Friday and Monday were pretty much a wake-up call for investors who dozed during the summer as the Volatility Index hovered at all-time lows. One thing is for sure: just when you think the water is calm, the floodgates can open and the volatility can skyrocket. With everything from analysts lowering estimates to the political cycle to a very hard to follow Federal Reserve, the ingredients are there for a witches brew of volatility.
In a new research piece, Deutsche Bank’s outstanding strategist David Bianco makes the case that it is dangerous to become too complacent on volatility, and he also recommends buying mega-cap and large cap stocks with low price-to-earnings (P/E) ratios.
We screened the “what to buy now” Buy-rated stock list at Deutsche Bank for stocks that fit into this category, and also looked for those with a solid dividend. We found four that look very good now.
Shares of this top pharmaceutical stock with very solid growth potential are down over 15% from highs hit last summer. Abbott Laboratories (NYSE: ABT) is a leading diversified global health care company that develops, manufactures and markets branded generics, medical devices, nutritional products and diagnostic solutions.
The company recently agreed to acquire the equity in Minnesota-based Tendyne Holdings that it does not already own for $250 million plus future payments tied to regulatory milestones. Wall Street likes the purchase and the way the company is putting its substantial balance sheet to work.
The company also offers a diversified large cap play as earnings are split between five well-positioned business segments: Nutritionals (31% of revenues), Vascular (13%), Generic Pharmaceuticals (20%) and Diagnostics (25.5%) and Diabetes (10.5%).
Back in July, CEO Miles White, who has been at the firm for over three decades, bought a stunning $45.5 million worth of company stock, which added to his already substantial holdings. The purchase made him one of the top 100 shareholders.
Abbott Labs investors receive a 2.55% dividend. The Deutsche Bank price target for the stock is $49, and the Wall Street consensus target is $48. The shares closed Monday at $41.42.
This large cap broadcaster has bounced nicely off the lows and still could be an incredible value. CBS Corp. (NYSE: CBS) may be in the best position of all the broadcast networks with an outstanding prime time lineup, solid sports franchises like the NFL, March Madness College Basketball, The Masters and other top programming, the venerable network could once again be an outstanding stock for shareholders.
The company is leading in the spring ratings, and is poised to continue the network’s programming dominance in 2016. The broadcasting giant is now in the midst of a significant stock repurchase process, and many on Wall Street expect the company to shrink its share base by around 25% over the next two years.
Network advertising and strong content licensing revenue drove the upside in the third-quarter earnings, which beat consensus estimates despite a slight revenue miss. Similar to the broadcasting giant’s rivals, many analysts expect CBS to look to book content licensing more evenly over this year and into 2017.
CBS shareholders receive a 1.11% dividend. Deutsche Bank has a $68 price target. The consensus target is $63, and shares closed most recently at $52.76.