Investing

Top Stocks to Buy from the Merrill Lynch US 1 List

With 2013 at almost the halfway point, we find this a good time to review the top current stocks to buy at various firms around Wall Street. The Bank of America/Merrill Lynch US 1 list is intended to represent a collection of their best investment ideas, drawn from the universe of Buy-rated U.S. listed stocks (including ADRs). To be included in the list, stocks must be listed in the United States and must have an average daily trading volume of at least $5 million in the six months preceding their selection for the list. We screened the list by sector for the top names to buy.

Allergan Inc. (NYSE: AGN) is the top stock to buy in health care. The company discovers, develops and commercializes pharmaceutical, biological, medical device and over-the-counter products for the ophthalmic, neurological, medical aesthetics, medical dermatological, breast aesthetics, urological and other specialty markets. The Merrill Lynch price target for the stock is $110. The Thomson/First Call estimate is at $115. Investors receive a tiny 0.2% dividend.

Anadarko Petroleum Corp. (NYSE: APC) is the top name in the energy sector. Anadarko and Eni SpA (NYSE: E) are jointly developing the world’s second largest liquid natural gas (LNG) export terminal in Africa, with an estimated development cost of $50 billion. Once the facility is fully operational, Anadarko and Eni would be catering to rising energy demands in Asian and African countries. Merrill Lynch has a scorching $120 price target for this top name, while the consensus target is $105. A move to the target level would represent a gain of almost 40%. Investors receive a small 0.4% dividend.

Check Point Software Technology Ltd. (NASDAQ: CHKP) is the top information technology (IT) name on the US 1 list. Cybersecurity has jumped to the top of the most critical list for business and governments. Check Point is a leading name that develops, markets and supports a range of software,and combined hardware and software products and services for IT security worldwide. The Merrill Lynch target price is $56, while the consensus is at $55.

Under Armour Inc. (NYSE: UA) is a top consumer discretionary name to buy. The apparel manufacturer, has made it clear that it wants to make a push into Lululemon Athletica Inc.’s (NASDAQ: LULU) territory. Under Armour had $400 million of sales from women’s products in 2012 and added Leannne Fremar as executive creative director for Women’s product. Merrill Lynch has a $68 price target, and the consensus is at $64.

Kraft Foods Group Inc. (NASDAQ: KRFT) is the top consumer staples name to buy. The company provides its well-known products primarily under the Baker’s, Cheez Whiz, Cool Whip, Cracker Barrel, Crystal Light, Jell-O, Kool-Aid, Kraft, Lunchables, MiO, Miracle Whip, Oscar Mayer, Planters, Shake ‘N Bake, Stove Top and Velveeta brand names. Merrill Lynch has a $62 target on this iconic name, while consensus target is lower at $55. Investors are also paid a solid 3.6% dividend.

3M Co. (NYSE: MMM) is the top name in industrials to buy. The company hit a 52-week high yesterday and is part of the conglomerates sector and conglomerates industry. Shares are up 19.6% year to date, as of the close of trading on Tuesday. Merrill Lynch has a $113 price target, and the consensus stands at $111. Investors receive a 2.3% dividend.

Eastman Chemical Co. (NYSE: EMN) rounds out the top stocks to buy in the materials sector. The company generated $8.1 billion in 2012 revenue and $5.38 in earnings per share. Earnings are forecast to jump to $6.30 per share this year, and as high as $8 by 2015. The Merrill Lynch target is $85, but the consensus is lower at $80.50. Investors are paid a 1.7% dividend.

The US 1 list differs from the S&P 500 index in the following ways. While sector weighting is considered, the US 1 list is not required to match the weights of the S&P 500 index or any other index. Also, to be considered for the list, stocks must have an average daily trading volume of at least $5 million in the six months preceding their selection for the list. This assures that the top stocks to buy will have ample liquidity for investors looking to buy or sell.

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