The higher the market goes, the harder it is for investors to know what to do. One good strategy is to always buy stocks that are the highest conviction picks at a Wall Street firm. These ideas are given to the top institutional and high net worth clients, so the firms generally put their best research foot forward. In a new report from, Credit Suisse, they add some new stocks to the firm’s prestigious Top Picks list.
The Credit Suisse Top Picks list has 148 stocks, which represents just about 17% of the total stocks they cover. We looked for the new stocks added as number one ideas, as each analyst is allowed to enter three top picks. Here are four of the new number one top picks added to the Credit Suisse list: Aramark Inc. (NASDAQ: ARMK), Biogen Inc. (NASDAQ: BIIB), Hewlett-Packard Corp. (NYSE: HPQ) and McKesson Corp. (NYSE: MCK).
This top industrial stock provides food, facilities and uniform services to education, health care, business and industry, sports, leisure and corrections clients primarily in North America. The company also offers managed services, including dining, catering, food service management, convenience-oriented retail operations, grounds and facilities maintenance, custodial, energy and construction management, and capital project management.
The Credit Suisse analysts see a deleveraging and capital return story that could start next year. They also think the company can generate $1.2 billion in cash over the next three years, which they see as providing the impetus to drive the stock higher.
Aramark investors are paid a 1.11% dividend. The Credit Suisse price target for the stock is $37, and Thomson/First Call consensus price target is $35.57. Shares closed Tuesday at $31.05.
Biogen is a top biotech stock that jumps onto the list at Credit Suisse. The analysts cite the fact that greater investor appreciation of the company’s outstanding pipeline can drive the biotech giant’s shares higher. They also note that the recent slowdown in Tecfidera sales has long since been priced into the stock.
The stock jumped in March after the company’s experimental drug for Alzheimer’s disease exceeded already high expectations in an early study. The medicine, known as BIIB037, or aducanumab, showed both reductions in levels of the amyloid plaques in the brain associated with Alzheimer’s and a significant slowing of the disease’s hallmark cognitive declines.
The Credit Suisse price target for this large cap leader is posted at a massive $500, and the Thomson/First Call consensus is $483.84. Shares closed Tuesday at $385.80.
This old-school tech stock has been sold off hard as investors feel that the PC slowdown in sales could continue to hurt earnings. In fact, the stock is down a whopping 20% year to date and trades at a very low 8.9 times 2015 estimated earnings. Some Wall Street analysts feel that weak PC demand could continue to negatively impact revenue and free-cash-flow at the company. The recent decline in the stock may represent investors already discounting a weak first quarter. HP does a large 65% of sales to foreign accounts, and the dollar could be topping out after a long run.
The server business is where many top analysts on Wall Street are bullish, and by adding in the firm’s very solid printer business, investors may be well advised to look at this stock at current lower trading levels. The Credit Suisse team views the stock as undervalued, and it should beat very conservative guidance.
HP investors are paid a 2.2% dividend. Credit Suisse has a very solid $45 price target. The consensus target is $40.40. Shares closed Tuesday at $33.16. The company reports earnings in late May.
This company is the largest U.S. drug distributor and is also a health care services and information technology company dedicated to making the business of health care run better. It partners with payers, hospitals, physician offices, pharmacies, pharmaceutical companies and others across the spectrum of care to build healthier organizations that deliver better care to patients in every setting. McKesson helps its customers improve their financial, operational and clinical performance with solutions that include pharmaceutical and medical-surgical supply management, health care information technology, and business and clinical services.
The Credit Suisse team sees an overall solid fundamental backdrop for the company, in addition to seeing positive accretion from the purchase of Celesio, a European health care and pharmaceutical company.
McKesson investors are paid a small 0.45% dividend. The Credit Suisse price target is posted at $255, and the consensus stands at $247.06. Shares closed most recently at $222.78.
These top pick additions all make good sense for long-term growth investors. They are large cap leaders that should hold up better than momentum stocks in the event of a sell-off.