Investing

Top Strategists Say Sell Expensive Tech Giants and Buy Cheap Cyclicals Now

Martin Marietta Materials

This company remains a favorite across Wall Street, especially if a large infrastructure package emerges. Martin Marietta Materials Inc. (NYSE: MLM) is one of the largest U.S. suppliers of aggregates, with operations across 27 states, Canada and the Bahamas. Its largest concentration is in Texas, comprising approximately a third of its exposure.

The company remains upbeat on 2020 construction demand and noted that many states with its greatest exposure were well positioned for housing and public nonresidential construction growth.

Investors receive a 0.98% dividend. Jefferies has set its price objective at $267, well above the $239.29 consensus figure. Martin Marietta Materials stock ended Monday’s trading at $228.00.

Teledyne Technologies

This is a perfect swap for more aggressive investors that want to have multiple sector exposure. Teledyne Technologies Inc. (NYSE: TDY) engages in the provision of electronic and communication products for wireless and satellite systems. It operates through the following business segments.

The Instrumentation segment includes monitoring and control instruments for marine, environmental and industrial applications. The Digital Imaging segment offers sensors, cameras and infrared systems.

The Aerospace & Defense Electronics segment provides electronic components, data acquisition, subsystems and communications equipment. The Engineered Systems segment develops and produces electrochemical energy systems and small turbine engines.

The $360 Jefferies price target compares to the $373.75 consensus target. Teledyne Technologies stock closed at $307.29 a share on Monday.

Western Alliance Bancorp

This off-the-radar bank is based in Phoenix and looks poised for a strong second half of 2020. Western Alliance Bancorp (NYSE: WAL) is a bank holding company engaged in the provision of deposit, lending, treasury management, international banking and online banking products and services for businesses.

The company operates through the following business segments: Homeowners Association (HOA) Services, Hotel Franchise Finance (HFF), Public & Nonprofit Finance, Technology and Innovation, Other NBL (National Business Lines) and Corporate and Other.

The company reported second-quarter earnings that were lower than a year ago but better than analysts expected. Net operating revenue for the second quarter of $309.5 million was higher year over year and also exceeded consensus expectations.

Shareholders receive a 2.74% dividend. The Jefferies price objective of $42 is just above the $41 consensus estimate. Western Alliance Bancorp stock retreated over 4% on Monday to close at $36.52.

Xilinx

This is a good swap for technology investors looking to stay in the sector but take profits on the high flyers. Xilinx Inc. (NASDAQ: XLNX) is a leading fabless supplier of high-density programmable logic devices, which are standard integrated circuits that offer significant advantages over custom logic chips, such as application-specific integrated circuits. They are used extensively in key end markets such as communications.

In the prior quarter, Xilinx reported a profit of $528.43 million. The company also saw revenues increase to $756.17 million. In addition, Xilinx has free cash flow of $1.06 billion as of March 2020. The company’s earnings before interest, taxes, depreciation, and amortization compares well with its peers. Xilinx is scheduled to report again later this week.

Holders of Xilinx stock receive a 1.42% dividend. Jefferies has a $120 price target. The $100.65 consensus target is less than Monday’s $106.81 closing price, which came after a 4% gain for the day.

These six top stocks make sense for investors looking to rotate from high-flying tech momentum leaders to cyclical players that have some overseas exposure. The market is overbought as a whole, so it may make sense to buy partial positions here and see if we don’t pull back some.

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