One advantage of covering many of the top brokerage and financial firms here at 24/7 Wall St. on a daily basis is that we often receive some good color on what the professionals are buying and selling. Often, but certainly not always, that can translate into stocks that can be headed higher in the very near future.
A recent report from the trading desk at SunTrust Robinson Humphrey noted that late last week basically only two sectors were being bought, and that was technology and financials. We noted recently that technology was continuing its leadership in the markets.
The SunTrust traders also focused in on some of the stocks that the investors were buying, some of which look like outstanding ideas for not only the near term but solid trades for the rest of 2018. Here we focus on five that have a large following across Wall Street.
Applied Materials
This semiconductor capital equipment leader has one of the broadest ranges of exposure to 3D NAND and Foundry display, and it is also on the Stifel Select List. Applied Materials Inc. (NASDAQ: AMAT) is the global leader in precision materials engineering solutions for the semiconductor, flat panel display and solar photovoltaic industries. Applied Material’s technologies help make innovations like smartphones, flat screen TVs and solar panels more affordable and accessible to consumers and businesses around the world.
The analysts are very positive on the stock, and see Applied Materials benefiting not only on the semiconductor side of the business but also from larger, higher resolution and flexible screens on the display side of the business. It may still be one of the best technology values available for investors today. Some Wall Street analysts see continued FinFET capacity expansion (10nm/14nm/16nm) and transition to 3D NAND, with DRAM spending remaining strong this year.
Semiconductor and Display markets are strong. Many feel there are five top reasons to own the shares: semiconductor capital equipment strength, OLED, investments from China, valuation and $4 in earnings per share in two years.
Applied Materials investors are paid a 1.34% dividend. The Wall Street consensus price target is at $69.90. The stock traded early Wednesday at $60.00. The 52-week trading range for the shares is $37.41 to $62.40.
Hewlett Packard Enterprise
This company was part of the big split in operations at the iconic Hewlett-Packard. Hewlett Packard Enterprise Co. (NYSE: HPE) is now an industry leading technology company that enables customers to go further, faster. With the industry’s most comprehensive portfolio, spanning the cloud to the data center to workplace applications, the company’s technology and services help customers around the world make IT more efficient, more productive and more secure.
The company operates under four segments: Enterprise Group (50% of revenue) has servers, storage, networking hardware and Technology Services. Enterprise Services (37%) has a broad IT outsourcing focus. Software (7%) and Financial Services (7%) make up the remaining portfolio. The company has leading market share across many of its businesses.
Hewlett Packard Enterprise also has a partnership with Microsoft that offers new innovation in Hybrid Cloud computing through Microsoft Azure and Hewlett Packard Enterprise infrastructure and services, as well as new program offerings. The extended partnership appoints Microsoft Azure as a preferred public cloud partner.
Shareholders receive a 1.59% dividend. The posted consensus price target is $19.13. The shares traded just shy of that level Wednesday morning at $18.95. The 52-week trading range for the company is $12.70 to $19.48.
Marvell Technology
This company has made a bold $6 billion bid to buy Cavium. Marvell Technology Group Ltd. (NASDAQ: MRVL) is a fabless supplier of mixed signal and analog semiconductor products to a number of storage, computing and communication applications, including hard disk drives, personal computers, servers, Ethernet switches, printers and connectivity markets.
The Merrill Lynch team is very positive on the company’s purchase of Cavium, and they feel the deal adds significantly to the growth element for the stock. The addition helps to make Marvell solidly positioned in data center, cloud, enterprise, security and 5G.
Shareholders are paid a 1.05% dividend. The consensus price objective was last seen at $27.69. The stock was trading at $22.80 on Wednesday, in a 52-week trading range of $14.58 to $25.18.
Sanmina
This is another company that saw some serious buying recently. Sanmina Corp. (NASDAQ: SANM) is an electronics manufacturing services provider serving the following end markets: industrial, medical and defense (43%), communications networks (37%) and embedded computing and storage (20%).
Sanmina has two reporting segments: Integrated Manufacturing Solutions, which accounts for 80% of revenues, and Components, Products and Services, which accounts for 20%. The company derives approximately 84% of its revenues from non-U.S. operations.
While optical revenues have been somewhat weak in the past two quarters, analysts feel those numbers could turn higher as new programs start to ramp up.
The consensus price target is $32.60. The shares were last seen at $28.40, and the 52-week trading range is $24.60 to $42.95.
Teradyne
This lesser known semiconductor capital equipment leader could also have solid upside potential. Teradyne Inc. (NYSE: TER) provides automatic test equipment (ATE) serving semiconductors, printed circuit board assemblies, and other (automotive, broadband) segments. Its products deliver a competitive advantage to semiconductor, electronics, automotive and network systems companies. Teradyne operates in three segments: Semiconductor Test Systems, Assembly Test Systems and Other Test Systems.
The analysts like this stock as a somewhat ancillary play to the sector and cited the growing emerging robotics silo as more of a reason to own the shares than the fundamentals related to wafer fab equipment. The company also consistently buys back stock.
Shareholders are paid a small 0.73% dividend. The Wall Street consensus price objective is $51.15, and the stock traded at $49.00 early Wednesday. The 52-week trading range is $29.68 to $50.68.
These are five top companies that the traders at SunTrust saw some solid buying in, and they could very well be set up for a solid first quarter. One thing is for sure: anytime there is enough buying to mention specific companies, there is often a reason.
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