They always say that the proverbial rising tide lifts all boats. Stock investors know that is about the farthest thing from the truth, especially in years where the bulk of the gains in the broad indexes like the S&P 500 are driven by a handful of hot momentum tech stocks.
The venerable Dow Jones industrial average is having a solid year, up just under 6%, but many of the top names in the index are down for 2018 and may be offering investors enticing entry points.
We screened the index against the Merrill Lynch research universe and found five stocks that are rated Buy and are still down for the year. All make good sense for growth investors looking for value in a market that is clearly rich.
This top industrial that could really jump with continued economic pickup, and the shares are still down almost 12% this year. 3M Co. (NYSE: MMM) is a diversified, global manufacturer. Its businesses are technology-driven and organized under five segments: Consumer, Safety and Graphics, Electronics and Energy, Healthcare, and Industrial. Its popular brands include Scotch, Post-It, 3M and Thinsulate. The company also holds over 500 U.S. patents.
Last year the company entered into a definitive agreement with Johnson Controls to acquire the latter’s operating unit Scott Safety. The deal, which was worth $2.0 billion, likely will boost 3M’s technology, manufacturing, global capabilities and brand. In addition, it will enable the company to expand its recent portfolio actions within the Safety and Graphics business to help position for long-term success.
3M shareholders receive a 2.6% dividend. The Merrill Lynch price target for the stock is $255, and the Wall Street consensus target is $210.36. The stock closed Monday at $209.53.
This stock trades at a very reasonable 9.35 times estimated 2019 earnings, and it is a member of the Merrill Lynch US 1 list. Goldman Sachs Group, Inc. (NYSE: GS) has a gigantic institutional equity, debt and derivatives business, an ultra-high net worth clientele, top investment banking and capital markets expertise. The firm continues to be a dominant force around the world, one of the most sought-after banks one of the very few firms that dictate who can be a client.
In investment banking, the company has the preeminent client franchise. Goldman Sachs advised on more than $1.5 trillion of announced mergers and acquisitions transactions last year, the highest level the bank has ever recorded. It also has maintained a leading market share over the past 25 years.
Second-quarter profit surged 40% year over year, exceeding analysts’ estimates on better-than-expected revenue from every major business with the exception of trading. Three of the bank’s four main businesses all posted surprisingly strong results, thanks to higher private equity gains and fees from equity issuance.
Shareholders receive a 1.4% dividend. Merrill Lynch has a $280 price target, and the consensus target is $276.23. The stock closed Monday at $227.89.