Despite the nice rally the last two days, the $3 trillion two day sell-off after the Brexit vote was one of the largest on record. While of course it’s always better to hold your nose and buy while the sell-off is happening, it can be very hard to catch the proverbial falling knife, and sometimes the selling continues. While the Brexit vote certainly has consequences, it will take years to actually be enacted, and there is always a chance that Britain renegotiates with the European Union and ultimately stays in.
The folks at the top at Deutsche Bank went to the firm’s North American research analysts and asked them to present a list of their highest conviction stocks to buy at current levels now.
The analysts came up with a list that they believe the risk/reward from current levels is the most compelling, and we selected four.
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Cyrusone
This is a top Deutsche Bank pick among the data center stocks. Cyrusone Inc. (NASDAQ: CONE) designs, builds and operates facilities across the United States, Europe and Asia that give its customers the flexibility and scale to match their specific growth needs. Specializing in highly reliable enterprise-class, carrier-neutral data center properties, the company provides robust data center infrastructure to ensure the continued operation of IT equipment for a rapidly growing list of organizations that now nears 900, including 9 of the Fortune 20 and more than 160 of the Fortune 1000 or equivalent-sized companies.
Many analysts feel that some of the best returns in the data center sector may be found in the smaller players in the space like CyrusOne. The company trades at numerous lower multiples than their bigger competition and many on Wall Street feel that the discount valuation is not warranted given the recent surge in leasing and above-average growth. The company has also exhibited faster deployment times, rapid new market expansion and low churn among customers. These are all bullish reasons for buying the stock.
CyrusOne unitholders are paid a solid 2.8% distribution. The Deutsche Bank price target is $55, and the Thomson/First Call consensus target is set at $54.68. The shares closed Wednesday at $54.72.
CommScope
This is another top play now for investors that may be somewhat more under the radar. CommScope Holding Company Inc (NASDAQ: COMM) provides connectivity and infrastructure solutions for wireless, business enterprise, and residential broadband networks in the United States, Europe, the Middle East, Africa, the Asia Pacific, Central and Latin America, and Canada. The company operates in three segments: Wireless, Enterprise, and Broadband. The company’s network infrastructure solutions help customers increase bandwidth; maximize existing capacity; improve network performance and availability; increase energy efficiency; and simplify technology migration
The analysts feel that the company will benefit from the low teens spending growth in Data Center Optical Connectivity, and trading at 9.8 times estimated 2017 earnings, the stock is also very cheap.
The Deutsche Bank price target for the stock is $36, and the consensus is at $36.36. The stock closed on Wednesday at $30.35.
Foot Locker
This athletic shoe retailer has been hammered this year, and may be offering the best entry point in some time. Foot Locker, Inc. (NYSE: FL) is a specialty athletic retailer that operates 3,419 stores in 23 countries in North America, Europe, Australia, and New Zealand. Through its Foot Locker, Footaction, Lady Foot Locker, Kids Foot Locker, Champs Sports, SIX:02, Runners Point, and Sidestep retail stores, as well as its direct-to-customer channels, including Eastbay.com, footlocker.com, and SIX02.com.
Foot Locker investors are paid a 2% dividend. The Deutsche bank price target is posted at a whopping $71, and the consensus price target for the stock is at $70.59. The stock closed Wednesday at $55.08.
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Wells Fargo
This large cap bank is another stock for investors to look at now for safety, dividends and solid upside potential. Wells Fargo & Company (NYSE: WFC) is a nationwide, diversified, community-based financial services company with $1.8 trillion in assets. The company provides banking, insurance, investments, mortgage, and consumer and commercial finance through 8,700 locations, 12,800 ATMs, the internet and mobile banking, and has offices in 36 countries to support customers who conduct business in the global economy. Wells Fargo serves one in three households in the United States.
Wells Fargo has slowly, but surely, become one of the biggest mortgage lending companies in the United States, in addition to their normal banking and brokerage businesses. A continued increase in commercial real estate lending could really boost the bank’s bottom line, and overall revenue. The stock also remains a top Warren Buffett holding, who raised his holdings in the bank to 10% on the stock’s weakness earlier this year.
Wells Fargo shareholders are paid a solid 3.25% dividend. The Deutsche Bank price target is posted at $59, and the consensus is at $54.79. Shares closed Wednesday at $46.97.
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All of these top stocks to buy had been weak to some degree even before the huge selling, so they are offering investors outstanding entry points at current levels. While volatility could remain elevated as the political cycle continues to roll along, many stocks remain on sale now.
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