With earnings reporting for the fourth quarter more than half over, and the first quarter of 2019 about the same, many of the top companies we follow on Wall Street are making some changes to the lists of their high-conviction stock picks for clients. With the market over the past four months showing volatility not seen in years, it makes sense to examine the lists and also make some changes as the rest of the year could have additional volatility, as the political and geopolitical cycle could prove to be very explosive components.
In a recent research note, the analysts at Merrill Lynch made a big move by adding pharmaceutical giant Merck & Co, Inc. (NYSE: MRK) to the firm’s well respected US 1 list of stocks to buy. The company replaced Allergan PLC (NYSE: AGN), which was removed following the expiration of its 12-month term on US 1 list. The stock does remain Buy rated.
We screened the Merrill Lynch US 1 list looking for similar large-cap blue-chip stocks that pay solid dividends like Merck and found four great selections for growth and income investors.
This is one of the larger cap data center companies and a top pick at Merrill Lynch. Equinix Inc. (NASDAQ: EQIX) provides data center services to protect and connect the information assets for the enterprises, financial services companies, and content and network providers primarily in the Americas, Europe, the Middle East, Africa and the Asia-Pacific.
The company provides colocation services and related offerings, including operations space, storage space, cabinets and power for customers colocation needs; interconnection services, comprising physical cross connect/direct interconnections, Equinix Internet Exchange, Equinix Cloud Exchange, Equinix Metro Connect and Internet connectivity services; and managed IT infrastructure services, including installation of customer equipment and cabling, as well as equipment rebooting and power cycling, card swapping and emergency equipment replacement services.
Equinix investors are paid a 2.33% distribution. The Merrill Lynch target price for the share is $490, while the Wall Street consensus price objective is $483.83. The shares ended Wednesday’s trading at $390.10 apiece.
This company, like other major defense contractors, has had a very solid few years, and the future looks solid. General Dynamics Corp. (NYSE: GD) is engaged in business aviation, land and expeditionary combat vehicles and systems, armaments, munitions, shipbuilding and marine systems, and information systems and technologies.
Major products include Virginia-class nuclear-powered submarine and Ohio class replacement, Arleigh Burke-class Aegis, Abrams M1A2 tank, Stryker eight-wheeled assault vehicle, medium-caliber munitions and gun systems, tactical and strategic mission systems.
General Dynamics investors are paid a 2.14% dividend. Merrill Lynch has a $220 price target, while the consensus estimate is $201.63. The stock closed at $172.76 on Wednesday.
This consumer sector giant makes good sense for conservative accounts. Mondelez International Inc. (NASDAQ: MDLZ) manufactures and markets snack food and beverage products worldwide. It offers biscuits, including cookies, crackers and salted snacks; chocolates, and gums and candies; powdered beverages and coffee; and cheese and grocery products.
Its primary brand portfolio includes LU, Nabisco and Oreo biscuits; Cadbury, Cadbury Dairy Milk and Milka chocolates; Trident gum; Jacobs Kaffee; and Tang powdered beverages.
Mondelez sells its products to supermarket chains, wholesalers, supercenters, club stores, mass merchandisers, distributors, convenience stores, gasoline stations, drug stores, value stores and other retail food outlets through direct store delivery, company-owned and satellite warehouses, distribution centers and other facilities, as well as through independent sales offices and agents.
Shareholders receive a 2.26% dividend. The $56 Merrill Lynch price target is well above the $48.67 consensus target. The stock closed most recently $46.20 per share.
This stock remains a solid and safe retail total return play now. Target Corp. (NYSE: TGT) is one of the largest discount retailers in the United States, operating roughly 1,800 Target stores across the country. The company sells merchandise in its Signature Categories Style, Baby, Kids and Wellness, as well as other products in both physical Target stores and online at Target.com.
Since 2017, Target has poured tons of money into its e-commerce offerings, overhauling its stores and refreshing its inventory to better compete against Amazon. Target has even embraced the same-day delivery concept and is expanding retail floor space for toys as it looks to scoop market share after the closing of Toys “R” Us.
Most importantly, the company seems to have put some good distance between the headline issues that were public relations nightmares, and it continues to be a favorite destination of consumers.
Target shareholders receive a 3.03% dividend. Merrill Lynch has set a $100 price objective. The consensus target is much lower at $82.12, and shares were last seen trading at $72.51.
A new addition to the US1 list, and four additional stocks that offer a fair degree of safety, and solid dependable dividends. With the market volatility spiking more often now, it makes sense to play things smart, and these are good stocks to be in.
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