The RBC team highlighted real estate investment trusts (REITs), select food products, big pharmaceuticals and discount stores as sectors that make good sense now. We screened for stocks that growth investors looking for good portfolio additions could feel comfortable with.
Avalonbay Communities
This company is in the business of developing, redeveloping, acquiring and managing apartment communities in leading metropolitan areas around the country. Avalonbay Communities Inc. (NYSE: AVB) currently holds a direct or indirect ownership interest in 277 apartment communities, containing 82,487 apartment homes in 11 states and the District of Columbia, of which 26 communities were under construction and eight communities were under reconstruction.
By focusing on high-growth high demand areas in the Unites States Avalon has become on the premier apartment REIT on Wall Street. Recent research indicates that channel occupancy rates are 0.5% to 1.5% higher for the first half of 2015, despite the fact that many REITs pushing rents higher and still fairly robust development pipelines. The analysts feel that think this could drive growth acceleration, leading to strong earnings results being reported.
Avalonbay unitholders are paid a solid 2.88% distribution. The Thomson/First Call consensus price target is $193.20. The shares closed on Friday at $173.44. It is important to remember that REIT distributions may contain return of capital.
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Johnson & Johnson
This larger pharmaceutical conglomerate is another yield leader on the UBS list. Johnson & Johnson (NYSE: JNJ) is one the top market cap stocks in the health care sector and will raise its dividend for shareholders this year for the 52nd consecutive year. With everything from medical devices to over the counter health items and prescription drugs, the company remains one of the most diversified health care names on Wall Street.
Johnson & Johnson also has one of the most exciting pipelines of new drugs in the sector. That, combined with the solid OTC product business, makes the stock an outstanding holding. With branded pharmaceuticals leading the sales growth for the company, investors received a mildly bullish report when the company reported second-quarter numbers. U.S. consumer health sales rose nearly 3%, versus a 9% decline in total revenue. That and other factors helped the company just squeak by Wall Street estimates.
Johnson & Johnson investors are paid a 3.15% dividend. The consensus price target is set at $109.66. The stock closed Friday at #$95.56.
Target
Target is a retail stock that hit a very rough patch over the past two years but recently posted outstanding earnings and appears to be back. Target Corp. (NYSE: TGT) has been increasing the focus on online sales, which currently totals right about 3% of total sales. While that number looks low in comparison to some, the huge sales volume of the store tempers the overall numbers.
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The company shut down all its Canadian locations back in May, putting about 17,600 employees out of work. While difficult, it closes a very unprofitable and ill-fated chapter, and it helps the company to move forward on concentrate on the very profitable U.S. business.
With the solid earnings, many Wall Street companies raised estimates as it appears some of Target’s strength is coming at the expense of the company’s big-box competitor Wal-Mart. With low fuel prices and job growth, consumer purchasing should continue to grow.
Target investors are paid a solid 2.86% dividend. The consensus price target is $85.38, and shares closed the day on Friday at $78.40.
Tyson Foods
This American food giant could be among one of the safest stocks for investors to consider. Tyson Foods Inc. (NYSE: TSN) is one of the world’s largest food companies, with leading brands such as Tyson, Jimmy Dean, Hillshire Farm, Sara Lee, Ball Park, Wright, Aidells and State Fair. The company is a recognized market leader in chicken, beef and pork, as well as prepared foods, including bacon, breakfast sausage, turkey, lunch meat, hot dogs, pizza crusts and toppings, tortillas and desserts. Tyson also supplies retail and food service customers throughout the United States and approximately 130 countries.
The company recently had to announce that it was reducing beef production capacity due to a continued lack of available cattle. Tyson had to permanently cease beef operations at its plant in Denison, Iowa, to better align its overall production capacity with current cattle supplies.
Tyson investors are paid a 0.96% dividend. The consensus target is $50. The stock closed Friday at $41.67.
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These are not exciting stocks, and they are not meant to be. What they do provide is solid growth prospects and they do not have the kind of unlimited downside that some of the super-hot momentum stocks do. Those looking to put cash to work or rotate out of losers may want to consider these solid companies.
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