With 2017 just about over and 2018 right around the corner, many of the top companies we follow here at 24/7 Wall St. are making some changes to the lists of their high-conviction stock picks for clients. With the market continuing to trade at all-time highs, it makes sense to examine the lists and make some changes, as we could have additional volatility as the political and world landscape looks to remain unsettled, and portfolio managers shuffle their holdings for next year.
In a new research report, the analysts at Merrill Lynch make a high-profile addition to the firm’s US 1 portfolio of high-conviction stock picks: Equinix Inc. (NASDAQ: EQIX). They also remove Lam Research Corp. (NASDAQ: LRCX), a tech stock that has been an absolutely lights-out performer for the past two years but has been hit hard recently.
We alsoscreened the US 1 list for other technology-related stocks that remain in the portfolio, and found three that look like solid picks for 2018.
This is one of the larger capitalization companies in the data center industry, and it is the newest addition to the Merrill Lynch US 1 portfolio. Equinix 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.
Equinix investors are paid a 1.77% distribution. The Merrill Lynch target price for the shares is $520, while the Wall Street consensus price objective is $522.13. The shares traded early Thursday at $455.75.
This is one of the top chip equipment picks across Wall Street, but it was removed after a long run from the US 1 list. Lam Research designs, manufactures, markets, refurbishes and services semiconductor processing equipment used in the fabrication of integrated circuits. The company offers plasma etch products that remove materials from the wafer to create the features and patterns of a device.
Many Wall Street analysts have highlighted the company and its peers as having a significant equipment opportunity from the NAND evolution as well. Lam Research also appears well positioned to gain share in the wafer fab equipment market, driven by a strong focus on technology inflection spending over the next few years.
Shareholders of Lam Research are paid a 1.07% dividend. Merrill Lynch has discontinued coverage of the company, hence the removal from the US 1 list. The posted consensus price objective was last seen at $226.65, and the stock traded at $181.25 Thursday morning.