Investing

Merrill Lynch Out With Top US Stock Picks for Q3

NextEra Energy

With a very strong balance sheet, NextEra Energy Inc. (NYSE: NEE) is poised for a solid second half of 2016. It is a leading clean energy company with consolidated revenues of over $17.0 billion, and approximately 44,900 megawatts of generating capacity, which includes megawatts associated with noncontrolling interests related to NextEra Energy Partners.

NextEra Energy’s principal subsidiaries are Florida Power & Light, which serves approximately 4.8 million customer accounts in Florida and is one of the largest rate-regulated electric utilities in the United States, and NextEra Energy Resources, which, together with its affiliated entities, is the world’s largest generator of renewable energy from the wind and sun.

Shareholders receive a 2.65% dividend. The $144 Merrill Lynch price target is well above the consensus of $127.60. Shares closed Tuesday at $130.87.

Raytheon

This company has a diversified mix of business, posted solid first-quarter numbers and is also on the Merrill Lynch High Quality and Dividend Yield screen. Raytheon Corp. (NYSE: RTN) is an industry leader in defense, government electronics, space, information technology and technical services. It operates in four principal business segments: Integrated Defense Systems, Intelligence, Information and Services, Missile Systems, and Space and Airborne Systems.

Investors are paid a 2.15% dividend. The Merrill Lynch price target is $150, and the consensus target is $141.13. The stock closed most recently a $136.70.

Realty Income

This top commercial REIT makes the Merrill Lynch top ideas list. Realty Income Corp. (NYSE: O) monthly dividends are supported by the cash flow from over 4,600 real estate properties owned under long-term lease agreements with regional and national commercial tenants. To date, the company has declared 552 consecutive common stock monthly dividends throughout its 47-year operating history and increased the dividend 86 times since its public listing in 1994.

The company also boasts in-house acquisition, portfolio management, asset management, credit research, real estate research, legal, finance and accounting, information technology and capital markets capabilities.

Shareholders receive a 3.4% distribution. The Merrill Lynch price objective is $70, and the consensus target is much lower at $59.27. Shares closed Tuesday at $71.47.

Salesforce.com

Once again this tech powerhouse reported outstanding numbers and the stock took off. Salesforce.com Inc. (NYSE: CRM) provides enterprise cloud computing solutions, with a focus on customer relationship management to various businesses and industries worldwide. It offers enterprise cloud computing applications and platform services, including Sales Cloud that enables companies to store data, monitor leads and progress, forecast opportunities, gain insights through relationship intelligence and collaborate around sales on desktop and mobile devices.

The company blew away earnings estimates with a large billings beat, and virtually every platform and product area at the company has been posting much higher numbers than almost anyone expected. In addition, the company raised guidance for the rest of the fiscal year.

Merrill Lynch recently raised its price target to $100 from $90, and the consensus target is $97.11 The stock closed at $78.67.

Walgreens

This huge drugstore chain completes the list of the top ideas for the third quarter. Walgreens Boots Alliance (NASDAQ: WBA) operates as a pharmacy-led health and well-being company. It sells prescription drugs and an assortment of general merchandise, including non-prescription drugs, beauty products, photo finishing, seasonal merchandise, greeting cards and convenience foods through its retail drugstores and convenient care clinics.

It also provides specialty pharmacy services and manages in-store clinics under the brand Healthcare Clinic. As of August 31, 2015, this segment operated 8,173 retail stores under the Walgreens and Duane Reade brands in the United States and seven specialty pharmacy locations, as well as managed approximately 400 Healthcare Clinics.

Investors receive a 1.72% dividend. The Merrill Lynch price target is $94, and the consensus is set at $94.27. The stock closed Tuesday at $83.52.

The two underperform rated stocks in the list for the quarter are Capital One Financial Corp. (NYSE: COF) and Williams-Sonoma Inc. (NYSE: WSM). Aggressive accounts may want to consider these for short sales.

Needless to say, all of these ideas are pretty conservative, and given the multitude of issues facing the markets, they all make good sense for growth accounts looking to stay involved, but play it safe.