With the first quarter over and earnings reports ready to start rolling out fast and furious, 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 as the political and world landscape looks to remain uncertain.
In a recent research note, the analysts at Merrill Lynch made a big move by adding a top software company to the firm’s well respected US 1 list of stocks to buy, which is the firm’s highest conviction ideas.
Salesforce.com Inc. (NYSE: CRM) reported solid fourth-quarter results as billings drastically improved, and it is the newest member of the US 1 stock portfolio. The company provides enterprise cloud computing solutions, with a focus on customer relationship management to various businesses and industries worldwide.
It offers enterprise cloud computing applications and platform services, including Sales Cloud that enables companies to store data, monitor leads and progress, forecast opportunities, gain insights through relationship intelligence and collaborate around sales on desktop and mobile devices.
The company also provides Service Cloud, which enables companies to deliver personalized customer service and support, as well as connect their service agents with customers on various devices; and Marketing Cloud, which enables companies to plan, personalize and optimize customer interactions.
The analysts noted in a recent report:
Coming out of Salesforce.com’s event, we believe the target to potentially 2x revenues over 3-4 years is credible. As the depth of Einstein capabilities gets assimilated in core products, customers are headed for a new wave of productivity.
Merrill Lynch has a $100 price target for the stock, while the Wall Street consensus target is $96. The shares closed Tuesday at $82.97.
We also screened the US 1 list for the other top technology and communication stocks in the portfolio.
This company has had a nice run off lows posted in November but is still trading below levels printed last summer. AT&T Inc. (NYSE: T) is the world’s largest provider of pay TV, with TV customers in the United States and 11 Latin American countries. In the United States, the AT&T wireless network has the nation’s self-described strongest 4G LTE signal and most reliable 4G LTE. The company also helps businesses worldwide serve their customers better with mobility and highly secure cloud solutions.
With its shares trading at a very cheap 14.4 times estimated 2016 earnings, the company continues to expand its user base, and strong product introductions from smartphone vendors have not only driven traffic but increased device financing plans.
The company posted fourth-quarter adjusted earnings per share in line with analyst expectations, though its revenue fell short of Thomson Reuters consensus estimates and also was a slight drop from sales during the year-earlier quarter.
AT&T investors are paid a huge 4.71% dividend. The $46 Merrill Lynch price objective compares with the consensus price target of $43.05. Shares closed Tuesday at $41.69.