Needless to say, the first quarter was the proverbial roller-coaster ride for investors. After a gut-wrenching 10% or so sell-off to start the year that lasted all the way until almost the middle of February, the market finally turned and rallied back to just about breakeven by the end of the quarter. The question now is what are the good ideas to put to work for the second quarter, especially after a somewhat rough start.
A recent Merrill Lynch research report features its quarterly top 10 ideas. Eight are stocks to Buy and two are rated Underperform and are potential short sale candidates. Here we focus on the eight top stocks to Buy. The analysts are smart and for the most part play it safe by staying away from momentum areas that could get bludgeoned in a downturn.
American Water Works
This could be the premiere name for investors to own. American Water Works Co. Inc. (NYSE: AWK) is the largest publicly traded U.S. water and wastewater utility company. It provides drinking water, wastewater and other related services to an estimated 14 million people in more than 40 states and parts of Canada.
American Water Work investors receive a 1.95% dividend. The Merrill Lynch price target for the stock is $72, and the Thomson/First Call consensus target is $68.38. The shares closed Thursday at $69.80.
One of the nation’s largest video, high-speed Internet and phone providers to residential customers under the XFINITY brand, Comcast Corp. (NASDAQ: CMCSA) also provides these services to businesses. Comcast has invested in technology to build an advanced network that delivers among the fastest broadband speeds and brings customers personalized video, communications and home management offerings.
Comcast consistently has grown earnings substantially with extremely strong content revenue growth. Increased revenue at NBC Universal also is giving the company some earnings tailwinds, and a growing sports lineup is adding to revenues.
Comcast shareholders receive a 1.79% dividend. The $84 Merrill Lynch price target is well above the consensus target of $69.44. The shares closed Thursday at $61.40.
Digital Realty Trust
Digital Realty Trust Inc. (NYSE: DLR) supports the data center and colocation strategies of more than 600 firms across its secure, network-rich portfolio of data centers located throughout North America, Europe, Asia and Australia. Its clients include domestic and international companies of all sizes, ranging from financial services, cloud and information technology services, to manufacturing, energy, gaming, life sciences and consumer products. The company rates highly with portfolio managers, as large part of the market cap of the company is in institutional hands.
Shareholders receive a 3.91% dividend. Merrill Lynch has a $95 price objective. The consensus target is $85.44, but shares closed above that level at $90.07 on Thursday.
As it continues to dominate the social media world, Facebook Inc. (NASDAQ: FB) also continues to show very stable penetration, usage and consumer frequency. The company has been on a huge roll the past three earnings reporting quarters, and many on Wall Street feel that the stock has plenty of room to run. Mobile revenue and advertising numbers have skyrocketed, and the company has started to add a search component that could prove to be another earnings silo for the social media giant
The Merrill Lynch price target is $140. The consensus target is $134.02. The shares closed most recently at $113.63.
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