Investing

Merrill Lynch Says Buy These 8 Stocks for Q1 Earnings Surprises

McKesson

Health care services are expected to continue to grow at a furious rate over the coming years. McKesson Corp. (NYSE: MCK) is the largest drug distributor in the United States, as well as having sizable businesses in Canada and Europe, including distribution and retail pharmacy assets.

The company is also the largest medical-surgical distributor to the non-acute care market and offers various supply chain services and technology, although recently divested its clinical health IT platform.

McKesson investors are paid a small 0.98% dividend. Note that the $179 Merrill Lynch price target is less than the posted consensus target of $182.69. Shares closed most recently at $140.66.

Nvidia

This top chip company has reported strong earnings the past few years and remains a top pick at Jefferies for 2018. Nvidia Corp. (NASDAQ: NVDA) is one of the leaders when it comes to supplying graphics processing technology for the 3D graphics market, including desktop graphics processors and gaming consoles.

Nvidia is also moving into visual computing chips for cars, mobile devices and supercomputers. The company has been able to use its ability to leverage past investments, with a more controlled spending structure ahead on unified, which enables strong cash flow that is allowing a focus on capital return, which is currently estimated to be $1 billion next year.

Investors in Nvidia are paid a small 0.28% dividend. The Merrill Lynch price target is $300. The posted consensus target is much lower at $251.29. The stock closed Wednesday at $221.35 per share.

Qualcomm

This stock recently was added to the Merrill Lynch US 1 list. Qualcomm Inc. (NASDAQ: QCOM) designs, develops and supplies semiconductors and collects royalties on wireless handheld devices and infrastructure based on its dominant position in CDMA and other related technology patents.

In addition, Qualcomm provides systems software and components to wireless handset vendors and promotes applications and services that run on high-speed wireless networks. The company operates primarily through two segments: CDMA Technologies and Technology Licensing.

Qualcomm shareholders are paid a very hefty 4.16% dividend. Merrill Lynch has set its price target at $75. The consensus target was last seen at $71.03. The stock closed at $54.70 on Wednesday.

United Rentals

This stock has rallied smartly but still has solid upside potential, and it is also on the Merrill Lynch US 1 list. United Rentals Inc. (NYSE: URI) is the largest equipment rental company in the world. It has an integrated network of 876 rental locations in 49 states and 10 Canadian provinces. With approximately 12,200 employees, the company serves construction and industrial customers, utilities, municipalities, homeowners and others. It offers for rent approximately 3,100 classes of equipment for rent.

The Merrill Lynch price target of $230 compares with the $180.29 consensus estimate. The stock closed trading on Wednesday at $169.11 a share.

These eight top companies in various sectors are expected to beat earnings estimates, are under-owned by fund managers and are rated Buy at Merrill Lynch. They make good sense for growth accounts that have a degree of risk tolerance.