J.P. Morgan's Top Stock Picks for the Second Half of 2014

After a solid first half of the year that saw the S&P 500 rise almost 7%, many of the firms that we cover on Wall Street are out with their stock picks for the second half of the year. While many disagree on what sectors and individual stocks will perform the best, they almost universally agree that the market will end the year higher.

A new report from the equity strategy team at J.P. Morgan presents an extensive list of top names to buy for the next six months in a multitude of categories. We screened their Top Picks list for the selections that have the highest potential upside from current trading levels.

The J.P. Morgan team is not taking any huge shots or leaps of faith here. They are trying to play it straight down the middle of the fairway with solid names that have good earnings and growth prospects. With the stock market at record highs, that is not a bad plan for the balance of the year.

American Airlines Group Inc. (NASDAQ: AAL) leads off the list, and it has been absolutely on fire this year, up more than 50%. American Airlines Group is the holding company for American Airlines and U.S. Airways. Together with wholly owned and third-party regional carriers operating as American Eagle and US Airways Express, the airlines operate an average of nearly 6,700 flights per day to 339 destinations in 54 countries.

Despite high fuel prices and the cost of the merger and emerging from the bankruptcy, American Airlines continues to draw followers. The J.P. Morgan’s price target for the stock is $57.50. The Thomson First Call price target is $47.66. The stock closed trading on Wednesday at $41.95 a share.

BioMarin Pharmaceutical Inc. (NASDAQ: BMRN) is a top mid cap to buy at J.P. Morgan and is considered by some a possible takeover target. Media speculation of big-pharma interest in BioMarin is likely related to the commercial success of the orphan drug model globally. Its diversified and expanding pipeline could also provide significant strategic value to acquirers.

BioMarin released updated results from the Phase 1 trial of its PARP inhibitor BMN673. The data continue to suggest that BMN673 is promising in breast cancer and may be active in small cell lung cancer. The J.P. Morgan price target is a lofty $90. The consensus target is $82.47. BioMarin closed Wednesday’s trading at $64.28.

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Boeing Co. (NYSE: BA) shares were up more than 80% last year, and the company recorded better-than-expected orders in the first quarter of 2014, reached favorable agreement with several of its union locals and announced a change in post-retirement plans for non-union workers. Some perceived weak guidance and a 787 glitch that slowed some deliveries has dropped the shares almost 15% early this year, and another recent sell-off has analysts thinking that this provides a solid entry point.

Boeing investors are paid a 2.2% dividend. The Stifel price target is $160. The J.P. Morgan target price is a strong $167, and the consensus estimate is at $153.91. Boeing closed Wednesday at $127.62.

Facebook Inc. (NASDAQ: FB) makes the Top Picks list, and the social media giant is on a roll. With mobile revenue and advertising numbers skyrocketing, the company has been a stellar performer the past year. With more than a billion registered users around the world, Facebook is expected to earn $1.43 this year on $11.84 billion in revenue, and $1.83 on $15.59 billion in revenue in 2015. These are staggering figures that could prove to be low. The J.P. Morgan price target is $80, and the consensus target is $77.86. Shares closed Wednesday at $66.45.

General Motors Co. (NYSE: GM) is a top consumer discretionary name on the list, and June auto sales were at their highest level in eight years. Despite all the recent recall troubles, hedge funds and portfolio managers across Wall Street are continuing to stick with the name. GM trades at a low 9.8 times forward earnings.

GM has benefited from incredible sales in China to boost revenue. GM invested heavily in China and grabbed a big chunk of what is now the world’s largest auto market. Investors are paid a solid 3.3% dividend. The J.P. Morgan price objective is $50, and the consensus target is $43.67. GM closed Wednesday at $37.74.

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Marvell Technology Group Ltd. (NASDAQ: MRVL) is a tech stock investors have waited on for years for their ship to come in, and it is a top pick at J.P. Morgan. The key to Marvell’s success is that it is gaining market share at Western Digital, and the advent of SSDs has turned out to be a solid catalyst. In addition, hard disk drives are also being used for non-PC applications such as server storage and data centers.

Marvell enjoys a 50% share of Western Digital’s enterprise business, which is significant. Investors are paid a 1.6% dividend. While J.P. Morgan has a $20 price target, the consensus target is $16.71. Marvell closed trading Wednesday at $14.54.

Medtronic Inc. (NYSE: MDT) made a huge splash with its recent purchase of Covidien and its announcement that the company would move its headquarters to Ireland. The company operates in two segments: the Cardiac and Vascular Group and the Restorative Therapies Group. The J.P. Morgan team, like many on Wall Street, thinks the company has the appropriate strategic focus, especially with the newly announced acquisition, and a number of new products in the pipeline that along with continued emerging market performance should lead to acceleration in growth.

Longer term, many analysts and investors also believe Medtronic should benefit from its size and scale. Investors are paid a 1.9% dividend. The J.P. Morgan price target is $78, while the consensus target is at $71. Medtronic ended Wednesday at $63.91.

Whiting Petroleum Corp. (NYSE: WLL) is a large energy player in the Bakken Shale and is ranked as the third largest producer there. Over 2013, Whiting sold off significant amounts of its assets outside the Bakken, including its Postle Field enhanced oil recovery assets for $817 million and its acreage in the Delaware Basin for $150 million.

Whiting in turn is using the cash from the sales and deploying more assets into the higher-return Bakken this year and beyond. The J.P. Morgan price target is a stout $94, and the consensus figure is $85.63. Whiting closed Wednesday at $80.01.

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