Many fundamental analysts will tell you the chart followers are nothing more than people reporting after-the-fact data. The reality on Wall Street is that a great chart pattern combined with solid fundamentals can give an investor an even better chance of finding trading success.
In a new research report, the top technical analyst at Merrill Lynch combed through the company’s research universe looking for top stocks that had 90-day price and volume breakout technical charts. A 90-day breakout is a sign of technical strength. We then looked through the list and picked only the stocks that were rated as stocks to buy.
Here are the buy-rated stocks by sector that also have a 90-day price and volume breakout pattern.
Home Depot Inc. (NYSE: HD) fits the bill in the consumer discretionary sector. Poor earnings from the its top competitor Lowe’s put some pressure on the stock Wednesday. A continued bright housing market is expected to keep earnings at the home improvement giant solid. Investors are paid a 1.9% dividend. The Merrill Lynch price target for the stock is $92. The Thomson/First Call estimate is at $87.50, and Home Depot closed Wednesday at $79.75.
PetroChina Co. Ltd. (NYSE: PTR) is the name in the energy sector that matches the criteria. The company operates in four segments in China: Exploration and Production, Refining and Chemicals, Marketing, and Natural Gas and Pipeline. With an ever increasing demand for its products, growth prospects for its stock are solid. Investors are paid a very nice 4% dividend. Merrill Lynch has a $141.39 price target for the stock, and the consensus is at $135.18. PetroChina closed Wednesday at $122.92.
IntercontinentalExchange Group Inc. (NYSE: ICE) is a top financial name that makes the grade in both analysis categories. The company announced this week that it has signed a definitive agreement to acquire the Singapore Mercantile Exchange. The terms were not disclosed, although IntercontinentalExchange did say that the purchase will be effected in an all-cash transaction. This comes on the heels of the recent acquisition of NYSE Euronext. The Merrill Lynch price target is posted at $230. The consensus is lower at $215. The stock closed Wednesday at $213.07.
Allergan Inc. (NYSE: AGN) is a top health care name with the technical and fundamental combo. Allergan, best known for its muscle relaxant Botox and its portfolio of plastic surgery products, reported its third-quarter earnings on Tuesday. The company’s earnings, revenue and growth across all major businesses rose by double-digits. Investors receive a very small 0.2% dividend. The Merrill Lynch price objective for the stock, which is a member of their U.S. 1 List, is $110. The consensus target is $103.50. Allergan closed on Wednesday at $98.59.
Automatic Data Processing Inc. (NASDAQ: ADP) is an information technology name that fits the bill. As one of the world’s largest providers of business outsourcing and human capital management solutions, ADP offers a wide range of human resource, payroll, talent management, tax and benefits administration solutions from a single source, and it helps clients comply with regulatory and legislative changes, such as the Affordable Care Act. Investors are paid a respectable 2.5% dividend. The Merrill Lynch price target is $88, and the consensus target is posted much lower at $78. ADP closed Wednesday at $79.05.
Brocade Communications Systems Inc. (NASDAQ: BRCD) is another interesting tech name that makes the cut. When the company reported better-than-expected earnings on Monday, it noted that “federal budget issues” and weakness in the storage market weighed on the quarter. But its performance still exceeded Wall Street’s expectations. Merrill Lynch has a $9.50 target, while the consensus target is $8.50. Brocade closed Wednesday at $8.80.
Owens-Illinois Inc. (NYSE: OI) wraps up the names of the double-threat candidates to buy from Merrill Lynch with 90-day breakouts. The company reported very strong earnings for its third quarter, and it is the world’s largest glass container manufacturer and preferred partner for many of the world’s leading food and beverage brands. The Merrill Lynch target for the stock is set at $37, and the consensus is at $35. Owens-Illinois closed Wednesday at $32.48.
Combining technical breakouts with buy-rated names that make the have the right fundamentals is a strong combination for success. People that watch the tape on Wall Street will also pick up that these stocks are strong technically. When they also see buy ratings from a firm like Merrill Lynch and higher price targets, they may also be inclined to get involved.