Most of the firms that we cover on Wall Street have presented their high conviction stock picks for 2014. The analysts at Credit Suisse have taken a little bit longer to release their top ideas for 2014. The have focused on summarizing the investment thesis, looking for upcoming catalysts and tracking valuation. Like many of the firms we cover, Credit Suisse is positive on equity performance for 2014. They are also quick to point out that another 30% gain in the S&P 500 like 2013 is unlikely.
With 50 names on their top ideas for 2014 list, we have taken a sector by sector look and screened for the names that may have the biggest upside potential for investors. While this is not meant to serve as a portfolio recommendation, it will give our readers a broad look at the sector picks that have the highest conviction at Credit Suisse for 2014.
Here are some the top picks for 2014 broken down by sector.
Sealed Air Corp. (NYSE: SEE) is one of the top picks in the basic materials sector and is a mid-cap name with solid upside potential. The company provides food safety and security, facility hygiene and product protection solutions worldwide. The company operates through three segments: Food & Beverage, Institutional & Laundry and Protective Packaging. It was also the original creator of bubble wrap. Investors receive a 1.7% dividend. The Credit Suisse price target is set at $42. The Thomson/First Call estimate is posted at $33.82. Sealed Air closed Tuesday at $31.01. A move to the target would represent a 35% gain for investors.
Home Depot Inc. (NYSE: HD) is a top consumer discretionary name. It is also a top housing market winner. CNBC’s Jim Cramer made it one of his target stocks to own for 2014. The continued housing strength combined with do-it-yourself upgrades is driving strong earnings for the stock. Investors are paid a 2% dividend. The Credit Suisse price target is posted at $87. The consensus price target is placed at $87.94. Home Depot closed Tuesday at $78.54.
Colgate-Palmolive Co. (NYSE: CL) is a top consumer staples name to make the Credit Suisse list for 2014. Colgate sells its products in more than 200 countries and makes more than 75% of its revenue outside the United States, which provides geographic diversification and growth opportunities in emerging markets for the company. This diversity matched with a huge list of consumer products keeps revenues and dividends growing. Investors are paid a 2.2% dividend. The Credit Suisse price target for the stock is $72, and the consensus target is 68.79. Colgate closed Tuesday at $62.87.
EOG Resources Inc. (NYSE: EOG) is a top energy name added for 2014 at Credit Suisse. The company is fueling record oil and natural gas production that is revolutionizing the U.S. energy position. Its position in the three biggest tight oil plays makes it a huge player in the exploration and production field. EOG Resources would be a huge acquisition for even the biggest of big oil companies. That said, there is a lot to like about EOG as it is the top producer in the Eagle Ford Shale and it has solid positions in both the Bakken and Permian Basin. Investors are paid a tiny 0.5% dividend. The Credit Suisse price target for the stock is posted at $205, and the consensus figure is $192.40. EOG closed Tuesday at $167.22. Trading to the target would be a 20% gain for investors.
Halliburton Co. (NYSE: HAL) is another top energy and oil field services name for 2014. The company is a top provider of products and services that are used in the energy industry for exploration, development and production of oil and natural gas. It serves major oil and natural gas companies throughout the world, operating in 80 countries. Investors are paid a 1.2% dividend. Credit Suisse has a price target of $70, and the consensus is at $63.88. The stock closed Tuesday at $48.33.
Energy Transfer Equity L.P. (NYSE: ETE) is a top master limited partnership for 2014 at Credit Suisse. The company announced a $1 billion stock buyback program in late December. This is significant for investors as the company is buying back stock despite and outstanding 2013 that saw the stock move considerably higher. Investors are paid a 3.2% distribution. The stock recently awarded investors a two-for-one stock split. The adjusted Credit Suisse price target is $50, while the consensus figure is at $46.06. The stock closed Tuesday at $41.15. A move to the target would be a solid 20% gain.
State Street Corp. (NYSE: STT) is a top financial name from Credit Suisse for 2014. The company is the second biggest provider of exchange traded funds (ETFs). State Street, based in Boston, offers 197 ETFs, holding $413 billion in assets, second only to New York-based BlackRock’s $898 billion. Investors receive a 1.4% dividend. Credit Suisse has an $84 price target on the stock, and the consensus is posted at $80.18. Shares closed Tuesday at $68.88.
