With 2019 as an incredible year for stocks to act as a capstone on the decade, investors better stop looking backward and start looking into 2020 and beyond. The bull market is now well over 10 years old. Some investors are cautious about 2020, but others are very optimistic, with many catalysts coming from earnings, easing of trade tensions, shockingly low unemployment, stable inflation, a global business recovery, accommodative central banking rates and overall business conditions being more positive than negative.

24/7 Wall St. has tracked many analyst and strategist forecasts heading into 2020. Most strategists remain positive, and analysts have many picks for upside. The typical Buy and Outperform ratings are coming with an implied total return projection of 8% to 10% at this stage of the bull market. That’s after adding in the effect of dividends.

Merrill Lynch has released a list of 11 top stock picks for 2020 heading into the new year. These are not necessarily the stocks with the most implied upside to each stock’s price target. Instead, these picks are from the major industry/category and fit within the 2020 themes for value, yields at a reasonable price, institutional ownership, growth expectations, foreign exposure, macro-sensitivities, position against peers, and so on. The firm also included scoring on the environmental, social and governance (ESG) theme, although some of the companies are not exactly loaded up in the major ESG funds and exchange-traded funds.

Only three of the 11 picks have remained from the 2019 list of top picks issued a year ago. The return has averaged about 20% on equal weighting since that time. That has underperformed in the strong market surge of 2019, and the 11 picks are said to differ from the S&P 500 index as they are more exposed to stock-specific risk and are subject to higher volatility than its benchmark.

We have added in color on each call, included the dividend yield and offered the Merrill Lynch 12-month price objective compared with the Refinitiv consensus analyst target price.

Walt Disney Co. (NYSE: DIS) now is listed under communications services and ranked high in the ESG theme, and it was still underweighted by large-cap active fund managers. The firm also liked its robust start to the Disney+ offering. Shares trade near $144, and Merrill Lynch’s price objective of $169 compares with a $156.28 consensus target. Disney comes with a 1.2% current dividend yield.

CarMax Inc. (NYSE: KMX) is a high-quality value stock with both cyclical and secular drivers. It ranks well on some quant models/factors. Merrill Lynch noted that it is underowned by active funds. The firm’s price objective of $150 is significantly above the current price of $88 and is the most aggressive among all analysts. The consensus target price is just $107.17, and CarMax currently does not pay a dividend.

Tyson Foods Inc. (NYSE: TSN) has a healthy and growing dividend yield with a low payout. It is likely to benefit from China’s recent lifting of U.S. poultry export ban amid the need to import other proteins due to African swine fever. Tyson Foods has a 1.8% yield for income investors, and the Merrill Lynch price objective is now $105. The current price is $90.75, and the consensus target price is $98.92.

Exxon Mobil Corp. (NYSE: XOM) is a diversified oil company with a high ESG score, although most ESG investors will wonder why the largest U.S. oil and gas stock can even count in the theme. The downstream business (35% of net income) is likely to benefit from the new IMO 2020 regulation. The stock is also underweighted by large-cap active funds. Exxon is one of Merrill Lynch’s top and most aggressive calls in the oil (and gas) patch, despite it being the largest supermajor in the United States. The firm’s price objective of $100 is way above the $78.47 consensus target price, and the current price of $69.50 offers new investors a yield of about 5% at this time.

Citigroup Inc. (NYSE: C) offers solid value as it continues to trade below its book value. The bank offers a growing dividend at a reasonable price with a still-low payout ratio. Citigroup is still the cheapest of the money center banks against book value per share, and the $79.50 current share price comes with a dividend yield of about 2.5%. Merrill Lynch’s price objective of $85 is actually under the consensus target price of $86.06.

Dentsply Sirona Inc. (NASDAQ: XRAY) is more insulated from political/election backdrop in 2020, when compared with pharmaceutical and managed care companies. This stock is still underweight at large-cap active funds, and it could benefit from a rotation from large caps to small caps. Shares currently trade at $56.35, and the Merrill Lynch price objective of $65 is above the consensus target price of $62.27. The dividend yield is only 0.7%.

Raytheon Co. (NYSE: RTN) offers inexpensive valuations, high quality and above-market free cash flow yield. The company could also see defense benefits from geopolitical risk and the “great power competition” with China. Raytheon is still pending its merger, but while it trades at $220.50, Merrill Lynch has a price objective of $265. That is handily above the consensus target price of $228.07. It also has a 1.7% yield.

Intel Corp. (NASDAQ: INTC) has a healthy free cash flow, dividend yield and a high-ranked ESG score. Intel is also underweight by large-cap active funds. It was trading at $59.50, and the Merrill Lynch 12-month price objective of $70 is handily above the consensus target price of $56.72. The processor giant still has a yield of 2.1%.

WestRock Co. (NYSE: WRK) is a corrugated packaging company and a more domestically oriented materials stock. The company has a high free cash flow yield, high dividend yield and solid dividend growth. WestRock trades at $42.75 and currently comes with better than a 4% dividend yield. Merrill Lynch’s 12-month price objective of $48 is above the $46.14 consensus target price, but it is still nowhere close to being a street-high target.

Kimco Realty Corp. (NYSE: KIM) is a grocery-anchored real estate investment trust that could benefit from the BOPIS (buy online, pickup in store) trend. The stock could benefit from a rotation from large caps to small caps. Kimco has close to a 5.4% yield. At $20.57 a share, it has a consensus target price of $20.68. That is well under the $24 price objective of Merrill Lynch (which is tied for the street-high here).

American Electric Power Co. Inc. (NYSE: AEP) is a defensive hedge against a slowdown. It has stable earnings and limited commodity exposure. The stock offers a low payout ratio and high dividend yield. It ranks well on Merrill Lynch’s quantitative investing models, among other factors. AEP recently traded at $94, with right at a 3% dividend yield. Merrill Lynch’s price objective of $106 is handily higher than the $97.67 consensus target price, and the firm has the highest target of the major brokerage firms covering the utility.

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