Investing

Merrill Lynch Makes a Big New Addition to the US 1 List

With earnings reports for the third quarter underway, and the fourth quarter of 2016 in full swing, many of the top companies we follow on Wall Street are making some changes to the lists of their high conviction stock picks for clients. With the market continuing to trade to near all-time highs, it makes sense to examine the lists and make some changes as the rest of the year could have additional volatility as the political cycle could prove to be very volatile component.

A recent Merrill Lynch research features a big move by adding a top consumer goods company, Crown Holdings Inc. (NYSE: CCK), to the firm’s well-respected US 1 list of stocks to Buy.

This packaging products leader designs, manufactures and sells packaging for consumer goods in the Americas, Europe and the Asia-Pacific. The company offers aluminum beverage cans and ends, and other packaging products to beverage and beer companies; food cans and ends, including two-and three-piece cans in various shapes and sizes for food marketers; and aerosol cans and ends for manufacturers of personal care, food, household and industrial products. It also provides metal and composite closures, and capping systems and services, as well as various specialty containers comprising lid and closure variations.

Merrill Lynch points to positive macro trends and the company’s solid positioning. The firm also cites a reasonable overall valuation and positive factors, not only specific to the company, but the industry as well. In addition, the 2016 earnings guidance looks reasonable, with the possibility for steady growth through 2018.

The analysts also feel it is very possible the company will buy back shares, and institute a long-awaited dividend. The Merrill Lynch price target for the stock is $65, and the Wall Street consensus price objective is $61.77. Shares closed Tuesday at $55.98.

In addition, here are the four top dividend-paying stocks is the US 1 portfolio.

AT&T

This company has had an incredible run this year but is off over 10% in less than six weeks. AT&T Inc. (NYSE: T) is the world’s largest provider of pay TV, with TV customers in the United States and 11 Latin American countries. In the United States, the AT&T wireless network has the nation’s self-described strongest 4G LTE signal and most reliable 4G LTE. The company also helps businesses worldwide serve their customers better with mobility and highly secure cloud solutions.

With its shares trading at a very cheap 14.3 times estimated 2016 earnings, the company continues to expand its user base, and strong product introductions from smartphone vendors have not only driven traffic but increased device financing plans.

AT&T has several major catalysts that likely will drive strong network traffic demand: DirecTV Now and Mobile, “Data-Free TV” for DirecTV/U-verse subscribers and increasing penetration of unlimited data plans. Many on Wall Street believe that the company is well-positioned to address ongoing traffic requirements, with additional LTE capacity available and the ability to leverage small cell deployments.

Other top Wall Street analysts have cited the company’s positive commentary on free cash flow, and improving video/broadband trends later this year with single truck-roll and new converged offerings are expected to be coming next month.

AT&T investors receive a huge 4.88% dividend. Merrill Lynch has a $46 price target. The consensus price objective is $42.61, and shares closed Tuesday at $39.36.

Comcast

This is a broadcasting-related stock that could have big upside potential. Comcast Corp. (NASDAQ: CMCSA) is one of the nation’s largest video, high-speed internet and phone provider to residential customers under the XFINITY brand and 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 has consistently been growing earnings substantially with extremely strong content revenue growth. Increased revenue at NBC Universal is also giving the company some earnings tailwinds, and a growing sports lineup is adding to revenues.

Some top Wall Street analysts see cable giants like Comcast as a top growth story that still has plenty of room to run, as well as generating solid earnings to support continued stock buybacks.

Comcast investors receive a 1.7% dividend. The whopping $84 Merrill Lynch price target compares with the consensus target of $75.70 and the close on Tuesday at $64.88.

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