Investing

4 Stocks to Buy Where Fundamentals and Charts Both Look Strong

Jon C. Ogg

Published: April 2, 2019 10:35 am

Last Updated: January 30, 2020 10:36 pm

The thematic stock charts team at Merrill Lynch has released a showing of technical analysis on its Top 10 U.S. Ideas for the second quarter of 2019. While the firm has eight Buy and two Underperform ratings for the group, there were four stock in which the team noted that the bullish technicals were most aligned with bullish fundamentals.

It’s not fair to call this a techni-mentals call, but many investors look at a blend of charts and fundamentals when making their decision. Of the eight Buy ratings, the four that are most aligned on technicals and fundamentals are Dover Corp. (NYSE: DOV), Masco Corp. (NYSE: MAS), Norfolk Southern Corp. (NYSE: NSC) and Thermo Fisher Scientific Inc. (NYSE: TMO).

We have included the technical analysis and most recent trading history here on each one. We also have included the fundamental ratings and price objectives from Merrill Lynch, along with the consensus analyst target prices from Refinitiv. A chart snapshot from StockCharts.com on each recent trading activity is included at the end as well, along with the key exchange traded funds for the Dow Jones industrials and S&P 500 as a comparison.

Dover

Dover is said to have bullish chart patterns favoring further upside to $107, and then perhaps up to $112 to $114, and its shares closed up 2.3% at $95.96 on Monday after hitting new all-time highs. Merrill Lynch noted that the immediate trend will remain positive, while the stock is above $90 first and even down to $88. Merrill Lynch’s fundamental analyst team has a $105 price objective and a Buy rating on Dover.

This diversified manufacturer of industrial products is shown to be made up of more than 30 independent companies that operate globally in three segments: Refrigeration & Food Equipment, Fluids and Engineered Systems.

The stock has a 52-week range of $65.83 to $95.98 and a consensus price target of $93.85. Its market cap is $13.9 billion, and the dividend yield is 2.0%.

Masco

In late 2018, Masco was noted as having leadership, and that it bodes well for the company in 2019. Its shares closed flat at $39.31 on Monday, and Merrill Lynch sees its chart holding the $36 handle down to $33 keeping its stock chart constructive. The firm sees a rise above $40.20 to $41.00 as generating a price action target range of $46.00 to $46.44. Merrill Lynch’s fundamental analyst team has a Buy rating and a $44 price objective on Masco.

This top building products company produces and sells paints, faucets, shower heads and other products for plumbing, cabinets, windows and hardware. Merrill Lynch noted that approximately 85% of its total 2018 revenues were attributable to residential repair and remodeling activities, with the remaining 15% from new residential construction.

Shares of Masco have a 52-week trading range of $27.03 to $41.76 and a consensus price target of $44.31. The market cap is $11.6 billion. The dividend yield is 1.2%.

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Norfolk Southern

Shares of Norfolk Southern were up 3.5% at $193.54 on Monday, and Merrill Lynch noted that a breakout from a six-month bullish consolidation pattern targets it up to a range of $210 to $227. Even holding $184 first and down to $174 would keep the pattern bullish, according to the call. The Merrill Lynch fundamental analyst team has a Buy rating and a $44 price objective on the rail giant.

This railroad operator should need no introduction as it runs the giant Norfolk Southern Railway line through more than 20 states. Merrill Lynch raised its rating to Buy and the price objective was raised to $205 from $190 just on April 1, so this is a fresher positive call than some of the others that seem to be ongoing. Merrill Lynch also sees Norfolk Southern increasing its share buybacks by more than $1.2 billion, about 38% above the firm’s current $4.4 billion buyback estimate over a three-year window.

Norfolk Southern has a 52-week range of $127.79 to $193.78. The consensus analyst target is $192.67, the market cap is $51.6 billion and the dividend yield is 1.8%.

Thermo Fisher

Thermo Fisher Scientific was up 0.9% at $276.19 on Monday, with shares having hit all-time highs, and Merrill Lynch sees that if it holds $254 and down to $246, then it will still keep a bullish continuation pattern breakout intact and would favor further upside to $292 to $298 ahead. The fundamental analyst team has a Buy rating and has set its fundamental price objective at $285.00.

This is the largest and most diversified life sciences company, with a product portfolio consisting of analytical instruments, lab equipment, consumables, software and services used for all stages of scientific testing, research and manufacturing, as well as in safety and environmental testing. Its sales growth was over 16% to $24.36 billion in 2018 alone, and the consensus estimates are looking for $25.2 billion in 2019 revenues and $26.6 billion in 2020 revenues.

Thermo Fischer has a consensus price target of $273.50 and a 52-week range of $202.39 to $276.66. It also has a market cap of $110.2 billion and a dividend yield of 0.3%.