Merrill Lynch Growth Portfolio Stocks Crushing the S&P 500: 5 to Buy Now

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There are many different ways that top Wall Street firms go about covering companies with their research departments. Some use a top-down approach that starts with the big picture and breaks down from there into smaller segments. Others utilize a bottom-up approach, which is the piecing together of systems to give rise to more complex systems, thus making the original systems subsystems of the emergent system.

Almost all the firms we cover at 24/7 Wall St. also use quantitative research, which is used to quantify the company by way of generating numerical data or data that can be transformed into usable statistics. The analysts at Merrill Lynch have their Growth 10 portfolio, which is quantitatively generated and based on proprietary Merrill Lynch versus consensus earnings surprise model plus three additional screening criteria.

The portfolio has mauled the S&P 500 growth category over the past three-, five- and 10-year periods. We screened the portfolio and found five companies that look like solid picks for the rest of 2018.

Facebook

The huge social media leader has continued to post gigantic numbers, and the fourth quarter should be no exception. Facebook Inc. (NASDAQ: FB) operates as a mobile application and website that enables people to connect, share, discover and communicate each other on mobile devices and personal computers worldwide.

Its solutions also include Instagram, a mobile application that enables people to take photos or videos, customize them with filter effects, and share them with friends and followers in a photo feed or send them directly to friends; Messenger, a messaging application for mobile and web on various platforms and devices, which enable people to reach others instantly, as well as enable businesses to engage with customers; and WhatsApp Messenger, a mobile messaging application.

The Merrill Lynch price target for the shares is $265, which compares to a Wall Street consensus target of $222.81 The stock closed trading on Wednesday at $177.91 per share.

Flowserve

This company should get a boost from an improving economy and the proposed infrastructure build. Flowserve, Corp. (NYSE: FLS) is a Texas-based supplier of pumps, valves, seals, automation and related services, primarily for the oil and gas, power and chemical industries. Flowserve operates under three segments: Engineered Products, Industrial Products and Flow Control.

The stock has stumbled some over its past few earnings reports, but the analysts note that bookings were strong as 2017 ended and the prospects look good for this year.

Flowserve investors are paid a 1.74% dividend. Merrill Lynch has set its price target at $57, and the consensus target is lower at $45.46. The shares closed most recently at $43.78.

Lowe’s

This company looks poised to see huge spring and summer 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.