Investing

BofA Securities Makes Huge End-of-Summer Changes to US 1 List

Ameren

While lesser known than some other members of the US 1 list, this may be a perfect defensive stock to rotate to. Ameren Corp. (NYSE: AEE) operates as a public utility holding company in the United States engaged in the rate-regulated electric generation, transmission and distribution activities, as well as rate-regulated natural gas distribution and transmission businesses.

The company primarily generates electricity through coal, nuclear and natural gas, as well as renewable sources, such as hydroelectric, methane gas and solar. Ameren serves residential, commercial and industrial customers. It also serves approximately 1.2 million electric customers and approximately 130,000 natural gas customers in central and eastern Missouri.

The analyst said this about the very solid second-quarter results:

Ameren posted second quarter adjusted EPS of $0.98, compared to $0.72 in the second quarter of 2019, our estimate of $0.86, and Street consensus of $0.88. We stress the magnitude of the beat is notable and affirms our underlying confidence on shares. Reiterate Buy heading into key updates this Fall with latest integrated resource plan iteration. The company expects a gradual economic recovery in the third and fourth quarter to drive a rebound in retail sales to a year over year decline of 2.5%, for an anticipated earnings impact of – 5 cents in the second half of the year. Expectations of continued strong execution following constructive Missouri rate case order and looking ahead to the company’s Integrated Resource Plan filing in September which we expect will include detail on future coal retirement plans.

Shareholders receive a 2.44% dividend. The surprising $79 BofA Securities price target is less than the $81.80 consensus target. Ameren stock closed most recently at $81.16.

BlackRock

Many on Wall Street love this firm’s growth potential, especially for the long term, and it is a top financial in the US 1 list. BlackRock Inc. (NYSE: BLK) is the largest asset manager in the world, with more than $5 trillion in assets under management. Its acquisitions of Merrill Lynch Investment Management and iShares transformed it from a fixed income manager into a multiproduct and multichannel giant, with roughly 40% of its assets under management overseas. It has leading franchises in exchange-traded funds (ETFs), institutional fixed income, alternatives and cash. It also operates Solutions, a leader in risk analytics.

The company’s strong historical and prospective dividend growth is underpinned by the high-quality and diversified business model. Dividends have increased 18% annually over the past 10 years. Dividend growth likely will moderate but remains solid in the low teens, consistent with expectations for earnings growth in the years ahead.

Shareholders receive a 2.48% dividend. BofA Securities has set a stunning $675 price objective. The consensus target is lower at $643.27, and BlackRock stock closed at $586.64.

Equinix

This is one of the largest companies in its industry. Equinix Inc. (NASDAQ: EQIX) provides data center services to protect and connect the information assets for the enterprises, financial services companies, and content and network providers primarily in the Americas, Europe, the Middle East, Africa and the Asia-Pacific.

The company provides colocation services and related offerings, including operations space, storage space, cabinets and power for customers colocation needs; interconnection services, comprising physical cross connect/direct interconnections, Equinix Internet Exchange, Equinix Cloud Exchange, Equinix Metro Connect and Internet connectivity services; and managed IT infrastructure services, including installation of customer equipment and cabling, as well as equipment rebooting and power cycling, card swapping and emergency equipment replacement services.

Investors are paid a 1.40% distribution. The BofA Securities target price is a towering $865 while the consensus price objective on Wall Street is posted at $812.74. The shares closed Tuesday at $758.17.


The two companies removed from the US 1 list were, surprisingly, Raytheon Technologies Corp. (NYSE: RTX) and, not so surprising, L. Brands Inc. (NYSE: LB). Despite the removal, both remain rated Buy at BofA Securities.

These are five top stocks from the BofA Securities US 1 list that investors may want to consider rotating to from the overbought and very pricey tech sector and overall momentum growth arena. It is pretty clear that a defensive rotation has started, and with the market getting close to the seasonal weaker portion of the year, now may be a great time to take some profits and reset.

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