Merrill Lynch Out With Top 10 Stock Picks for 2016

Investing

Published: December 11, 2015 8:25 am

Last Updated: January 13, 2020 4:12 pm

It’s that time of year again, when all the top firms that we cover here at 24/7 Wall St. start to make their stock picks and prognostications for 2016. This not only gives investors a little bit of a head start on year-end portfolio reshuffling, but it also gives them a look at what the overall macro thoughts for the coming year are at the big brokerages and banks.

In a new research report, Merrill Lynch is among the first firms to present their top picks for 2016. The top picks from last year from the Wall Street giant slightly underperformed, down 1%. However, six of the 10 stocks in the 2015 picks notably beat the S&P 500.

Here are Merrill Lynch’s top 10 stocks picks for 2016, one from each sector. Of course, all are rated Buy.

Citigroup Inc. (NYSE: C) makes the list in the financial sector. The stock is very cheap, trading at just 9.2 times estimated 2016 earnings, and is the nation’s fourth-largest bank by assets. Merrill Lynch sees the dividend growing from the current 0.4% and notes that Citi is the only U.S. universal bank trading below book value. The Merrill Lynch price target is $65 and the Thomson/First Call consensus target is $64.03 The stock closed most recently at $52.65.

Coca-Cola Co. (NYSE: KO) is the world’s biggest brand and largest manufacturer of soft-drink concentrate and syrups, and it is the top consumer staples pick. It enjoys a 50% share of the world’s carbonated soft drink market and 44% share of the U.S. market. The analysts note that the stock is underweighted by managers and can grow the dividend, which is currently 3.09%. The Merrill Lynch price target is $48, and the consensus target is $45.06. Shares closed Thursday at $42.76.