Merrill Lynch Has 8 Top US Stock Ideas for Q3

HD Supply Holdings

This off-the-radar pick could hold some serious upside potential. HD Supply Holdings Inc. (NYSE: HDS) is one of the leading industrial distributors in North America, operating in two key sectors: Facilities Maintenance and Construction & Industrial.

The company supplies over a million SKUs to roughly 500,000 diverse customers, which include multifamily building and hotel operators, contractors, maintenance professionals, home builders and industrial businesses. It operates out of 635 locations in 46 states and nine Canadian provinces.

Merrill has a $51 price objective. The consensus figure is $47.57, and shares ended Thursday at $40.09.


This is another lesser known stock that has solid growth potential. Masco Corp. (NYSE: MAS) is a leading building products company, manufacturing and selling paints, faucets, shower heads and other plumbing, cabinets, windows and other hardware products. Approximately 85% of 2018 sales were attributable to residential repair and remodel activity, with the remaining 15% from new residential construction.

The company’s portfolio of industry-leading brands includes Behr paint; Delta and Hansgrohe faucets, bath and shower fixtures; KraftMaid and Merillat cabinets; Milgard windows and doors; Kichler decorative and outdoor lighting; and HotSpring spas.

Masco investors receive a 1.25% dividend. The Merrill price target of $56 is well above the $46.87 consensus target. The stock closed at $38.12.

Northrop Grumman

This top defense company was ranked as one of the top five defense contractors by sales last year. Northrop Grumman Corp. (NYSE: NOC) provides innovative systems, products and solutions in unmanned systems, cyber, C4ISR and logistics and modernization to government and commercial customers worldwide.

The Aerospace Systems segment designs, develops, integrates and produces manned aircraft, unmanned systems, spacecraft, high-energy laser systems, microelectronics and other systems and subsystems.

The Information Systems segment offers advanced solutions for Department of Defense, national intelligence and federal civilian, state, international and commercial customers. It provides products and services primarily in the fields of command and control, communications, cyber, air and missile defense, intelligence processing, civil security, health information technology, and government support systems.

The Technical Services segment provides logistics, modernization and sustainment services, as well as other advanced technology and engineering services, including space, missile defense, nuclear security, training and simulation services.

Shareholders receive a 1.63% dividend. The Merrill price objective is $355, but the consensus target price is $372.06. Shares closed most recently at $324.93.


This mining stock could be a solid way to play improving growth worldwide. Vale S.A. (NYSE: VALE) is the largest producer of iron ore and pellets and the largest nickel producer. Vale also produces copper, coal, manganese and ferroalloys and holds equity stakes in some steel producers/projects.

A special Senate committee in Brazil recently issued several nonbinding suggested responses to Vale’s tailings dam tragedy. The Merrill team thinks the shares overreacted but did note risk of indicting a well-liked chief financial officer and an unlikely sharp tax hike. With iron ore setting new highs, the analysts stay very positive long term.

Shareholders see a 3.82% dividend. The Merrill price objective stands at $16, which compares to a $14.95 consensus estimate and the most recent close at $13.84.

The two stocks Merrill rates as Underperform are Illinois Tool Works Inc. (NYSE: ITW) and RH (NYSE: RH). More aggressive accounts may want to consider these ideas as possible short sale candidates for the third quarter.

Eight great stock ideas for the third quarter of 2019, along with two potential short sale ideas. All the long picks make good sense for growth portfolios looking to perhaps take some profit and move to new positions.

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