Credit Suisse's Top Mid-Cap Stocks to Buy for Rest of 2014
For the better part of the past two years, Wall Street strategists from many of the firms we cover have stressed to their clients to stick with the large- and mega-cap stocks. The reasoning was solid, as typically those stocks are the safest from a volatility standpoint and have the most liquidity. The strategy has been a good one as the large-cap leaders have done well, especially in technology.
The Credit Suisse team, in a new report, says investors may want to look at the top mid-cap companies to own. They are also advising clients to avoid come of the popular and over-owned stocks. In fact, within the Russell Midcap Index, the least popular names in mid-cap funds have experienced the best performance so far in 2014. In 2012 and 2013, the best performing Russell mid-cap stocks were found among the middle tiers of ownership.
Investors who realize they have a portfolio stuffed with mega-cap stocks may want to consider taking some profits or discarding some of the losers, if you follow their strategy. Adding big mid-cap companies keeps a level of safety in a solid growth portfolio and may add some alpha to beat the market, as many of the stocks are under-followed.
We screened the Credit Suisse research report for the top new ideas to own by sector. Here are the stocks rated Outperform.
Alliant Techsystems Inc. (NYSE: ATK) is a top defense stock rated Outperform at Credit Suisse. The company is a world-leading producer of ammunition, precision weapons and rocket motors. It announced Monday that it has received international contracts totaling more than $220 million from U.S. allies for medium-caliber cannons and aftermarket services that will support cannon system integration and product life cycle.
Alliant investors are paid a 1% dividend. Credit Suisse has a $177 price target on the stock. The Thomson/First Call consensus price target is at $154.44. The stock closed Tuesday at $134.69 a share.