With the market hitting new highs and earnings right around the corner, it is truly a toss-up on which way the market goes after such a strong and lengthy rally. By most measures stocks are fully priced on 2014 earnings. With that in mind, it may be time for investors to shift some of their portfolio money allocated to growth to names that present more of a value stock proposition.

A new research report from Merrill Lynch highlights a list of their top ten value stocks to buy. While there are no changes in the list for the month of July, these top stocks may be good replacements for growth names that have outperformed over the past year or so. All of the stocks are rated Buy at Merrill Lynch.

Clearly these are deep-value and contrarian shots the Merrill Lynch team is taking on sectors that underperformed over the past year, especially financials and the deepwater drillers. That said, adding a few names from this list to take the place of growth or momentum names in a diversified portfolio really makes sense with the market trading right at all-time highs.

Citigroup Inc. (NYSE: C) has been a poor performer this year for investors and portfolio managers, down more than 10% year to date. The bank trades a very reasonable 11.2 times trailing earnings and is down 16.3% from highs printed last year. With loan activity and other banking services starting to ramp up as the economy improves over the second half, adding this quality large cap bank to a portfolio at an incredibly low price now makes good sense.

Investors are paid a tiny 0.1% dividend. The Merrill Lynch price target for the stock, which is also on their US 1 list, is $65. The Thomson/First Call consensus price target is $58.21. Citigroup closed Monday at $47.98 a share.

Capital One Financial Corp. (NYSE: COF) is another top financial to make the list. The company has continued running its string of quirky commercials to grow its credit card business, and it trades at a low 11.1 times earnings. Capital One also offers a broad spectrum of financial products and services to consumers, small businesses and commercial clients through a variety of channels.

Capital One has more than 900 branches around the United States and more than $206.9 billion in assets. Investors are paid a 1.4% dividend. The Merrill Lynch price target is $84, and the consensus target is at $84.67. The stock closed Monday at $83.57.

ALSO READ: J.P. Morgan’s Top Stock Picks for the Second Half of 2014

Ensco PLC (NYSE: ESV) is one of the out-of-favor deepwater drillers and a solid energy name to make the list. Last year the company took delivery of ENSCO 121, the second of four ultra-premium harsh environment jackup rigs in its ENSCO 120 Series. ENSCO 121 is an enhanced version of Keppel’s proprietary KFELS Super A Class design. The rig has been contracted in the North Sea at a day rate of approximately $230,000.

Ensco shareholders are paid an outstanding 5.4% dividend. Merrill Lynch has a $64 target price, while the consensus target is $53.25. Ensco closed Monday at $53.80.

Eaton Corp. PLC (NYSE: ETN) is a solid industrial name on the list. It is a power management company providing energy-efficient solutions that help its customers efficiently manage electrical, hydraulic and mechanical power. Eaton continues to focus on doing business right as it leverages the business system for global expansion, product innovation, better profitability and the chase for breakout opportunities.

Eaton investors are paid a 2.5% dividend. Merrill Lynch has an $82 price target, and the consensus target is slightly higher at $83.05. Eaton closed Monday at $78.45.

Fifth Third Bancorp (NASDAQ: FITB) is a top regional banking stock that makes the grade at Merrill Lynch. The company recently announced an 8.3% hike in its quarterly dividend, and it has repurchased 8 million shares of stock this year. The bank also cleared the stress test in the reported period and subsequently got its capital plan approved by the Federal Reserve, under the 2014 Comprehensive Capital Analysis and Review.

Fifth Third’s capital plan included a raise in the company’s quarterly common stock dividend to 13 cents per share, which pays investors 2.4% yearly. The Merrill Lynch price objective for the stock is $25 and the consensus target is $24.18. Shares closed Monday at $21.57.

General Dynamics Corp. (NYSE: GD), like other defense contractors, is having a solid year and it makes the list. The company is a worldwide aerospace and defense company headquartered in Falls Church, Va. It has around 96,000 employees. General Dynamics operates through four business groups: Aerospace, Combat Systems, Marine Systems and Information Systems and Technology. The U.S. government is its largest customer.

Trading at 16.2 times trailing earnings, General Dynamics comes in a touch higher than the other names. Investors are paid a 2.1% dividend. Merrill Lynch has a whopping $145 price target, while the consensus is much lower at $125. Shares closed Monday at $115.75.

ALSO READ: Top U.S. Stocks to Buy From RBC’s Global Ideas List

General Motors Co. (NYSE: GM) is a top consumer discretionary name on the list. GM announced 54 recalls that have impacted nearly 26 million vehicles in the United States and wrote down $2.5 billion in losses because of those recalls in just six months. Despite all of its recent recall troubles, hedge funds are continuing to stick with the name.

GM trades at 17 times forward earnings. Investors are paid a solid 3.3% dividend. The Merrill Lynch price objective is posted at $55, and the consensus price target is $43.67. GM closed Monday at $37.44.

Hess Corp. (NYSE: HES) is a top energy name that is also on the Merrill Lynch US 1 list. The company has been has been the subject of takeover speculation in the past and some of that chatter has re-emerged. With a market capitalization of $31 billion, the company could fall prey to larger integrated as a quick bolt-on acquisition to boost growth.

The upcoming third quarter should be key as Hess nears the completion of its strategic transformation. Potential catalysts for investors purchasing stock now include the retail spin-off, greater clarity on an upcoming MLP and a possible analyst day. Shareholders are paid a 1% dividend. The Merrill Lynch price target is $130, and the consensus target is $100.48. Hess closed at $99.30.

Noble Corp. (NYSE: NE) is another deepwater driller that many Wall Street analysts are very bullish on. With numerous corporate missteps behind the company, its shift to the deepwater/floater market will benefit from an improving landscape and very strong demand. Investors receive a very solid 4.4% dividend. Merrill Lynch has a $40 price objective for the stock, while consensus target is lower at $34.82. Noble closed Monday trading at $32.34.

ALSO READ: 13 Analyst Stocks Under $10 With Huge Implied Upside

Wells Fargo & Co. (NYSE: WFC) is another solid financial name on the list that may really benefit if yields start moving higher. The yield curve typically steepens in an improving economy, which many on Wall Street currently anticipate. Wells Fargo is slowly but surely becoming one of the biggest mortgage lending companies in the United States, in addition to their normal banking and brokerage businesses. An increase in commercial real estate lending could really boost the banks bottom line. It also remains a top Warren Buffett holding.

Wells Fargo investors are paid a 2.6% dividend. The Merrill Lynch price target for the stock is posted at $55, and the consensus target is $52.91. Wells Fargo closed Wednesday at $52.50 a share.

Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.