Investing

5 Raymond James Analyst Favorite Picks With Huge Implied Upside

Lee Jackson

Published: October 11, 2019 7:10 am

Last Updated: January 30, 2020 2:46 pm

For the first time in many years, active managers are outperforming index funds year to date, and that should be a loud wake-up call to passive investors. After a more than 10-year-old bull market, the bull is tired. Although central banks are still providing a liquidity security blanket, and interest rates remain at generational lows, this looks to many on Wall Street like the proverbial “stock pickers” market.

With that being the case, and with many portfolio managers and investors looking for stocks that can outperform into year’s end and generate a little finish line alpha, the analysts at Raymond James were all asked to submit their favorite stock pick. The analysts may only have one “buy” idea from their stocks under coverage rated Strong Buy or Outperform on the list at any given time.

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We then screened the list for companies with big upside to the Raymond James price targets and found five that look like solid picks for the fourth quarter and into 2020. All these favorite picks are rated Strong Buy.

Alibaba

This continues to be among the most bought tech stocks on Wall Street. Alibaba Group Holding Ltd. (NYSE: BABA) runs the largest retail marketplaces (Taobao, TMall) and leading B2B sites (Alibaba.com, 1688.com) in China and Lazada in Southeast Asia. It collects revenues mainly from commissions, marketing services, subscription fees, cloud computing and software, as well as other value-added services.

Alibaba has gone beyond e-commerce and developed into a sophisticated new type of conglomerate in the cyber-era with e-commerce as the base for the rest of the four businesses: logistics, finance, data-computing and cross-border infrastructure. Top analysts expect a whopping 24% compounded annual growth rate between now and 2020 for e-commerce in China.

The Raymond James price target for the stock is a stunning $280, while the posted consensus target price is $224.34. The stock closed Thursday’s trading at $166.07 a share.

Becton Dickinson

This top health care stock is a solid and safer play now. Becton Dickinson and Co. (NYSE: BDX) is a diversified global medical technology company that produces medical devices, instrument systems and reagents for the health care, life sciences research, clinical, diagnostic and pharmaceutical markets.

The company has grown into a large medical conglomerate with over 49,000 employees covering nearly 50 countries worldwide. The CareFusion acquisition in 2015 significantly expanded the company’s medical technology footprint in infusion and medication management.

Becton Dickinson shareholders receive a 1.25% dividend. Raymond James has a price target of $288, and the consensus figure was last seen at $267.38 a share. The stock closed trading at $248.54 on Thursday.

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This stock is trading at a very reasonable 9.55 times estimated 2019 earnings. Gilead Sciences Inc. (NASDAQ: GILD) is a biopharmaceutical company that discovers, develops and commercializes therapies for the treatment of HIV/AIDS, liver disease, cancer and inflammation. The acquisition of Kite Pharmaceutical in 2017 allowed for entry into the CAR-T space, indicating a renewed focus in oncology.

The company’s products include Stribild, Complera/Eviplera, Atripla, Truvada, Viread, Emtriva, Tybost and Vitekta for the treatment of human immunodeficiency virus (HIV) infection in adults; and Harvoni, Sovaldi, Viread and Hepsera products for the treatment of liver disease.

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Investors in Gilead Sciences receive a very solid 3.98% dividend. The $85 Raymond James price objective compares with the $80.45 consensus price target, as well as the most recent closing price of $63.26 per share.

Occidental Petroleum

This company made huge news with a Warren Buffett backed purchase of Anadarko Petroleum. Occidental Petroleum Corp. (NYSE: OXY) is an oil-levered multinational organization with principal business segments in oil and gas and in chemicals.

The oil and gas segment explores for, develops, produces and markets crude oil and natural gas, primarily in the U.S. Permian Basin, Colombia, Bolivia, Libya, Oman, Qatar and Yemen. Meanwhile, the chemicals segment manufactures and markets basic chemicals, vinyls and performance chemicals.

The shares have underperformed since the Anadarko acquisition was announced, but the investment case anchored by yield has not changed. With a rock-solid balance sheet and a commitment to dividend coverage, investors look safe for now. Occidental has paid quarterly cash dividends continuously since 1975 and has increased its dividend each year since 2002.

Occidental Petroleum provides shareholders a sizable 7.70% dividend. The Raymond James analysts have set a massive $80 price target. The Wall Street consensus target is much lower $54.85, and the stock closed most recently at $41.03 a share.

ServiceNow

This stock has had an incredible run, but it was hit hard in the summer and is offering a great entry point. ServiceNow Inc. (NYSE: NOW) develops and sells a hosted, subscription-based suite of services designed to automate various IT department functions, such as help desk, operations management and change/release management.

The company also sells a number of applications that automate various self-service related applications outside of the IT department, such as HR onboarding, facilities requests and governance, risk and compliance.

The Raymond James price target was last seen at $342. The posted consensus target is $317.75, and the shares closed on Thursday at $263.18 apiece.

These five Raymond James analyst favorite stock picks have substantial upside potential to the price targets. While all are more suited for growth accounts with higher risk tolerance, they all make solid portfolio additions at current price levels.