Seeking Alpha

Merrill Lynch unveils its top 10 stocks to buy for 2014

  • BofA Merrill Lynch is a more cautious buyer of stocks after this year's gains, and its top 10 large-cap stocks to buy for 2014 are mostly under-owned and unloved on Wall Street: ADM, Caterpillar (CAT), CenturyLink (CTL), Citigroup (C), Cisco (CSCO), DaVita (DVA), Exxon (XOM), GM, NextEra Energy (NEE) and Nucor (NUE).
  • On CAT, the Lynch analysts point to high foreign sales prospects for 2014, and see strength in energy-related profits offsetting weakness in global mining; the firm has a $100 price target vs. ~$90 consensus.
  • XOM is considered inexpensive compared to many large-cap energy names, it is expected to continue its large share buyback program and should increase the dividend; Lynch's target is $110 vs. $96 consensus.
  • NUE is the ultimate contrarian play, as Wall Street is underwhelmed by steel stocks, but Lynch sees a rebound in commercial building as a big boost for 2014 earnings; the firm has a $60 target vs. $55 consensus.
Comments (35)
  • Archman Investor
    , contributor
    Comments (2353) | Send Message
     
    And there you have it. More "innovative" research from the brightest and the best.

     

    Under owned? Unloved?

     

    These stocks rank right up there with every over owned and over loved large cap stock that exists right now. Is BAC trying to tell people that these stocks aren't in the S & P 500, or total stock market index funds, which are the most owned index by institutions and investors?

     

    This is what I have been saying for years: It is comical what passes for "innovative" Wall Street research and recommendations.

     

    Here is a more realistic translation: Buy what we own in our own inventory because we need to show we are making money. Plus we want to sell you what is in our inventory cause we gotta eat too.
    7 Dec 2013, 08:36 AM Reply Like
  • dicere
    , contributor
    Comments (4) | Send Message
     
    24 years at NYSE firms and as a portfolio manager for a RIA
    7 Dec 2013, 12:48 PM Reply Like
  • dicere
    , contributor
    Comments (4) | Send Message
     
    The function of a brokerage firm is distribution from those who know the value to those who do not.
    7 Dec 2013, 12:49 PM Reply Like
  • okmnx
    , contributor
    Comments (13) | Send Message
     
    Archman-- last paragraph sums-it-up. Well said.
    7 Dec 2013, 08:43 AM Reply Like
  • Uncle Pie
    , contributor
    Comments (2689) | Send Message
     
    Not exactly groundbreaking research.
    7 Dec 2013, 08:56 AM Reply Like
  • garyreynolds.rdg
    , contributor
    Comments (26) | Send Message
     
    I do not see many of the big houses excelling at individual stock analysis and selection on these e-mail blast.
    7 Dec 2013, 09:05 AM Reply Like
  • pemdas1
    , contributor
    Comments (150) | Send Message
     
    I like the list, and own many of them. I think the theme is low PE stocks that can outperform if the economy recovers.
    7 Dec 2013, 09:14 AM Reply Like
  • Patent News
    , contributor
    Comments (1312) | Send Message
     
    these people commenting negatively seem jealous.
    7 Dec 2013, 09:26 AM Reply Like
  • Patent News
    , contributor
    Comments (1312) | Send Message
     
    DVA is a warren buffett stock but it does not have a dividend.
    7 Dec 2013, 09:29 AM Reply Like
  • Patent News
    , contributor
    Comments (1312) | Send Message
     
    a lot of these are warren buffett stocks which make sense for most portfolios.

     

    CAT not sure if they will beat on foreign sales prospects versus losses in other areas, some chance but not high.

     

    Cisco needs a new CEO and better strategies for the cloud.
    7 Dec 2013, 09:33 AM Reply Like
  • Michael Bryant
    , contributor
    Comments (5363) | Send Message
     
    I would not buy (CSCO). Too big. Not a lot of growth. And yes, management is bad.

     

    (CAT) dominates its industry, but I see more competition coming.
    7 Dec 2013, 10:14 AM Reply Like
  • samuel_liu
    , contributor
    Comments (2797) | Send Message
     
    thanks Michael.
    7 Dec 2013, 10:27 AM Reply Like
  • Patent News
    , contributor
    Comments (1312) | Send Message
     
    NUE seems like a bad choice of all of the list probably lowest chance of good performance, high debt, high PE, low dividend - too much overhang.
    7 Dec 2013, 09:36 AM Reply Like
  • moneymorality
    , contributor
    Comments (89) | Send Message
     
    Not sure where you got your numbers. NUE has just 30% debt to total capital, which is low for an industrial and unheard of for a steel company. Their dividend is close to 3%. Significantly higher than both Dow and S&P. Their P/E is not not high relative to where their forward earnings will come in and you need to account for some adjustment and charges. You should do some research on the company and their history. You will be surprised and impressed.
    8 Dec 2013, 10:15 AM Reply Like
  • BAHAMAS1
    , contributor
    Comments (1801) | Send Message
     
    Don't agree with some of these.

     

    I can't trust CAT management for many reasons and would replace it with JOY.

     

    COP,CVX,BP- all or any of these in place of XOM.

     

    Add ETN (Eaton) who is anticipated to have a big 2014 and great management.

