With second-quarter earnings reporting all but done, Wall Street pros and investors are looking hard for companies that are poised to do well for the rest of 2017. With the stock market trading at all-time highs, and at very expensive levels, it’s critical to own stocks that can beat estimates or that have substantial tailwinds to drive growth and earnings.
A new RBC research report notes that while demand in technology remained strong in certain areas like personal computers, memory, iPhones and industrial, there was some weakness in automotive, China smartphones, enterprise servers and networking. The analysts at the firm are focused on six companies they feel can beat current expectation and have momentum. All are rated Outperform, and two are top picks.
This technology giant posted big second-quarter results and has raced to all-time highs. Apple Inc. (NASDAQ: AAPL) revolutionized personal technology with the introduction of the Macintosh in 1984, and it is among the leaders in the world in innovation with the iPhone, iPad, Mac, Apple Watch and Apple TV.
Apple’s four software platforms — iOS, OS X, watchOS and tvOS — provide seamless experiences across all Apple devices and empower people with breakthrough services, including the App Store, Apple Music, Apple Pay and iCloud.
RBC thinks the iPhone 8 opportunities are solid, as the firm, like others, feels the product will have significant upgrades. Toss in the easier comparisons and the strong average selling prices, and the new phone is a distinct positive. While the firm does note higher commodity prices are a potential headwind from NAND and DRAM pricing, it sees service growth and acceleration as another distinct positive.
Apple investors receive a 1.75% dividend. The RBC price target for the stock is $168, and the consensus target is $158.95. Shares closed trading on Friday at $156.39.
This is the top pick in the sector and has remained a favorite at RBC for some time. Amphenol Corp. (NYSE: APH) is one of the world’s largest designers, manufacturers and marketers of electrical, electronic and fiber optic connectors, interconnect systems, antennas, sensors and sensor-based products and coaxial and high-speed specialty cable.
Amphenol designs, manufactures and assembles its products at facilities in the Americas, Europe, Asia, Australia and Africa and sells its products through its own global sales force, independent representatives and a global network of electronics distributors. The company has a diversified presence as a leader in high-growth areas of the interconnect market, including: automotive, broadband communications, commercial aerospace, industrial, information technology and data communications, military, mobile devices and mobile networks.
RBC noted this in the report:
Amphenol has 4% exposure to Cisco, which is expected to report on August 16th, mainly in routers. The company posted solid numbers on the quarter and should be fine.
Shareholders receive a 0.98% dividend. RBC has an $81 price target, while the consensus target is $79.73. Shares closed Friday at $77.66.
This stock is a top pick at RBC and across Wall Street, and it derives 20% of its business from Apple. Broadcom Ltd. (NASDAQ: AVGO) has an extensive semiconductor product portfolio that addresses applications within the wired infrastructure, wireless communications, enterprise storage and industrial end markets.
Applications for Broadcom’s products in its end markets include data center networking, home connectivity, broadband access, telecommunications equipment, smartphones and base stations, data center servers and storage, factory automation, power generation and alternative energy systems and displays.
Top Wall Street analysts like the leadership in the mobile, data center and broadband markets, and especially in the radio frequency (RF) arena. Many on Wall Street see a cyclical rebound in industrial and communications demand.
The analysts note that the stock is underowned compared to peers, and the 40% iPhone content growth, combined with the closure of the Brocade purchase, which they feel is accretive, are very positive catalysts. They also feel dividend growth is possible.
Broadcom investors receive a 1.65% dividend. The $270 RBC price target is lower than the $273.81 consensus target. Shares closed Friday at $249.17.