Merrill Lynch Has 3 Buy-Rated Stocks Breaking Out on Price and Volume

By Lee Jackson Updated Aug 5, 11:59AM EDT · Published Aug 5, 10:10AM EDT

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One of the best indicators for investors is the marriage of good fundamentals and support from a solid technical chart. One of the best technical indicators is when a stock breaks out on a 90-day chart for price and volume. A new research report from Merrill Lynch includes a large list of stocks rated Buy that hit that technical criteria.

We screened the Merrill Lynch list of Buy-rated stocks with a 90-day price and volume breakout for those that make sense now as the market seems to be hitting a wall. We avoided momentum stocks simply because, if the market rolls over and sells off, they will be the first to go regardless of technicals and fundamentals. We chose the three stocks with the best volatility rating from Merrill Lynch.

Brown-Forman

This company always has a big audience as it is one of the top spirits distillers and bottlers in the United States. Brown-Forman Corp. (NYSE: BF-B) manufactures, bottles, imports, exports, markets and sells various alcoholic beverages worldwide. It provides spirits, wines, ready-to-drink cocktails and liqueurs. The company offers its products primarily under the Jack Daniel’s, Gentleman Jack, Finlandia, Southern Comfort, Korbel, el Jimador, Woodford Reserve, Canadian Mist, Herradura, Sonoma-Cutrer, Early Times, Chambord, Pepe Lopez, Antiguo, Old Forester, Tuaca, Collingwood and Santa Dose labels.

The stock broke out in June after putting in a long base and combined with outstanding earnings and growth prospects. It remains a good holding for long-term growth stock buyers.

Brown-Forman investors are paid a small 1.16% dividend. The Merrill Lynch price target for the stock is $110, though the Thomson/First Call consensus target was not posted. The stock closed on Tuesday at $109.51.

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Coca-Cola Enterprises

This company reported solid earnings, and merger rumors are starting to fly as well. Coca-Cola Enterprises Inc. (NYSE: CCE) is the leading Western European marketer, producer and distributor of nonalcoholic ready-to-drink beverages and one of the world’s largest independent Coca-Cola bottlers. CCE is the sole licensed bottler for products of Coca-Cola in Belgium, continental France, Great Britain, Luxembourg, Monaco, the Netherlands, Norway and Sweden. CCE operates with a local focus and has 17 manufacturing sites across Europe, where the company manufactures nearly 90% of its products in the markets in which they are consumed.

With strong earnings and the company reaffirming full-year guidance recently, the stock has traded extremely well. The company is in advanced talks with Coca-Cola Erfrischungsgetränke in Germany and Coca-Cola Iberian Partners, which serves Spain and Portugal, according to the Wall Street Journal. This again would expand and consolidate the company, and investors like the idea.

Coca-Cola Enterprises investors are paid a solid 2.25% dividend. The Merrill Lynch price target is set at $52, and the consensus target is $47.13. The stock closed Tuesday at $50.52, up almost 3%.

DENTSPLY

This is a top health care equipment company to consider. DENTSPLY International Inc. (NASDAQ: XRAY) is a leading manufacturer and distributor of dental and other consumable medical device products. It claims that it is the world’s largest manufacturer of consumable dental products for the professional dental market.

The company reported outstanding second-quarter earnings of $44.1 million, which translated to adjusted for restructuring costs and non-recurring costs, was $0.73 per share, which topped estimates. DENTSPLY posted revenue of $698 million in the period, falling short of Wall Street forecasts of $719 million. Many analysts are very bullish on the company’s overseas business and prospects.

DENTSPLY investors receive a small 0.52% dividend. The Merrill Lynch price target is $60 and the consensus objective is $58. Shares closed Tuesday at $55.88.

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Combine outstanding fundamentals and earnings with a technical breakout that is considered very bullish and you are in great shape. Toss in the very best Merrill Lynch volatility and risk level ranking for safety, and you have all the ingredients for what could be an outstanding addition to growth portfolios.

About the Author Lee Jackson →

Lee Jackson has covered Wall Street analysts' equity and debt research and equity strategy daily for 24/7 Wall St. since 2012. His broad and diverse career, which included a stint as the creative services director at the NBC affiliate in Austin, Texas, gives him unique insight into the financial industry and world.

Lee Jackson's journey in the financial industry spans over 30 years, with nearly two decades as an institutional equity salesperson at Bear Stearns, Lehman Brothers, and Morgan Stanley. His career was marked by his presence on the sell side during pivotal Wall Street events, from the dot.com rise and bubble to the Long Term Capital Management debacle, 9/11, and the Great Recession of 2008. This is a testament to his resilience and adaptability in the face of market volatility.

Lee Jackson’s practical financial industry experience, acquired from a career at some of the biggest banks and brokerage firms, is complemented by a lifetime of writing on various platforms. This unique combination allows him to shed light on the intricacies and workings of Wall Street in a way that only someone with deep insider experience and knowledge can. Moreover, his extensive network across Wall Street continues to provide direct access for him and 24/7 Wall St., a privilege few firms enjoy.

Since 2012, Jackson’s work for 24/7 Wall St. has been featured in Barron’s, Yahoo Finance, MarketWatch, Business Insider, TradingView, Real Money, The Street, Seeking Alpha, Benzinga, and other media outlets. He attended the prestigious Cranbrook Schools in Bloomfield Hills, Michigan, and has a degree in broadcasting from the Specs Howard School of Media Arts.