Investing

5 All-American 4th of July Stocks to Buy for Year-Round Gains

Lee Jackson

Published: July 3, 2018 8:40 am

Last Updated: March 13, 2020 3:02 pm

If there is any holiday that we celebrate in the United States that is among the favorites among all citizens, it has to be the 4th of July. The secular nature of the celebration makes it one for all who live here, as we honor a day that is perhaps the most important in our history. From the largest cities to the smallest rural communities, the pride and participation of small kids to senior citizens marks this truly special day.

At 24/7 Wall St., we thought it was a good time to look at top companies that are usually big holiday winners. Some may be even bigger ones this year as the celebration falls on a Wednesday, so many Americans may be up for an extended long weekend. With parades, barbecues, boating, bands and much more, many people will be going to the store to get provisions for the big day, or heading out for fun vacations.

We screened the Merrill Lynch research database and found five top companies that may have a solid start to the third quarter because of the holiday, and four are rated Buy.

Coca-Cola

This top Warren Buffet holding not only offers safety but an incredibly strong worldwide brand with 40% overseas sales. Coca-Cola Co. (NYSE: KO) is the world’s largest beverage company, refreshing consumers with more than 500 sparkling and still brands.

Led by Coca-Cola, one of the world’s most valuable and recognizable brands, the company’s portfolio features 20 billion-dollar brands including Diet Coke, Fanta, Sprite, Coca-Cola Zero, vitaminwater, Powerade, Minute Maid, Simply, Georgia and Del Valle. Globally, it is the number one provider of sparkling beverages, ready-to-drink coffees and juices and juice drinks.

Through the world’s largest beverage distribution system, consumers in more than 200 countries enjoy Coca-Cola beverages at a rate of more than 1.9 billion servings a day. With coolers getting packed for picnics, parades and vacations you can bet that they will be stuffed with products from this iconic American company. Also remember that the company also owns 16.7% of Monster Beverage, which continues to deliver big numbers.

Coca-Cola investors receive a 3.57% dividend. The Merrill Lynch price target for the stock is $52, while the Wall Street consensus price target is $49.64. The stock closed Monday at $43.75 a share.

Disney

This top consumer media company has multiple streams of income to push revenue, and it is a top pick at RBC. Walt Disney Co. (NYSE: DIS) stock continues outperforming on a near-term and long-term basis. With the movie studio business poised to improve, as with accelerating theme park business, the network programming continues to drive viewership with extensive sports programming. Combining that revenue growth with the company’s solid media networks and interactive presence, and 2018 revenue estimates could be conservative.

The Disney Media Networks segment operates broadcast and cable television networks, domestic television stations and radio networks and stations, and it is involved in the 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.

Families will be flocking this summer to the company’s theme parks such as Disneyland, Walt Disney World in Orlando, Magic Kingdom Park, Epcot and also the international parks. The long 4th holiday week could jump-start attendance.

Disney shareholders are paid a 1.59% dividend. The Merrill Lynch rating and price target were not available as the firm may be advising Disney or Comcast on the Fox deal. The Wall Street consensus price objective is $116.63. The shares closed trading at $105.33 on Monday.

Exxon Mobil

This remains a top Wall Street energy pick and is on the US 1 list at Merrill Lynch. 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.

Exxon posted first-quarter 2018 earnings of $4.7 billion, compared with $4.0 billion a year earlier. Cash flow from operations and asset sales was $10 billion, including proceeds associated with asset sales of $1.4 billion.

With Americans hitting the road in record numbers for the holiday, and perhaps the start of their vacations, you can bet that plenty of gasoline will be sold to get everybody to their destination, regardless of the somewhat higher prices this summer.

Exxon recently raised its dividend by a nickel to $0.82 per share, which translates to a 3.96% dividend. Merrill Lynch has a $100 price objective, while the consensus target price is much lower at $87.79. The stock closed Monday at $81.76.

Kraft Heinz

This consumer staples stock makes sense for nervous investors. Kraft Heinz Co. (NYSE: KHC) is the third-largest food and beverage company in North America and the fifth-largest in the world, with eight $1 billion-plus brands. A globally trusted producer of delicious foods, Kraft Heinz provides high quality, great taste and nutrition for all eating occasions whether at home, in restaurants or on the go.

The company’s iconic brands include Kraft, Heinz, ABC, Capri Sun, Classico, Jell-O, Kool-Aid, Lunchables, Maxwell House, Ore-Ida, Oscar Mayer, Philadelphia, Planters, Plasmon, Quero, Weight Watchers Smart Ones and Velveeta.

You can also bet that consumers will flock to the stores to buy the company’s products for 4th of July picnics and outings.

Shareholders receive a 2.8% dividend. The $85 Merrill Lynch price target is well above the $67.90 consensus target. The shares closed Monday at $62.09.

Molson Coors

While the iconic American beer company did merge with a Canadian beer giant, it is still based in Denver. Molson Coors Brewing Co. (NYSE: TAP) is one of the world’s largest brewers, with core brands Coors Light, Carling, Molson Canadian and Staropramen. Molson and Coors merged in February 2005 and added StarBev in 2012, and it serves markets including the United States, Canada, Eastern Europe and the United Kingdome and Ireland, with exposure to other markets through its Molson Coors International division.

What picnic or holiday gathering would be complete without a cold beer, and you can bet that sales will ramp up for the holiday and the potential long weekend. The Coors light brand remains a huge favorite with Generation X and baby boomers, who were all around when the light beer revolution started.

Shareholders are paid a 2.43% dividend. The Merrill Lynch price target is $80. The consensus target is $73.75, and the shares closed on Monday at $67.62.

Five all-American companies to buy that should have great Independence Day sales and are poised to continue to be solid investments for the second half of 2018. With second-quarter earnings right around the corner, it may be smart to buy partial positions now, and see how the results come in.