With the market busting through a top that has been in place since February of 2015, some of the more bullish voices on Wall Street think it’s possible we could see a big breakout. While that is indeed possible, earnings have to start coming in strong, not only for the second quarter, but for the rest of the year. In addition, guidance from companies will need to be very positive to keep the momentum in place.
In a recent research report, Merrill Lynch does what many of the top firms will be forced to do with a rising market. The firm is raising the price targets on some of the top stocks its covers, as the recent rally has pushed some right up near current price target levels. This week it raises the price targets on four top momentum growth companies, all of which are outstanding buys for aggressive accounts.
This is a conservative information technology company. Automatic Data Processing Inc. (NASDAQ: ADP) is one of the world’s largest providers of business outsourcing and human capital management solutions. It offers a wide range of human resource, payroll, talent management, tax and benefits administration solutions from a single source, and it helps clients comply with regulatory and legislative changes, such as the Affordable Care Act (ACA).
The company has been primarily benefiting from continued strength in its PEO services and growth in its newer platforms like RUN, Workforce Now and Vantage. In addition, it has a sizable market share in the payroll processing business. Apart from the core payroll processing business, ADP is also expected to benefit from new higher-growth services like tax filing, retirement, pre-employment, insurance and others.
ADP investors are paid a 2.23% dividend. Merrill Lynch raised its price target to $100 from $95. The Thomson/First Call consensus target price is much lower at $90, but the stock closed most recently at $95.14.
This top company printed an all-time high last November and has almost traded back to it, after being down to sideways for almost a year. American Tower Corp. (NYSE: AMT) is one of the largest global real estate investment trusts (REITs), as well as a leading independent owner, operator and developer of multi-tenant communications real estate with a portfolio of approximately 97,000 communications sites. It is on track to own and operate 100,000 cell towers by the end of 2015, in both U.S. and international operations. It is also reported that the company is already processing about 900 applications in its pipeline to add additional carriers to the newly acquired Verizon towers.
In 2012, the company made a very smart move to convert from a corporation to a REIT, which requires it to pay at least 90% of its profits as dividends. With the company’s top and bottom lines growing so quickly, American Tower has been able to increase its payout by more than 20% annually ever since. With the bulk of the company’s towers out of dense urban areas, macro remains the asset of choice for this top company.
American Tower investors are paid a 1.83% distribution. The Merrill Lynch price target was raised to $131 from $112, The consensus target is $117, and the shares closed most recently at $116.01.