While the Merrill Lynch reports states that the removal of Panera Bread Co. (NASDAQ: PNRA) is part of an overall composition adjustment and of a portfolio rebalancing, which is common, the stock is up 30% over the past year and 100% since the fall of 2011. The bottom line is the firm is doing the right thing and taking the 30% gain as the stock was put in the portfolio in early September of 2014.
We screened the US 1 list and Panera Bread was the only real momentum stock in the portfolio. We also screened for some dividend contrarian plays that could make good sense now.
Disney
This top consumer media company with multiple streams of income got absolutely hammered after disappointing earnings prompted a big fear that consumers are “cutting the cable cord.” The Walt Disney Co. (NYSE: DIS) has the movie studio business poised to improve, as with accelerating theme park business, the network programming continues to drive viewership with extensive sports programming. Most importantly, the company produces tons of content that will keep it a long-term media alternative, and recently announced that Star Wars-themed areas will be coming to Disneyland park and Disney’s Hollywood Studios at Walt Disney World Resort in Orlando, Fla.
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The Disney Media Networks segment operates broadcast and cable television networks, domestic television stations and radio networks and stations, and it is involved in television production and television distribution operations. Its cable networks include ESPN, Disney Channels and ABC Family, as well as UTV/Bindass and Hungama. This segment also owns eight domestic television stations. Disney is also one of 24/7 Wall St.’s top stocks to own for the next decade.
Disney shareholders are paid a 1.23% dividend. The Merrill Lynch price target stays at $130, and the Thomson/First Call consensus target is $122.10. Shares closed most recently at $106.94.
Kinder Morgan
Insiders have been buying big blocks of this company at current and even higher prices. Kinder Morgan Inc. (NYSE: KMI) is the largest energy infrastructure company in North America. It owns an interest in or operates approximately 84,000 miles of pipelines and 165 terminals. The company’s pipelines transport natural gas, gasoline, crude oil, CO2 and other products, and its terminals store petroleum products and chemicals, as well as handle bulk materials like coal and petroleum coke. Kinder Morgan is the largest midstream and third largest energy company in North America, with an enterprise value of approximately $115 billion. The company also recently was added to Goldman Sachs elite Conviction Buy List.
In a recent interview, Richard Kinder, the respected leader of the company, said that mergers and acquisitions could be in store as prices have become increasingly opportunistic. He said the energy giant would not be making any foolish buys, but that tremendous opportunity could lie in Mexico, where the company already has one pipeline.
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Kinder Morgan investors are paid an incredible 5.8% distribution. The Merrill Lynch price target for the iconic industry giant is $49, and the consensus target is $47.69. Kinder Morgan closed Tuesday at $33.94.
Eli Lilly
This stock checks in at high on the global pharmaceutical lists at many top Wall Street firms. Eli Lilly and Co. (NYSE: LLY) is somewhat surprisingly out of consensus with portfolio managers at mutual fund and hedge funds, or what is known as the buy side. It also has more Neutral ratings than Buy ratings on Wall Street.
The company reported second-quarter earnings that were above the consensus estimates. However, revenues declined 4% to $4.979 billion, reflecting generic competition for Cymbalta and Evista in the United States, as well as some negative currency movement. However, revenues surpassed the consensus estimate.
The company’s new cancer drug Cyramza won FDA approval for label expansion recently. It treats patients suffering from metastatic colorectal cancer. This was the fourth Cyramza approval in a year, as it already has approval to treat advanced or metastatic gastric or gastroesophageal junction adenocarcinoma and metastatic non-small cell lung cancer. Cyramza has so far generated sales of $67.5 million.
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The Merrill Lynch team and other analysts on Wall Street love the company’s product pipeline and many think that its Solanezumab drug for Alzheimer’s Phase 3 data, and Jardiance, the company’s drug for diabetes, CV data are both huge upcoming catalysts that could drive the stock. The recent Phase 3 data on evacetrapib was very solid and just another positive for the company
Shareholders are paid a solid 2.4% dividend. The Merrill Lynch price target is $101, and the consensus target is $90.94. Shares closed Tuesday at $83.39.
Verizon Communications
This top telecommunications company recently did away with some phone incentives. Verizon Communications Inc. (NYSE: VZ) is a global leader in delivering the digital world. Verizon Wireless operates America’s most reliable wireless network, with 109.5 million retail connections nationwide. Verizon also provides converged communications, information and entertainment services over America’s most advanced fiber-optic network and delivers integrated business solutions to customers worldwide.
Wall Street has applauded Frontier’s acquisition of Verizon’s wireline operations in California, Florida and Texas, which is expected to be completed at the end of March 2016. Many feel that focusing on the higher margin segments at the company makes sense, and the sale to Frontier is a huge cash boost to the balance sheet.
Verizon investors are paid a very solid 4.64% dividend. The $55 Merrill Lynch price target compares with the consensus price objective of $51.42. Shares closed Tuesday at $47.46.
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Somewhat contrarian, on the US 1 list, all paying dividends and not considered momentum darlings. These are the kinds of stocks that do well if the going gets a little rough, and that certainly is not out of the question.
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