RBC Capital Markets Out With First Top Picks Equity List for 2020

Investing

Published: January 7, 2020 7:20 am

Last Updated: March 23, 2022 7:12 am

Investors who owned stocks in 2019 had a very satisfying year, and most are sorry to see it in the rear-view mirror as we launch into a new decade. One thing is quite likely: the double-digit gains from last year probably will not return for 2020. However, with that in mind, we still should be set up for a more standard investing year, with total return figures in the mid-to-high single digits.

Many of the Wall Street firms that we follow here at 24/7 Wall St. are still presenting their 2020 prognostications and top stock picks for this year. The RBC Capital Markets group is out with the firm’s first Top Picks List for 2020, and the analysts noted this in the report when discussing the methodology for the group:

RBC Capital Markets’ Equity Research Department is pleased to present the US Equity Top Picks List update for January 2020. The Top Picks List consists of the Top Pick-rated US equities as chosen by individual analysts in the RBC Capital Markets Global Equity Research Department. A Top Pick-rated stock represents an analyst’s best idea in the sector and is expected to provide a significant absolute total return over 12 months with a favorable risk-reward ratio.

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Here we focused on the three new additions to the Top Picks List, as well as two other companies with massive upside to the RBC price targets.

Salesforce

This top company reported solid fiscal 2019 results as billings have drastically improved, and this past quarter was no exception. Salesforce.com Inc. (NYSE: CRM) provides enterprise cloud computing solutions, with a focus on customer relationship management to various businesses and industries worldwide. It also has one of the most valuable brands in the world.

It offers enterprise cloud computing applications and platform services, including Sales Cloud that enables companies to store data, monitor leads and progress, forecast opportunities, gain insights through relationship intelligence and collaborate around sales on desktop and mobile devices.

The company also provides Service Cloud, which enables companies to deliver personalized customer service and support, as well as connect their service agents with customers on various devices, and Marketing Cloud, which enables companies to plan, personalize and optimize customer interactions.

In addition, Salesforce announced last year it has completed its acquisition of Tableau Software, bringing together the world’s number one customer relationship management company with the world’s number one analytics platform.

The RBC price target for the shares is $215, while the Wall Street consensus target is lower at $191.05. The stock was last seen trading on Monday at $173.45, up close to 5% on the day.

STAG Industrial

This strong industrial real estate investment trust play offers solid upside potential and is the second new member of the RBC list. STAG Industrial Inc. (NYSE: STAG) is a self-managed full-service REIT focused on the acquisition, ownership and management of single-tenant, Class B warehouses in secondary markets across the United States. The company continues to focus on expansion of its acquisition platform to find acquisitions to grow the portfolio.

The company is focused primarily on acquiring and operating single-tenant industrial properties in secondary markets. RBC expects management to be aggressive acquirers over time. Additionally, the in-place portfolio should deliver stable organic growth supported by healthy property-level fundamentals. The analysts said this in the report when looking at 2020 and beyond:

The company should be able to drive meaningful earnings growth largely due to management’s ability to source and complete accretive acquisitions. We expect STAG Industrial to complete $1 billion of deals annually in 2020 and 2021.

Investors receive a 4.58% distribution. RBC has a $34 price objective, near the consensus target of $34.25. The shares closed at $31.60 on Monday.