With earnings for the first quarter coming in hot and heavy, and the second quarter of 2020 well underway, many of the top companies we follow on Wall Street are making some changes to the lists of their high-conviction stock picks for clients. With the market displaying historically high volatility, it makes sense for the major firms to examine the lists and make some changes, as the rest of the year could add additional volatility, as the political and geopolitical cycle could prove to be very explosive components, in addition to the ongoing remarkable coronavirus issues.
In a recent research note, the analysts at BofA Securities make a big move by removing Walt Disney Co. (NYSE: DIS) from the firm’s well-respected US 1 list of stocks to buy. While keeping a Buy rating on the stock, and a $123 price target, the closure of the theme parks, declining advertising and a host of other issues probably all contributed to the removal. The consensus price objective across Wall Street for the entertainment giant is $129.29. The last Disney stock trade on Thursday came in at $100.90 a share.
In addition, the US 1 team also announced that Salesforce.com Inc. (NYSE: CRM) is being maintained on the list for a new 12-month term. Salesforce offers enterprise cloud computing applications and platform services, including Sales Cloud, which 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.
BofA Securities has a $180 price objective for Salesforce.com stock. That compares with the higher consensus target of $195.45 and Thursday’s close at $151.72.
We also screened the current US 1 list stocks looking for companies that are solid choices for long-term growth accounts looking to put some capital to work. Three look especially intriguing now.
Bristol-Myers
This is the only large-cap pharmaceutical on the US 1 list of top stock picks. Bristol-Myers Squibb Co. (NYSE: BMY) is a global pharmaceutical company focused on discovering, developing, licensing and marketing chemically synthesized drugs or small molecules and biologics in various therapeutic areas, including virology comprising human immunodeficiency virus infection (HIV), oncology, neuroscience, immunoscience and cardiovascular.
Bristol-Myers reported strong fourth-quarter results that were largely ahead of Wall Street consensus estimates, given the recognition of revenue from Celgene, which the company bought last year in a massive $74 billion acquisition. Bristol-Myers is expected to report first-quarter results on April 30.
Shareholders receive a solid 2.94% dividend. The BofA Securities price target is $75, while the consensus target is $70.45. Bristol-Myers stock closed trading on Thursday at $60.94.
Lam Research
This remains one of the top chip equipment picks across Wall Street, and it was up big on the bullish report. Lam Research Corp. (NASDAQ: LRCX) designs, manufactures, markets, refurbishes and services semiconductor processing equipment used in the fabrication of integrated circuits. The company offers plasma etch products that remove materials from the wafer to create the features and patterns of a device.
Many Wall Street analysts have highlighted the company and its peers as having a significant equipment opportunity from the NAND evolution as well. Lam Research also appears well positioned to gain share in the wafer fab equipment market, driven by a strong focus on technology inflection spending over the next few years.
Lam Research stockholders receive a 1.70% dividend. BofA Securities recently raised its price objective to $340. The posted consensus target price is $305.76. The final trade on Thursday was reportedly down almost 3% to $263.96.
24/7 Wall St.UPS
Needless to say, with many at home due to current lockdown rules, the delivery business has been red hot. United Parcel Service Inc. (NYSE: UPS) provides logistics, freight (air, sea, ground, rail) forwarding, international trade management and customs brokerage.
The company has roughly 481,000 employees (390,000 in the United States) and serves more than 220 countries and territories. It operates a fleet of 237 UPS aircraft, as well as a ground fleet of more than 110,000 delivery vehicles. More than 46% of its volume is business-to-consumer, and it delivers more than 18 million packages per day globally.
UPS said earlier this year that it aims to more than double weekend deliveries in 2020 as package carriers look for ways to satisfy the always-on demands of e-commerce customers, including rising rival Amazon.com. UPS is vying also to attract more retailers that want to keep pace with Amazon shipping speeds, while holding on to its Amazon business, which accounts for almost 20% of company volume.
Shareholders receive a 4.04% dividend. BofA Securities has set a $109 price target, which is above the $107.78 consensus target. UPS stock was last seen trading at $99.45 a share.
One big-time stock removed from the vaunted US 1 list, one remains on the list, and three additional ideas that offer solid growth and dependable dividends. Given the huge market moves this year, it may be wise to buy partial positions and see if we don’t indeed see a test of the lows in March, or at least a sizable pullback.
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