With the market continuing to run, and all the losses from early and mid-October recouped, the question for equity investors looking to stay long stocks is what to do now? The amazing thing is that for all the seemingly big upside in the rallies, all the major indexes are still just up single digits for the year, with the Nasdaq the leader, up about 9.33% through last Friday. The analysts at RBC are out with their top picks for November, and many offer tremendous value for investors.
An RBC Top Pick stock represents the analysts’ best idea in the sector and is expected to provide significant absolute total return over the next year with a favorable risk-reward profile. We screened the top picks at RBC for the stocks with the biggest upside potential to the posted price targets.
CBS Corp. (NYSE: CBS) may be in the best position of all the broadcast networks and is one of the top picks at RBC. With an outstanding primetime lineup, solid sports franchises like the NFL, March Madness College Basketball, the Masters and other top programming, the venerable network has been an outstanding stock for shareholders. The company again is leading in the fall ratings and is poised to continue the network’s programming dominance in 2015. The broadcasting giant is now in the midst of a significant stock repurchase, and the RBC team expects CBS to shrink its share base by about 25% over the next two years.
CBS investors are paid a 1.1% dividend. The RBC price target on the stock is $69. The Thomson/First Call consensus price target is $63. CBS closed Monday at $54.43. Trading to the RBC target would be a 25% gain.
Concho Resources Inc. (NYSE: CXO) is a top energy play in the Permian Basin in West Texas. The company is an independent oil and natural gas company engaged in the acquisition, development and exploration of oil and natural gas properties. The company is often touted as a possible takeover candidate. Concho completed a successful secondary stock offering in the summer that raised close to $1 billion and plans to use the net proceeds from this offering to repay debts under the company’s credit facility, as well as for corporate purposes that include financing its three-year accelerated growth plan, capital expenditures tied to the recently announced midstream joint venture and potential future asset buys.
RBC has a $155 price target, and the consensus target is $150.22. Concho closed Monday at $106.44. Trading to the RBC target would be more than a 40% gain for shareholders.
LyondellBasell Industries N.V. (NYSE: LYB) manufactures chemicals and polymers; refines crude oil; produces gasoline blending components; and develops and licenses technologies for production of polymers. The stock is down huge from its September highs and may be offering investors an incredible entry point. Lyondell reported very solid earnings for the quarter that rose 6.7%, which topped analysts’ estimates.
Lyondell shareholders are paid a very solid 3.1% dividend. The RBC price target is $126, while the consensus is posted at $111.68. Shares closed trading on Monday $89.22. Hitting the RBC target would be a 37% gain.
Marvell Technology Group Ltd. (NASDAQ: MRVL) is the tech stock investors have waited on for years for its ship to come in. The key to Marvell’s success is that it is gaining market share at Western Digital, and the advent of SSDs has turned out to be a solid catalyst. In addition, hard disk drives are also being used for non-PC applications such as server storage and data centers. Marvell enjoys a 50% share of Western Digital’s enterprise business, which is significant.
Marvel investors are paid a 1.75% dividend. RBC has a $22 target, though the consensus number is $16.42. Marvell closed trading Monday at $13.53. A jump to the RBC target would be just shy of a 64%% gain.
WebMD Health Corp. (NASDAQ: WBMD) is a moonshot call at RBC. The company has a large 17.9% of the stock sold short, so some are very bearish. That could prove dangerous as analysts’ estimates for the stock have been moving higher recently. The company added $40 million to its stock buyback plan in the summer and that number could be added to in the future.
RBC has a $70 price target, and the consensus target is much lower $53.60. WebMD closed Wednesday at $42.62. Hitting that huge RBC target would be a 63% gain.
One thing is for sure, RBC has not gone down the dangerous path of touting momentum stocks. With a pricey market and earnings guidance almost over for now, it would seem like any disappointments going forward could start a selling slide that could grow in magnitude. Most of the RBC stocks are suitable for growth-oriented portfolios.