Microsoft

This top old-school technology stock has posted all-time highs this year and has a massive $132.7 billion sitting on the balance sheet. Microsoft Inc. (NASDAQ: MSFT) continues to find an increasing amount of support from portfolio managers, who have added the software giant to their holdings at an increasingly faster pace all of this year and last.

Many Wall Street analysts feel that Microsoft has become a clear number two in the public or hyper-scale cloud infrastructure market with Azure, which is its cloud computing platform offering. Some have flagged Azure as a solid rival to Amazon’s AWS service, while others maintain that Microsoft is discounting Azure for large enterprises, such that Azure may be cheaper than AWS for larger users. The cloud was big in the recent earnings report which was outstanding.

Microsoft also is expected to be a winner in the government JEDI cloud project, as the company and its dedicated Azure Government segment appear to be the main challenger to AWS, with industry checks barely mentioning IBM and Google, and countering that Oracle has little traction as a provider of modern cloud infrastructure services to the U.S. federal government.

Shareholders receive a 1.53% dividend. The $130 Merrill Lynch price target compares with the $112.47 consensus price objective and the most recent close at $109.62.

Qualcomm

This company was added to the Merrill Lynch US 1 list in the spring. Qualcomm Inc. (NASDAQ: QCOM) designs, develops and supplies semiconductors and collects royalties on wireless handheld devices and infrastructure based on its dominant position in CDMA and other related technology patents.

In addition, Qualcomm provides systems software and components to wireless handset vendors and promotes applications and services that run on high-speed wireless networks. The company operates primarily through two segments: CDMA Technologies and Technology Licensing.

The company ended up finishing the fiscal second quarter with a positive earnings surprise. The company generated $5.23 billion in revenue, which also topped Wall Street expectations.

The company has had a plethora of headline issues, not the least of which was a proposed buyout by Broadcom that the government put the kibosh on. That is in addition to a failed attempt to acquire NXP Semiconductors. Qualcomm has announced its intention to terminate the NXP deal and pursue $30 billion in share repurchases.

Shareholders receive a 3.9% dividend. Merrill Lynch has a price target of $75. The consensus target is $61.95, and shares closed Thursday at $63.58.

Western Digital

This is a leader in the total addressable hard disk drive (HDD) market. Western Digital Corp. (NASDAQ: WDC) designs, manufactures and markets hard disk drives for use in enterprise storage, servers, desktop and laptop computers and consumer electronic devices. It also has a growing solid state drive and storage systems portfolio and is currently the third largest enterprise solid state drive manufacturer.

The company is responding to changing market needs by providing a full portfolio of compelling, high-quality storage products with effective technology deployment, high efficiency, flexibility and speed. Its products are marketed under the HGST and WD brands to original equipment manufacturers, distributors, resellers, cloud infrastructure providers and consumers.

The analysts feel the company’s business mix switch to NAND flash could provide earnings momentum and growth as compared to the rather flat revenue streams from the HDD product line. In addition, personal computers account for 50% of hard disk drive sales, and the improved performance at Dell and overall PC sales bodes well for the company in 2018 and beyond.

Shareholders receive a 2.01% dividend. Merrill Lynch analysts have a huge $120 price target. The consensus target is $115.73, and shares closed on Thursday at $77.09.

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Five companies that have big upside to the Merrill Lynch price targets, and also offer investors perhaps a more comfortable entry point. There is a good chance the market could continue to trade sideways for the balance of 2018, and these could be good vehicles for that sideways move.