Investing

Merrill Lynch Has 4 Stocks to Buy That Are Breaking Out

All stock investors look for an edge in trading. One of the best ways to help ensure success is to have a solid blend of technical and fundamental data stacked in your favor. In a new research report from Merrill Lynch, the technical team has found four stocks rated Buy at the firm that are breaking out on the technical charts as well.

When a stock breaks out of a trading range or a channel, it may be poised to take a big leg up. The four stocks pinpointed by the team at Merrill Lynch look like they could be ready to do just that.

Arista Networks

This company went public last June about this time and has continued to be one of the hot tech IPO stories of the past year. Arista Networks Inc. (NYSE: ANET) delivers software-driven cloud networking solutions for large data center and computing environments. In addition, the company’s 10/40/100 gigabit Ethernet switches offer scalability and performance and have over 2,700 customers and more than 2 million cloud networking ports deployed worldwide. At the core of Arista’s platform is EOS, an advanced network operating system. Arista Networks products are available worldwide through distribution partners, systems integrators and resellers.

Many on Wall Street think that the company could benefit from dual supplier requirements at the Web 2.0 and cloud portals, and they think Arista could see upside to the lofty 30% compound annual growth rates currently forecast.

The Merrill Lynch price target is $77. The Thomson/First Call consensus price target is $83.20. Shares closed most recently at $81.01 apiece.

ALSO READ: With Interest Rates Set to Rise, 4 Bank Stocks to Buy Now

FireEye

This stock has been on fire recently as huge cyberattacks like last week’s hack on the government push security concerns even higher. FireEye Inc. (NASDAQ: FEYE) has been mentioned recently as a buyout target, with a lot of the chatter centering on Cisco, which claims not to be interested. FireEye recently announced that its will be working with Visa to help the credit card giant develop products for merchants and credit card issuers to defend against large-scale attacks on payment data. FireEye is in an arena where it may drive the next big wave of cybersecurity technology.

The company is also torching the short sellers with a relentless move higher. As of May 29, 15.21 million shares of the stock, or 12.23% of the float was sold short. One can be sure that number has come in recently as the short sellers frantically try to cover.

The Merrill Lynch target price is $55. The consensus price target of $49.88 is below the most recent close at $51.31 per share.

Charles Schwab

The iconic discount broker looks solid from a technical standpoint. Charles Schwab Corp. (NYSE: SCHW) provides wealth management, securities brokerage, banking, money management and financial advisory services. The company operates through two segments, Investor Services and Advisor Services. Goldman Sachs recently upgraded the discount broker on the belief that the earnings outlook is underappreciated, given the potential for deposit growth in an environment of rising interest rate.

ALSO READ: 3 Stocks to Buy for a Hot Summer and Rising Natural Gas Prices

The Goldman analyst noted that Schwab has identified $75 billion worth of customer assets it can sweep in its banking business that could “meaningfully” add to earnings. A rising rate environment tends to benefit banks, because it allows them to earn a higher spread between what they pay and receive in interest.

Charles Schwab investors are paid a slight 0.72% dividend. The Merrill Lynch price target is $36, and the consensus target is $34.25. Shares closed Wednesday at $33.43.

PNC Financial

This super-regional bank makes the cut at Merrill Lynch and has been on an outstanding run for investors. PNC Financial Services Group Inc. (NYSE: PNC) is one of the largest U.S. diversified financial services organizations providing retail and business banking; residential mortgage banking; specialized services for corporations and government entities, including corporate banking, real estate finance and asset-based lending; and wealth and asset management. With consistent earnings growth, a very positive and growing loan portfolio, the company is a premiere super-regional bank stock to own.

PNC shareholders are paid a solid 2.1% dividend. The Merrill Lynch price target is $100. The $98 consensus figure is below Wednesday’s close at $99.18.

ALSO READ: Deutsche Bank’s Top 3 Cybersecurity Stocks to Buy Now

The combination of solid fundamentals and a chart breakout is about as good as it gets for investors. All of these top companies make good sense for growth investors looking to add quality companies to their portfolios.

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