Investing

5 Top Stocks to Buy as Investors Give Up on FANG Stocks

Exxon

This company remains a top Wall Street energy pick. Exxon Mobil Corp. (NYSE: XOM) is the world’s largest international integrated oil and gas company. It explores for and produces crude oil and natural gas in the United States, Canada, South America, Europe, Africa and elsewhere.

The company also manufactures and markets commodity petrochemicals, including olefins, aromatics, polyethylene and polypropylene plastics, and specialty products, and it transports and sells crude oil, natural gas and petroleum products.

For 75 years in a row, Exxon has raised its dividend on a split-adjusted basis. Thanks to the company’s vertically integrated model in the oil and gas business, its profitability doesn’t suffer through commodity price swings like a company that’s a pure play in one segment of the value chain.

Shareholders are paid a nifty 3.5% dividend. The $102 Merrill Lynch price objective is higher than the consensus target price of $88.95. The stock closed Monday at $88.01.

IBM

This blue chip leader has rallied but still may be offering investors among the best entry point in years. International Business Machines Corp. (NYSE: IBM) is a leading provider of enterprise solutions, offering a broad portfolio of information technology (IT) hardware, business and IT services, and a full suite of software solutions. The company integrates its hardware products with its software and services offerings in order to provide high-value solutions.

IBM’s five major segments are: 1) Cognitive Solutions, 2) Global Business Services, 3) Technology Services & Cloud Platforms, 4) Systems and 5) Global Financing. Analysts cite the company’s potential in the public cloud as a reason for raising price objectives.

IBM posted better than expected fourth-quarter results, and for the first time in 22 consecutive quarters, revenue declining on a year-over-year basis has ended. Now that streak has finally ended, it looks like a positive sign as the company faces competition from faster-growing companies.

IBM shareholders are paid a 3.91% dividend. The Merrill Lynch price target is $200. The consensus target is $170.75, and shares closed Monday at $166.80.

Western Digital

This long-time innovator in the storage industry is a leader in the total addressable HDD market. Western Digital Corp. (NASDAQ: WDC) is an industry-leading developer and manufacturer of storage solutions that help to create, manage, experience and preserve digital content.

The company is responding to changing market needs by providing a full portfolio of compelling, high-quality storage products with effective technology deployment, high efficiency, flexibility and speed. Its products are marketed under the HGST and WD brands to original equipment manufacturers, distributors, resellers, cloud infrastructure providers and consumers.

In addition, the long-drawn dispute with Toshiba finally was put to rest, and Merrill Lynch recently said:

The global settlement is positive as it removes uncertainty of NAND supply for Western Digital and the company gets to protect its intellectual property. The company positively preannounced the December quarter (revenue high end, margins came in better, offset somewhat by higher operating expense). Visibility has improved and management expects the flash supply/demand environment to remain healthy throughout 2018.

Shareholders are paid a 2.3% dividend. Merrill Lynch analysts have set a whopping $120 price target. The consensus target is $113.12, and the stock ended trading on Monday at $87.45.

These five stocks offer investors value characteristics, are overlooked by managers, but also look very well positioned for 2018. All make good sense for more conservative growth and income accounts that do have a degree of risk tolerance.

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