This company may offer investors some of the best total return possibilities, and Merrill Lynch sees it as a top yield play and recently added it to the firm’s US 1 list. ConocoPhillips (NYSE: COP) is a large integrated that has spent the past five years divesting assets. Although it is cash rich, the company has somewhat dampened earnings and growth expectations all year long. With oil still looking for a bottom, and the market watching events in the Middle East, many analysts may feel more comfortable with the stock.
Many Wall Street analysts feel Conoco can accelerate growth from reloaded portfolio depth in the Bakken and Eagle Ford, with visibility on future growth from a newly disclosed sizable position in the Permian. They are cautious but positive on the company’s impending earnings report. While Conoco reported a third-quarter loss, the largest U.S. independent oil company lowered its 2015 spending target in response to the lingering slump in crude prices. Solid cuts in unnecessary spending and the possibility of increased sales of noncore assets remain ongoing positives.
Investors receive a very strong 5.78% dividend. The Merrill Lynch price target is a whopping $77. The consensus target is much lower at $62.47. Conoco closed out Friday at $51.19.
Many of the Wall Street firms that we cover are becoming more positive on utilities again after this year’s underperformance. Dominion Resources Inc. (NYSE: D) is one of the nation’s largest producers and transporters of energy, with a portfolio of approximately 24,600 megawatts of generation and 6,455 miles of electric transmission lines. It operates one of the nation’s largest natural gas storage systems, with 928 billion cubic feet of storage capacity, and serves utility and retail energy customers in 13 states.
Dominion operates via three divisions. Dominion Virginia Power is focused on regulated electric transmission and distribution that serve residential, commercial, industrial and governmental customers in Virginia and North Carolina. Dominion Generation generates electricity through coal, nuclear, gas, oil, hydro and renewable sources. Dominion Energy centers around regulated natural gas distribution and storage.
Dominion investors receive a solid 3.9% dividend. The Merrill Lynch price target is $80 and the consensus estimate is $78.39. The stock closed Friday at $66.60.
This one could be offering investors the best value at current trading levels. Pfizer Inc. (NYSE: PFE) has a very strong pipeline, and being the world’s largest drug manufacturer by sales value supports the Wall Street notion that it can generate higher long-term revenues through the accelerated growth of its new drugs over the next five years.
Pfizer announced recently details of what would be one of this year’s biggest deals, a $160 billion merger with Allergan. Though specifics are still emerging, at current announced levels the purchase would be the largest 2015 acquisition. However, the Treasury Department has said that it is working on new rules for corporate tax inversions, which is potentially what the Pfizer/Allergan deal would be and could possibly throw wrench into the negotiations.
Pfizer has announced that it is starting 20 clinical trials this year and more soon after on treatments to conquer cancer, as it also seeks to gain leadership in one of the hottest, and most lucrative, areas of medicine. Pfizer currently has eight approved cancer medicines, four of them launched in the past four years. It is running late-stage patient tests on five of those drugs for additional uses and has three other drugs in late-stage testing, which is usually the last round before seeking regulatory’ approval. In addition, the company has 14 other drug programs in early stages.
Pfizer investors receive a 3.41% dividend. The $39 Merrill Lynch price target is lower than the consensus target of $40.47. Pfizer closed Friday at $32.80.
While these stocks may not have the excitement of high-beta momentum companies, they offer investors something that may be in big demand in 2016 and beyond: stability. With the market very possibly poised for years of sideways trading and single-digit gains, the total return potential from these blue chips is outstanding.
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