Bristol-Myers Squibb Co. (NYSE: BMY) is atop health care candidate for 2014 at Credit Suisse. With both Plavix and Avapro both going off patent last year, numbers for the year came in a little light. Most of Wall Street agree that increased sales from other top drugs in its portfolio will help the company to rebound this year. Investors receive a very solid 2.8% dividend. Credit Suisse has a $63 target for the stock. The consensus price target is $53.50. Bristol-Myers closed Tuesday at $51.07.
Biogen Idec Inc. (NASDAQ: BIIB) remains the top biotechnology name to buy at Credit Suisse. The company is an industry powerhouse and 2014 is poised to be another outstanding year. The Credit Suisse research team points out that, trading at just 21 times 2015 earnings, the stock is not overvalued. The Credit Suisse price target for 2014 was recently raised to $375 from $290. The consensus estimate is $290. Biogen Idec closed Tuesday at $305.65. A move to the Credit Suisse target would be a nice 2014 winner, up more than 20%.
McKesson Corp. (NYSE: MCK) is a top health care distribution and IT name to make the Credit Suisse list. Although McKesson plays in the health care info tech space, the lion’s share of its revenue comes from pharmaceutical distribution. This is expected to be a large growth area going forward with an aging population. The Credit Suisse price target for the stock is $200. The consensus price target for the stock is $187.63. McKesson closed Tuesday at $175.26.
Ingersoll-Rand PLC (NYSE: IR) is a top industrial name that is showing up on the stocks to buy lists at many of the major Wall Street firms we cover. It makes the Credit Suisse top picks list as well. With the housing market continuing to grow this year, the company’s wide range of portfolio products should continue to sell well. Investors are paid a 1.3% dividend. Credit Suisse has posted a $69 price target, and the consensus price objective for the stock is $63.89. Ingersoll-Rand closed Tuesday at $59.08.
Comcast Corp. (NASDAQ: CMCSA) is a top cable and satellite name for 2014. The largest cable company in the United States continued its push to be a top entertainment name. The Credit Suisse analysts think 2014 will be another banner year for entertainment stocks, with continued strong pricing power, advertising spending growth and new digital platforms. Rumors are circulating that Comcast will buy some Charter properties in its attempt to buy Time Warner cable. Comcast shareholders are paid a 1.5% dividend. The Credit Suisse price target is $54, and the consensus target is $57.30. Comcast closed Tuesday at $53.35.
Google Inc. (NASDAQ: GOOG) remains the 900-pound gorilla in the technology space. With everything from a dominate search platform to its Android operating system and YouTube, the company continues to lead the industry. Many on Wall Street think that Google may use the YouTube platform to stream original programming much like Netflix. In addition, the company has a mountain of cash, which at almost $55 billion provides ample room for innovation and acquisitions. The Credit Suisse price target for the stock is a whopping $1,450. The consensus is posted at $1,209.63. Google closed Tuesday at $1,123.01.
Micron Technology Inc. (NASDAQ: MU) is a global leader in advanced semiconductor systems and a top pick at Credit Suisse. Micron’s broad portfolio of high-performance memory technologies — including DRAM, NAND and NOR Flash — is the basis for solid state drives, modules, multichip packages and other system solutions. The company’s memory chip solutions enable the world’s most innovative computing, consumer, enterprise storage, networking, mobile, embedded and automotive applications. The Credit Suisse price target for the stock, which soared last year, is $30. The consensus target is posted lower at $27.29. Micron closed Tuesday at $23.05.
Lam Research Corp. (NASDAQ: LRCX) 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. The Credit Suisse analysts highlight the company and its peers as having a significant equipment opportunity from the NAND evolution. The Credit Suisse Price target for the stock is $60. The consensus target is at $61.89. Lam Research closed Tuesday at $51.22.
The Credit Suisse top picks are in line with what we have seen from many of the firms on Wall Street we cover. They are leaning to technology, and really have not strayed too far from stocks that had a solid year in 2013. They also maintain a bias for large cap names. We think that makes good sense after the tremendous 30% gains in 2013. Large cap names should hold up far better if we experience a sizable correction.
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