Investing

Investors Are Sitting on Mountains of Cash: 5 Blue Chip Buys With Big Upside

Citigroup

This top bank is trading at the lowest levels since 2012, and it is the top Merrill pick in the sector. Citigroup Inc. (NYSE: C) has approximately 200 million customer accounts and does business in more than 160 countries and jurisdictions. It provides consumers, corporations, governments and institutions with a broad range of financial products and services, including consumer banking and credit, corporate and investment banking, securities brokerage, transaction services and wealth management.

Trading at a still very cheap 6.2 times estimated 2020 earnings, this one looks very reasonable in what remains a pricey stock market.

Investors receive a sizable 4.5% dividend. The $60 Merrill price target compares with a $61.64 consensus price objective. Citigroup stock closed most recently at $45.42, after climbing over 12% on Friday.

Intel

This legacy leader in semiconductors has continued working hard to focus more on Internet of Things and data center cloud spending, and it was one of the top picks at Merrill Lynch for 2020. Intel Corp. (NASDAQ: INTC) designs, manufactures and sells integrated digital technology platforms worldwide.

The company’s platforms are used in various computing applications, comprising notebooks, two-in-one systems, desktops, servers, tablets, smartphones, wireless and wired connectivity products, wearables, retail devices and manufacturing devices, as well as for retail, transportation, industrial, buildings, home use and other market segments.

The analysts said this in front of the earnings for the first quarter, which will be reported this week:

We see inline first quarter, with our second quarter fiscal year 2020 estimated sales 3-4% below Street estimates. Focus on 10 nanometer manufacturing progress & on original $5 fiscal year 2020 earnings guidance (we/street now lower at $4.57/$4.82) We like Intel’s underappreciated scale/incumbency in secular AI/5G/cloud markets; the dividend yield also attractive/defensible.

Investors receive a 2.19% dividend. The Merrill analysts have set a $68 price target. The posted consensus price objective is lower at $63.10, and the last Intel stock trade on Friday came in at $60.36 a share.

Target

This remains a solid and safe retail total return play, and it is another member of the Merrill Lynch US 1 stock list. 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.

While the store, like other big-box retailers, was mobbed early on by worried shoppers, the advantage for Target is that the retailer has ample opportunities for revenue synergies. While sales during the initial panic reflected that consumers avoided discretionary items for essential ones, shoppers have now grown accustomed to the new normal, and are well aware that Target is more than just a toilet paper outlet.

In addition, since 2017, Target has poured tons of money into its e-commerce offerings, overhauling its stores and refreshing its inventory to compete better against Amazon. The recent pullback offers investors a solid entry point.

Shareholders receive a 2.33% dividend. The Merrill price objective is at a sizable $150. The much lower consensus target is $124.39, and Target stock ended last week at $113.27 per share, up a solid 4% on Friday.

Two of these five top companies are on the Merrill Lynch US 1 list of top picks. All five stocks are reasonably conservative, pay good and reliable dividends, and also have good upside to the analysts’ price targets. These stocks also will hold up better in the very volatile and often-changing marketplace.