Investing
5 Stocks to Buy When You See This One Indicator Turn Around
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You knew it had to come at some point, and we have advised our readers for months to raise cash and to take advantage of markets that seemingly went up every day. We noted it’s hard to just “go to cash” and hedging is expensive, but taking profits and shifting to lower volatility stocks did make sense. Most of that seems like a blur now, and just when you expect the doomsayers to show up, they are here right on cue.
Without mentioning any names, one market pundit who has been famous for outrageous calls that were wrong, said we could be on the brink of a substantial bear market, despite the fact that they rarely occur when the economy is not in recession. In fact, the economy may be poised for the strongest growth in 15 years.
Institutional investors have been for some time short volatility, and they are getting mauled, as they continued to pick up nickels in front of steamrollers. The real key is watching for the dollar to strengthen. Since our overly weak dollar is bearish for numerous reasons on a global basis, once it stabilizes and starts to trade higher against other currencies, you should see the selling slow or even stop.
Have your shopping list ready, because we screened the Merrill Lynch research universe, and found five high-dividend blue chips that should be bought for long-term investors.
Exxon Mobil
This remains a top Wall Street energy pick and is down over 10% in less than a week. Exxon Mobil Corp. (NYSE: XOM) is the world’s largest international integrated oil and gas company. It explores for and produces crude oil and natural gas in the United States, Canada, South America, Europe, Africa and elsewhere.
The company also manufactures and markets commodity petrochemicals, including olefins, aromatics, polyethylene and polypropylene plastics, and specialty products, and it transports and sells crude oil, natural gas and petroleum products.
For 75 years in a row, Exxon has raised its dividend on a split-adjusted basis. Thanks to the company’s vertically integrated model in the oil and gas business, its profitability doesn’t suffer through commodity price swings like a company that’s a pure play in one segment of the value chain.
Shareholders are paid a 3.86% dividend. The Merrill Lynch price objective is $102, while the Wall Street consensus estimate is $88.95. The stock closed Monday at $79.72.
General Motors
This domestic car company could continue to benefit from the environmental disasters dating back to last summer. General Motors Company (NYSE: GM) is the world’s largest automaker, with annual volume of almost 10 million units. The company reports its operations in four regions: North America, Europe, South America and International. And it now relies on only four core brands in its key North American segment (Chevrolet, GMC, Buick and Cadillac).
General Motors also sells vehicles to dealers for consumer retail sales, as well as to fleet customers, including daily rental car companies, commercial fleet customers, leasing companies and governments. In addition, it offers connected safety, security and mobility solutions, and information technology services. The company, through its subsidiary, General Motors Financial Company, provides automotive financing services.
Trading at an ultra-low 6.97 times estimated 2018 earnings, the stock makes good sense for investors looking for solid value. The company posted outstanding earnings this morning and is looked pretty stable in premarket trading as a result.
Shareholders receive a 3.84% dividend. The $57 Merrill Lynch price target compares with the consensus target of $44.13. The shares closed trading on Monday at $39.54.
24/7 Wall St.3M
This top industrial could really jump with an economic pickup in 2018, and only 19% of mutual funds currently hold the stock. 3M Co. (NYSE: MMM) is a diversified, global manufacturer. Its businesses are technology-driven and organized under five segments: Consumer, Safety and Graphics, Electronics and Energy, Healthcare, and Industrial. Its popular brands include Scotch, Post-It, 3M and Thinsulate. The company also holds over 500 U.S. patents.
Last year the company entered into a definitive agreement with Johnson Controls to acquire the latter’s operating unit Scott Safety. The deal, which was worth $2.0 billion, likely will boost 3M’s technology, manufacturing, global capabilities and brand. In addition, it will enable the company to expand its recent portfolio actions within the Safety and Graphics business to help position for long-term success.
Shareholders are paid a 2.35% dividend. Merrill Lynch has a $280 price target, and the consensus target was unavailable. The stock closed Monday at $231.44.
Lockheed Martin
This is a top aerospace and defense stock to buy, and many on Wall Street are expecting a very solid continuation of U.S. and foreign defense spending. Lockheed Martin Corp. (NYSE: LMT) researches, designs, develops, manufactures, integrates, operates and sustains advanced technology systems, products and services. It also provides a wide range of defense electronics products and IT services.
Being the Pentagon’s prime contractor, Lockheed Martin offers a diverse portfolio of global aerospace, defense, security and advanced technologies. Its leveraged presence in the Army, Air Force, Navy and IT programs guarantees a steady inflow of follow-on orders, not only from the U.S. government but also from many foreign allies of the nation.
Investors are paid a 2.38% dividend. Merrill Lynch has set its price objective at $400. The consensus target is $379.58, and shares closed Monday at $336.46.
Verizon Communications
This is a top telecommunications company was among the worst performing stocks in the Dow Jones Industrial Average last year. Verizon Communications Inc. (NYSE: VZ) is a global leader in delivering the digital world. Verizon Wireless operates America’s self-described 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 it delivers integrated business solutions to customers worldwide.
Verizon reported a solid top-line beat due to the strength of the wireless business. The company missed on fourth-quarter earnings due to higher expenses in the Oath business related to fourth-quarter seasonal effects.
Verizon investors receive 4.67% dividend. The Merrill Lynch price target is $58. The consensus target is $55.88, and the stock closed Monday at $50.50.
These five stocks could be great total return stories in 2018 and also offer investors a degree of safety in what has become a very volatile stock market. All make sense for more conservative growth and income accounts, and all make great buys as they are being put on sale by nervous investors. Again, when the dollar starts to strengthen, the selling should subside.
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