With the fourth quarter underway, many of the top firms we cover on Wall Street have had another solid year for clients. While much of the gains for the past couple of years are attributable to some of the high-dollar technology stocks, there remains a wide variety of tech and tech-related companies that still are offering investors solid value for their investment dollar.
A new Deutsche Bank research report starts to look ahead with recommendations that should be solid picks for the new year. The report noted:
As we near year-end and start to think about how we want to be positioned into 2018, a few new themes have emerged for our coverage. First is the resurgence in on-premise spending, as highlighted by multiple legacy vendors in the second quarter of 2017. Second, is the impact of industrial and macro trends on our coverage, given fewer tailwinds are expected in 2018. Finally, we remain focused on where we are in the semiconductor cycle, which appears to be nearing a peak.
The analysts have four top calls for 2018, and all make good sense for long-term growth accounts that have a degree of risk tolerance. Of course, all are rated Buy at Deutsche Bank.
This top pick has remained a favorite long-term pick at Deutsche Bank 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.
The Deutsche Bank report noted this:
Under the scenario forecast by Deutsche Bank’s economists, we favor companies with a more diversified end-market strategy and exposure to secular growth trends like the Industrial Internet of Thing (IIoT). Amphenol remains a top long-term pick, driven by management’s consistent execution, above-market growth, and its strong capital return strategy.
Amphenol shareholders receive a 0.88% dividend. Deutsche Bank has a $95 price target on the stock, and the Wall Street consensus target is $84.00. Shares closed Thursday at $86.30.
CDW came back from private equity land over four years ago and has done outstanding since. CDW Corp. (NASDAQ: CDW) provides information technology (IT) products and services to business, government, education and health care customers in the United States and Canada. It offers discrete hardware and software products to integrated IT solutions, such as mobility, security, data center optimization, cloud computing, virtualization and collaboration.
This stock has been highlighted in the past as having virtually no exposure to China and as a very attractive and somewhat defensive small/midcap play for investors. Analysts also think that the company has benefited from the integration of U.K. IT services and solutions provider Kelway, although CDW has implied numbers for the quarter from Kelway will be down.
Analysts have cited in the past the unique culture and the compensation structure, and the Dell Partnership as among the top reasons to own the stock. They also have pointed out the company has negotiated weak PC sales periods in the past. They also think the tailwind from share repurchases may not be factored in.
CDW investors receive a 0.92% dividend. Deutsche Bank has a $71 price target. The consensus target is $69.50, and shares closed Thursday at $69.29.