With earnings reporting for the first quarter just about over, and the second quarter of 2019 well underway, many of the top companies we follow on Wall Street are making some changes to the lists of their high-conviction stock picks for clients. With the market showing some marked volatility not seen in years, it makes sense to examine these lists and make some portfolio changes because the rest of the year could have additional volatility as the political and geopolitical cycle could prove to be a very explosive component.
In a recent research note, the analysts at Merrill Lynch made a big move by adding Corning Inc. (NYSE: GLW) to the firm’s well respected US 1 list of top-rated stocks to Buy. Corning is a technology pioneer that manufactures LCD glass for flat-panel displays. Telecommunications (30% of sales) produces optical fiber and cable, component hardware and equipment, and photonic components for the telecommunications, CATV and networking industry.
In addition, the company’s Environmental Technologies division (12% of sales) produces specialized glass, glass ceramic and polymer-based products for the automotive industry. Earlier this month, the Merrill team upgraded the shares to a Buy rating and noted this:
We upgrade Corning to a Buy rating as concerns appear overblown, growth prospects are solid, operating leverage a driver in fiscal year 2020 and beyond. Stock is down 6% despite a solid Quarter as investors focus on weaker gross margin guidance for fiscal year 2019, driven by investments in new capacity.
Shareholders are paid a reasonable 2.61% dividend. Merrill has a $40 price target on the shares, which compares to the $36.72 consensus estimate across Wall Street. The stock was last seen trading on Thursday at $30.63 a share.
We also screened the Merrill Lynch US 1 list for other technology companies that make the cut and found four additional outstanding companies for aggressive growth investors to consider.
Dropbox
This had a hot initial public offering last year but has come back to earth and could be offering investors a great entry point. Dropbox Inc. (NYSE: DBX) provides a cloud-based file sharing and collaboration platform and has over 500 million registered users across 180 countries. The company generates revenue by selling cloud file storage and collaboration tools for subscription fees.
The company reported better than expected earnings on Thursday. On a per-share basis, the company said it had a loss of $0.02. Earnings, adjusted for stock option expense and costs related to mergers and acquisitions, were $0.10 per share. The results beat Wall Street expectations. The average estimate of eight analysts surveyed by Zacks Investment Research was for earnings of $0.06 per share.
Dropbox posted revenue of $385.6 million in the period, also surpassing Wall Street forecasts. Seven analysts surveyed by Zacks expected $381.4 million.
The $33 Merrill price target for the stock compares with a $32.38 consensus price objective. The shares were last seen trading at $23.23 apiece.
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