Change can be good in the financial industry, and last month one of biggest changes on Wall Street in years was pulled off without a hitch when many of the highest profile stocks were moved into a new sector. Under the shakeup of the Global Industry Classification Standard, many top companies were moved out of the technology and consumer discretionary sectors into the new group. This new sector is a revised version of the former telecommunications sector and is now called communications services.

Given the high-profile stocks in the sector, portfolio managers have continued buying the stocks, and in a new research report, Merrill Lynch spotted the huge move and said this:

Our work suggests that Communication Services is not only overweight by large cap active managers (relative weight of 1.29x), but is more crowded than any other sector, and is also near a record overweight versus its history based on our data since 2008.

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Merrill Lynch found 12 companies that are the most overweight in portfolios by managers, and we screened that list for companies that are rated Buy. We found five that still make sense in a stock market that is very wobbly now, but they should continue to be leaders for years to come.

Alphabet

The search giant continues to expand and, while search is king, the cloud presence is growing fast. Alphabet Inc. (NASDAQ: GOOGL) is a global technology company focused on key areas, such as search, advertising, operating systems and platforms, enterprise and hardware products. It generates revenue primarily by delivering online advertising and by selling apps and contents on Google Play, as well as hardware products. The company provides its products and services in more than 100 languages and in 190 countries, regions and territories.

Alphabet offers performance and brand advertising services. It operates through Google and Other Bets segments. The Google segment includes principal internet products, such as Search, Ads, Commerce, Maps, YouTube, Apps, Cloud, Android, Chrome and Google Play, as well as technical infrastructure and newer efforts, such as virtual reality.

The company blew out the latest earnings numbers, and with a wide and bountiful silo of products and services, the stock remains almost unchallenged. It should be noted that traffic acquisition cost relief drove 20% gross profit growth, despite heavy cloud infrastructure and YouTube content investment.

At a recent conference, Google outlined expanding capabilities to facilitate commerce, capitalizing on the “treasure trove” of data provided by seven different properties, each with at least a billion active users (Android, Search, Chrome, Maps, Play, YouTube and Gmail). Smart shopping campaigns leverage machine learning to make sense of touch points along the consumer purchase path, including better offline attribution capabilities (locally oriented searches up 200% over past two years) and improved purchase conversion rates (20% on average).

Merrill Lynch has set its price target for the stock at $1,390. The Wall Street consensus estimate is $1,386.29, and shares closed at $1,090.74 on Thursday.

Charter Communications

This top cable giant has been linked to Verizon in takeover chatter in the past, but that seems unlikely now. Charter Communications Inc. (NASDAQ: CHTR) is a leading broadband communications company and the second-largest cable operator in the United States. It provides a full range of advanced broadband services, including Spectrum TV video entertainment programming, Spectrum Internet access and Spectrum Voice.

Spectrum Business similarly provides scalable, tailored and cost-effective broadband communications solutions to business organizations, such as business-to-business internet access, data networking, business telephone, video and music entertainment services and wireless backhaul.

The company made a huge investment in Time Warner Cable, and Charter is tracking well on its integration, which will enable all of its product offerings, pricing, packaging and service operations to be universal across its footprint. By the end of the year, the company plans to finish converting the remaining analog parts of the cable network to all-digital.

The $425 Merrill Lynch target price is well above the $377.16 consensus target. The shares closed most recently at $301.92.

Discovery

This is a somewhat off-the-radar media content play that could bring solid returns. Discovery Inc. (NASDAQ: DISCA) is one of the leading global providers of cable networks. Its portfolio of networks includes key networks such as Discovery Channel, Food Network, Eurosport (international network), HGTV, Animal Planet, The Learning Channel (TLC) and Travel Channel, as well as OWN (the Oprah Winfrey Network), DIY, Science Channel, Motor Trend Network and Investigation Discovery.

Discovery completed an $11.9 billion acquisition of Scripps in March, integrating the largely female-focused lifestyle channels such as HGTV, Travel Channel and Food Network with Discovery’s current channels. Most on Wall Street feel that strong post-Scripps merger execution for advertising and distribution should drive an acceleration in U.S. revenue growth over the next few quarters.

Merrill Lynch has a $35.50 price target, and the consensus target is $31.31. Shares closed Thursday at $31.02.

Facebook

The huge social media leader has been incredibly volatile since posting absolutely horrible quarterly results. Facebook Inc. (NASDAQ: FB) is the largest social network with over 2.0 billion monthly active users and over 1.4 billion daily active users. The company generates revenue from advertising and from payments, with over 95% of revenue from advertising. It generates close to 50% of revenues in the United States and Canada and is expanding rapidly in international markets.

Its solutions also include Instagram, a mobile application that enables people to take photos or videos, customize them with filter effects, and share them with friends and followers in a photo feed or send them directly to friends; Messenger, a messaging application for mobile and web on various platforms and devices, which enable people to reach others instantly, as well as enable businesses to engage with customers; and WhatsApp Messenger, a mobile messaging application.

Despite the disappointing earnings results and metrics, which caused the shares to sell off a stunning 20%, Facebook is used by some 60% of small businesses, which utilize the company’s advertising platform in some way for their businesses. The ability to grow that number is a huge positive for the beleaguered social media giant.

In addition, marketing data suggests that despite the negative headlines around data privacy, slowing engagement and shift to Stories, Facebook advertising return-on-investment remains strong, and the platform’s targeting capabilities and reach remain the best in class.

The Merrill Lynch price target is $205. The consensus target is $208.86, and shares closed most recently at $153.35, actually up on the day despite the sell-off.

Netflix

This Wall Street darling and FANG constituent could offer solid upside. Netflix Inc. (NASDAQ: NFLX) is the world’s leading internet television network, with more than 70 million members in over 190 countries enjoying more than 125 million hours of TV shows and movies per day, including original series, documentaries and feature films. Members can watch as much as they want, anytime, anywhere, on nearly any internet-connected screen. Members can play, pause and resume watching, all without commercials or commitments.

Netflix is available on virtually any device with an internet connection, including personal computers, tablets, smartphones, smart TVs and game consoles, and it automatically provides the best possible streaming quality based on available bandwidth. Many titles, including Netflix original series and films, are available in high-definition with Dolby Digital Plus 5.1 surround sound and some in Ultra HD 4K. Advanced recommendation technologies with up to five user profiles help members discover entertainment they’ll love.

The Merrill Lynch price target is $410, and the consensus target is $381.95. The shares closed Thursday at $321.10.

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Needless to say, the stock market has been very volatile to the downside, and high-profile technology companies have been hammered. With earnings right around the corner, it may make sense to buy partial positions now and wait for the results. Over the long haul, tech and content leaders and providers will stay popular. For now, the only question is timing, and after the recent big-time selling, many look like they are on sale.

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