create, publish, promote and monetize their digital content.
The Digital Marketing segment offers solutions for how digital advertising and marketing are created, managed, executed, measured and optimized. This segment provides analytics, social marketing, targeting, media optimization, digital experience management and cross-channel campaign management solutions, as well as video delivery and monetization to digital marketers, advertisers, publishers, merchandisers, Web analysts, chief marketing officers, chief information officers and chief revenue officers.
The Print and Publishing segment offers products and services, such as eLearning solutions, technical document publishing, Web application development and high-end printing, as well as publishing needs of technical and business and original equipment manufacturers (OEMs) printing businesses.
Adobe is also reasonably safe route for investors looking to own a company with Marketing Automation product, which has become huge.
The Merrill Lynch price target was raised to $120 from $115. The Wall Street consensus price target for the stock is set at $118.71. The stock ended trading on Thursday at $107.17 per share.
This time two years ago, this company was the hottest thing on the planet and getting ready to come public. Alibaba Group Holding Ltd. (NYSE: BABA) is the largest online and mobile commerce company as measured by gross merchandise volume, and it had the highest profile initial public offering (IPO) of 2014.
Plain and simple, the dominance in Alibaba’s core business, the very hard barrier to entry for competition and new growth opportunities like cross-border e-commerce make the stock extremely attractive. With most of the damage to the China equity markets seemingly subsided for now, the residual effect to the company may all subside some.
The Merrill Lynch team sees the company as cheap, with outstanding premium growth potential. They also note that the company has gone beyond e-commerce and developed into a sophisticated new type of conglomerate in the cyber-era with e-commerce as the base for the rest of the four businesses: logistics, finance, data-computing and cross-border infrastructure. They expect a whopping 24% compounded annual growth rate between now and 2018 for e-commerce in China.
The company recently reported huge quarterly numbers, and the driving force for some of the outperformance included social features, customized mobile app for users, cross-platform user tracking and ad targeting for merchants. In fact, growth returned to the levels the company was at when it went public.
The Merrill Lynch price target for the stock was raised to $119 from $117. The consensus target is lower at $116.33. The shares closed Thursday at $97.75 apiece.
This top video game producer has cashed in with some super-hot titles. Take-Two Interactive Software (NASDAQ: TTWO) offers its products under labels such as Rockstar Games and 2K. It develops and publishes action/adventure products under the Grand Theft Auto brand, as well as other franchises, including Civilization, Borderlands, Bioshock and Red Dead under the Rockstar Games label. The Grand Theft Auto franchise has been one of the best-selling video games ever released.
The company also reported outstanding earnings for the recent quarter, but it did push guidance lower than current levels. Top Wall Street analysts are very bullish on the next Rockstar title, as well as the fact that the company raised its 2018 fiscal year estimates.
The Merrill Lynch target for the stock went to $55 from $52, and the consensus price objective is listed at $48.62. The stock closed trading on Thursday at $48.29, up almost 8% on the day.
This stock is a big player in automotive technology. TE Connectivity Ltd. (NYSE: TEL) designs and manufactures products at the heart of electronic connections for the world’s leading industries including not only automotive but energy and industrial, broadband communications, consumer devices, health care and aerospace and defense. TE has a long-standing commitment to innovation and engineering excellence, which helps its customers solve the need for more energy efficiency, always-on communications and ever-increasing productivity demands.
Many on Wall Street are bullish on the stock due to the increasing electronic content in automotive, industrial, consumer and defense industries. Analysts cite the stock’s very reasonable valuation and the high growth auto sensor business helping to ramp up sales and earnings.
The company’s investors are paid a solid 2.35% dividend. The Merrill Lynch price target was raised to $70 from $68, while the consensus target is listed at $68.44. The stock closed Thursday at $62.41 a share.
These four top companies to buy are posting great numbers and look solid for 2017. While only suitable for more risk-tolerant accounts, they make sense for those seeking alpha in their portfolios.