Needless to say, the first quarter was the proverbial roller-coaster ride for investors. After a gut-wrenching 10% or so sell-off to start the year that lasted all the way until almost the middle of February, the market finally turned and rallied back to just about breakeven by the end of the quarter. The question now is what are the good ideas to put to work for the second quarter, especially after a somewhat rough start.

A recent Merrill Lynch research report features its quarterly top 10 ideas. Eight are stocks to Buy and two are rated Underperform and are potential short sale candidates. Here we focus on the eight top stocks to Buy. The analysts are smart and for the most part play it safe by staying away from momentum areas that could get bludgeoned in a downturn.

American Water Works

This could be the premiere name for investors to own. American Water Works Co. Inc. (NYSE: AWK) is the largest publicly traded U.S. water and wastewater utility company. It provides drinking water, wastewater and other related services to an estimated 14 million people in more than 40 states and parts of Canada.

American Water Work investors receive a 1.95% dividend. The Merrill Lynch price target for the stock is $72, and the Thomson/First Call consensus target is $68.38. The shares closed Thursday at $69.80.

Comcast

One of the nation’s largest video, high-speed Internet and phone providers to residential customers under the XFINITY brand, Comcast Corp. (NASDAQ: CMCSA) also provides these services to businesses. Comcast has invested in technology to build an advanced network that delivers among the fastest broadband speeds and brings customers personalized video, communications and home management offerings.

Comcast consistently has grown earnings substantially with extremely strong content revenue growth. Increased revenue at NBC Universal also is giving the company some earnings tailwinds, and a growing sports lineup is adding to revenues.

Comcast shareholders receive a 1.79% dividend. The $84 Merrill Lynch price target is well above the consensus target of $69.44. The shares closed Thursday at $61.40.

Digital Realty Trust

Digital Realty Trust Inc. (NYSE: DLR) supports the data center and colocation strategies of more than 600 firms across its secure, network-rich portfolio of data centers located throughout North America, Europe, Asia and Australia. Its clients include domestic and international companies of all sizes, ranging from financial services, cloud and information technology services, to manufacturing, energy, gaming, life sciences and consumer products. The company rates highly with portfolio managers, as large part of the market cap of the company is in institutional hands.

Shareholders receive a 3.91% dividend. Merrill Lynch has a $95 price objective. The consensus target is $85.44, but shares closed above that level at $90.07 on Thursday.

Facebook

As it continues to dominate the social media world, Facebook Inc. (NASDAQ: FB) also continues to show very stable penetration, usage and consumer frequency. The company has been on a huge roll the past three earnings reporting quarters, and many on Wall Street feel that the stock has plenty of room to run. Mobile revenue and advertising numbers have skyrocketed, and the company has started to add a search component that could prove to be another earnings silo for the social media giant

The Merrill Lynch price target is $140. The consensus target is $134.02. The shares closed most recently at $113.63.
Public Storage

Public Storage (NYSE: PSA) engages in the acquisition, development, ownership and operation of self-storage facilities in the United States and Europe. Its self-storage facilities offer spaces for lease on a month-to-month basis for personal and business use. It also has interests in commercial properties containing commercial and industrial rental space and ancillary operations, which include reinsurance of policies against losses to goods stored by self-storage tenants and retail operations comprising merchandise sales.

Public Storage investors receive a 2.5% dividend. The $284 Merrill Lynch price target compares to a consensus target of $245.81. The stock closed Thursday at $273.83.

Reynolds American

Reynolds American Inc. (NYSE: RAI) manufactures and sells cigarettes and other tobacco products in the United States. Its RJR Tobacco segment offers cigarettes under the Newport, Camel, Pall Mall, Doral, Misty and Capri brands, as well as Camel Snus, a smoke-free tobacco product. It also manages various licensed brands, including Dunhill and State Express 555. The Santa Fe segment manufactures and markets cigarettes and other tobacco products under the Natural American Spirit brand. The American Snuff segment provides smokeless tobacco products, such as moist snuff under the Grizzly and Kodiak brand names.

Reynolds shareholders receive a 3.31% dividend. The Merrill Lynch price objective is $54. The consensus target is $54.75. The stock closed most recently at $50.83.

Salesforce.com

Enterprise cloud computing solutions provider Salesforce.com Inc. (NYSE: CRM) has a focus on customer relationship management to various businesses and industries worldwide. It offers enterprise cloud computing applications and platform services, including Sales Cloud, with enables companies to store data, monitor leads and progress, forecast opportunities, gain insights through relationship intelligence and collaborate around sales on desktop and mobile devices.

The company also provides Service Cloud, which enables companies to deliver personalized customer service and support, as well as connects their service agents with customers on various devices. And Marketing Cloud enables companies to plan, personalize and optimize customer interactions.

Merrill Lynch has a $90 price target. The consensus estimate is at $88.49, and the stock closed Thursday at $75.32.

Stryker

Medical technology company Stryker Corp. (NYSE: SYK) operates through three segments. The Orthopaedics segment offers implants for use in hip and knee joint replacements, and trauma and extremities surgeries. The MedSurg segment provides surgical equipment and surgical navigation systems, endoscopic and communications systems, patient handling and emergency medical equipment, and reprocessed and remanufactured medical devices, as well as other medical devices for use in various medical specialties.

The Neurotechnology and Spine segment offers neurosurgical and neurovascular devices that include products used for minimally invasive endovascular techniques; products for brain and open skull base surgical procedures; orthobiologic and biosurgery products, including synthetic bone grafts and vertebral augmentation products; and minimally invasive products for the treatment of acute ischemic and hemorrhagic stroke.

Stryker shareholders receive a 1.41% dividend. The Merrill Lynch price objective is $115, and the consensus target is $109.41. The shares closed Thursday at $107.95.

There you have them, eight top ideas from the analysts at Merrill Lynch for the second quarter. While not all are appropriate for more conservative accounts, they all make good sense in a market that is close to fully valued.

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