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.
Exxon Mobil Corp. (NYSE: XOM) is an energy sector behemoth that the Merrill Lynch analysts are very positive on, and it is the top energy pick for 2016. They see the stock as a mega-cap play with a strong balance sheet and a 3.83% dividend. They also feel that the company can withstand the current downturn better than peers. The $100 Merrill Lynch price target is well above the consensus of $83.80. The stock closed Thursday at $75.69.
3M Co. (NYSE: MMM) is the top industrial pick that could really jump with an economic pickup, and it is also a member of the Merrill Lynch US 1 list. This high-quality mega-cap stock has big pricing power, geographic exposure and a solid 2.6% dividend. The Merrill Lynch price target is $178, and the consensus target is $161.14. The stock closed at $157.52.