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Deutsche Bank Rebalances Tech 8 Basket With Top New Stocks to Buy
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Like many firms on Wall Street, technology is a major theme for the balance of the year. Deutsche Bank A.G. (NYSE: DB) launched its “tech enduring eight” basket of stocks to buy earlier this year, and now we are seeing a refresh of that list. Most of these offer a decent dividend yield and strong dividend growth potential, and yet they trade amongst the lowest trailing price-to-earnings in the S&P 500.
Each of these companies has 20+ years of experience in adapting to shifts in technology and remains a strong global player. These companies are already key players in big data, cloud and mobility, the main drivers of business information technology (IT) spending. Here are the stocks to buy in the Deutsche Bank “Tech 8” basket.
Cisco Systems Inc. (NASDAQ: CSCO) routing division’s sales growth is inevitable. The division boosted Cisco’s revenues in the past one year. In the third quarter, the routing division accounted for 17.5% of Cisco’s total revenues. In the second quarter, the routing division accounted for 16.1% of the total revenues of the tech giant. The division accounted for 17.3% of Cisco’s total revenues in the first quarter. The Thomson/First Call price target is $26. Investors are paid a 2.8% dividend.
EMC Corp. (NYSE: EMC) is the 800-pound gorilla of the storage sector. The company’s products and services support a wide range of corporate and governmental data storage needs. The firm’s size and diversification, together with its well-regarded management, bode well for the long term. But EMC is not just relying on past laurels. For example, the company owns 80% of VMware Inc. (NYSE: VMW), a leader in server virtualization, one of the fastest growing niches in the tech sector. The consensus price target for the stock is $30. Investors receive a 1.4% dividend.
Intel Corp. (NASDAQ: INTC) recently announced that the Samsung Galaxy Tab 10.1 tablet will use the Clover tail+ processor from Intel. This is one of the flagship tablets from Samsung and bodes well for Intel’s push into the tablet market. The consensus price target for the stock is at $23.25, and investors receive a 3.8% dividend.
International Business Machines Corp. (NYSE: IBM) is making a big push to become more cloud competitive. Big Blue recently announced its acquisition of Soft Layer Technologies for an undisclosed amount, although sources suggest that $2 billion is a good estimate. In conjunction with the acquisition, company executives commented that IBM wants to become competitive by offering value-added services, not just cloud storage and access. The consensus price objective for the stock is at $225. Investors are paid a 1.9% dividend.
Microsoft Corp. (NASDAQ: MSFT) has increased its quarterly payout in the past three years from $0.13 to $0.23. On an annual basis, that is a rise of 40 cents per year. Deutsche Bank thinks investors can expect more of the same as the company returns cash to shareholders. The consensus price objective for the stock is $35. Shareholders are paid a 2.7% dividend.
NetApp Inc. (NASDAQ: NTAP) last week unveiled the latest version of its operating system software, which some Wall Street observers opined could boost the company’s product sales. NetApp’s Clustered Data Ontap version 8.2 promises to bring advantages of handling larger data sets, among other things, the company said. The consensus price target for the stock is $42. Investors receive a 1.6% dividend.
Oracle Corp. (NASDAQ: ORCL) releases earnings this Thursday, and investors are hoping they do not repeat the dismal numbers posted back in March. The good news is that, over a six-year period, Oracle is yet to post two consecutive quarters where it misses expectations. The consensus price target for the stock is $37.50. Investors are paid a small 0.7% dividend.
Adobe Systems Inc. (NASDAQ: ADBE) is the newest addition to the Deutsche Bank basket of tech stocks to buy. The company will announce earnings this week, and analysts estimates for revenue is $1.01 billion. On the bottom line, the average estimate is $0.34 per share. The consensus price target for the stock is $47.
Clearly the Deutsche Bank analysts are not taking a lot of chances with these stocks to buy. However, by purchasing large cap technology stocks that are industry leaders, investors lessen the chances of a stock implosion caused by a single product or incident. As we wrote yesterday, growth and income are the way to solid portfolio gains. The Deutsche Bank Tech 8 stocks look poised to provide just that.
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