Investing

Deutsche Bank Out With New Top Stock Buys for the Next Year

KBR

This old-school construction firm looks like a shoo-in for border wall contracts. KBR Inc. (NYSE: KBR) is a premier global engineering and construction company focusing on the energy sector and government services, with particularly strong resume in the liquefied natural gas (LNG) market, having built a third of the installed global capacity.

KBR operates through three segments. The Government Services segment offers life-cycle support solutions to defense, space, aviation, and other programs and missions for government agencies in the United States, the United Kingdom and Australia.

Technology & Consulting includes proprietary technology focused on the monetization of hydrocarbons (especially natural gas and natural gas liquids) in ethylene and petrochemicals; ammonia, nitric acid and fertilizers; oil refining; gasification; oil and gas consulting; integrity management; naval architecture and proprietary hulls; and downstream consulting

Engineering & Construction includes onshore oil and gas; LNG (liquefaction and regasification)/GTL; oil refining; petrochemicals; chemicals; fertilizers; differentiated EPC; maintenance services (Brown & Root Industrial Services); offshore oil and gas.

Shareholders receive a 1.97% dividend. Deutsche Bank has set its price objective at $19. The consensus price target is $19.38, and shares closed Tuesday at $16.24.

Parsley Energy

This is a smaller capitalization stock for aggressive investors to consider and a potential takeover candidate. Parsley Energy Inc. (NYSE: PE) is an oil and gas producer with 227,000 net acres in the Permian Basin. The majority of acreage sits on the Midland side of the basin, but the company also holds a small acreage position in the Delaware Basin.

The company had 222 million barrels of oil equivalent of proved reserves at the end of 2016, of which 61% was oil. Through strategic acquisitions and acreage swaps, it has grown its acreage position since its initial public offering and has over 7,900 horizontal locations across multiple prospective zones.

The company is a catalyst rich and is Permian Basin pure play. Parsley Energy has some of the strongest wells in the basin, generating returns that are among the best in the industry. It is also rapidly de-risking its drilling inventory and is well-positioned to continue to beat its strong growth projections.

The Deutsche Bank price target is $36. The consensus target is $37.55, and shares closed at $28.24.

Microsoft

This top old-school technology stock has posted all-time highs this year and has a massive $138.6 billion sitting on the balance sheet. Microsoft Inc. (NASDAQ: MSFT) continues to find an increasing amount of support from portfolio managers, who have added the software giant to their holdings at an increasingly faster pace all of this year and last.

Numerous Wall Street analysts feel that Microsoft has become a clear number two in the public or hyper-scale cloud infrastructure market with Azure, which is the company’s cloud computing platform offering. Some have flagged Azure as a solid rival to Amazon’s AWS service. Analysts also maintain that Microsoft is discounting Azure for large enterprises, such that Azure may be cheaper than AWS for larger users. The cloud was big in the recent earnings report, which was outstanding.

The company has been somewhat quieter on plans for its huge trove of overseas funds, but CEO Satya Nadella surely has big plans for any repatriated money, be it pay off debt, buy back shares, hire employees or spend on research and development.

Shareholders currently receive a 1.85% dividend. The Deutsche Bank price target of $120 compares with a consensus target of $104.55 and the most recent close at $89.71.

Six new ideas on the Deutsche Bank Conviction List that are top stocks to buy for the next year. All make good sense for growth accounts looking to add new positions. Plus, all are at reasonable prices, so any big risk-off selling shouldn’t have a huge impact.