Investing

5 Merrill Lynch US 1 Stocks Are Top 2018 Total Return Plays

Delta Air Lines

This company consistently has ranked high with Wall Street. Delta Air Lines Inc. (NYSE: DAL) and the regional Delta Connection carriers offer service to 334 destinations in 64 countries on six continents. Headquartered in Atlanta, Delta employs nearly 80,000 employees worldwide and operates a mainline fleet of more than 700 aircraft.

Wall Street analysts have long lauded Delta for the most extensive hedging policy among the airlines and it owns and operates a refinery in addition to a sizable hedging book. The company reported solid third-quarter results, and the Merrill Lynch analysts were very encouraged by fourth quarter revenue outlook for the airline.

Delta investors are paid a very nice 2.28% dividend. The $63 Merrill Lynch price objective is well above the consensus price target of $58.46. The stock closed Monday at $53.62.

Lowe’s

This company has a low 6% of foreign sales. Lowe’s Companies Inc. (NYSE: LOW) operates as a home improvement retailer, offering products for maintenance, repair, remodeling and home decorating.

Categories include kitchens and appliances; lumber and building materials; tools and hardware; fashion fixtures; rough plumbing and electrical; lawn and garden; seasonal living; paint; home fashions; storage and cleaning; flooring; millwork; and outdoor power equipment. The company also offers installation services through independent contractors in various product categories.

The stock is trading at a price-to-earnings discount to its rival Home Depot, as well as trading below its five-year and 10-year P/E averages. Many expect the company to report strong earnings next month as the disastrous hurricane damage in Texas and Florida could drive earnings for multiple quarters.

Lowe’s investors are paid a 2.0% dividend. Merrill Lynch has set its price objective at $95. The consensus target price is $84.38, and shares closed Monday at $81.20.

Walmart

The giant retailer’s stock has performed well since bouncing off lows for the year in January. Wal-Mart Stores Inc. (NYSE: WMT) operates retail stores in various formats worldwide, including discount stores, supermarkets, supercenters, hypermarkets, warehouse clubs, cash and carry stores, home improvement stores, specialty electronics stores, restaurants, apparel stores, drug stores and convenience stores. It also operates via retail websites, such as Walmart.com and SamsClub.com.

Each week, nearly 260 million customers and members visit the company’s 11,535 stores under 72 banners in 28 countries and e-commerce websites in 11 countries. With fiscal year 2016 revenue of $482.1 billion, Walmart employs approximately 2.2 million associates worldwide.

The company recently announced a massive $20 billion stock repurchase plan that was met with open arms by Wall Street. Many think it is in an effort to ward off potential activist investors.

Walmart shareholders are paid a 2.56% dividend. The Merrill Lynch price target of $100 compares with the posted consensus target of $85.49 and the most recent close at $85.74.

Despite the constant Wall Street bullishness, the market needs a breather, and a 5% sell-off would provide just that. These five top stocks rated Buy, all pay good dividends and offer a degree of safety in what is clearly a very expensive market by historical standards. With the markets grinding higher and very expensive, playing it safe makes sense.

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