     

    Add JPM and AIG to Citigroup as financials.

     

    Good luck to all.
    7 Dec 2013, 09:49 AM Reply Like
  • JohnBinTN
    , contributor
    Comments (3585) | Send Message
     
    I own and add to both (XOM) and (COP) regularly. Both of them have done nothing but increase the value of my investments.
    7 Dec 2013, 03:20 PM Reply Like
  • ComputerBlue
    , contributor
    Comments (681) | Send Message
     
    Yawn. I prefer bahamas1 suggestions.
    7 Dec 2013, 09:59 AM Reply Like
  • BAHAMAS1
    , contributor
    Comments (1801) | Send Message
     
    Thanks ComputerBlue.
    Imo. can't go wrong with those picks plus good dividends from most.

     

    I feel AIG and C will compensate for lower dividends with true capital gains over 2014 and forward.

     

    Good Luck to you.
    7 Dec 2013, 10:08 AM Reply Like
  • Michael Bryant
    , contributor
    Comments (5363) | Send Message
     
    The only one I like is (DVA). Heathcare will still be a winner. And good slow growth. http://yhoo.it/11kAOFu;c=

     

    (ADM)? Sorry, but corn-based ethanol is a losing game. Further, watch politics. And.............approa... resistance. http://yhoo.it/19paV8A;c=

     

    Anybody looking at Komatsu (OTCQB:KMTUY)?

     

    (CTL) seems to be near a technical bottom. http://yhoo.it/19paT0r;c=
    7 Dec 2013, 10:24 AM Reply Like
  • hneumann
    , contributor
    Comments (560) | Send Message
     
    Buffet changed COP for XOM, despite (or because) XOM has a much higher P/E
    7 Dec 2013, 10:40 AM Reply Like
  • berloe
    , contributor
    Comments (1575) | Send Message
     
    XOM normal P/E=14.9 Now @ 12.6

     

    COP normal P/E=10.6 Now @ 12.1

     

    Courtesy FAST graphs

     

    DD- long XOM; looking to add more or COP
    7 Dec 2013, 12:29 PM Reply Like
  • Veritas1010
    , contributor
    Comments (1313) | Send Message
     
    Excellent reply berloe. Agree succinctly.
    7 Dec 2013, 12:54 PM Reply Like
  • Snaphil
    , contributor
    Comments (12) | Send Message
     
    I love NÉE this one has a good div. and not a bad growth stk! Can I get someone's feelings on this one?
    7 Dec 2013, 10:49 AM Reply Like
  • kata
    , contributor
    Comments (443) | Send Message
     
    The general feeling is that all utilities will underperform in 2014. That said, NEE, the old Florida Power and Light, will probably continue to do better than most. You might want to take a look at D or DTE as well.
    7 Dec 2013, 06:23 PM Reply Like
  • Derek A. Barrett
    , contributor
    Comments (3534) | Send Message
     
    I've had it for a year so am looking backwards. It is a well run shop and the first company to receive the Deming award for quality outside of Japan. Electricity in Florida is like fertilizer for food, always going to be a demand. Not sure what the fundamental value is here though as I haven't analyzed it in a while.

     

    Speaking of which ADM is on my put hit list, the revenue increases this company is showing are pretty amazing.
    8 Dec 2013, 08:26 AM Reply Like
  • phredwelll
    , contributor
    Comments (6) | Send Message
     
    CTLwill hit $37.00 in 2014,plus 7% dividend. Yummy
    7 Dec 2013, 12:04 PM Reply Like
  • Realtoi
    , contributor
    Comments (246) | Send Message
     
    lol, if they're wrong with their price target, they just raise or lower the price target! Gee, I could do that for about $900k less salary than their analysts.
    7 Dec 2013, 12:31 PM Reply Like
  • combatcorpsmanVN
    , contributor
    Comments (658) | Send Message
     
    BAC's recommendations for 2014 aren't a surprise. Nothing wrong w/ big caps, especially since many investors have been and are currently still chasing Yield. 10 year T pays about 2.7% which, when inflation is considered, keeps the investor under water in a net sense.

     

    I've watched author after author blast MSFT this year but since MSFT made them look like fools; the new flavor of the month is to hate Chambers and CSCO. I don't give a hoot if Chambers stays or goes but CSCO at $21/sh and a 3.3% dividend makes sense to me. And, I have no problem writing Calls on the position which enhances the yield on CSCO -- and, from what I can see -- CSCO will offer price appreciation from the $21/sh level IMO.
    7 Dec 2013, 06:55 PM Reply Like
  • Derek A. Barrett
    , contributor
    Comments (3534) | Send Message
     
    Well done combat, the big techs are cash machines for options. Their reliable mediocrity and huge cash flows (and hence big dividends) make them excellent cash machines. I was actually sad when MSFT finally broke out of it's 10 year range, but it is still profitable selling puts on the way up.

     

    Agree with you on the 21 price for CSCO, seems to be the magic number right now.
    8 Dec 2013, 08:24 AM Reply Like
  • nafar
    , contributor
    Comments (217) | Send Message
     
    In order to avoid controversy, it would have been better had Merrill provided forward P/E for 2014 with SWOT analysis. The performance of their recommended companies for 2013 may also be provided with the rank of advance in their particular sector.
    8 Dec 2013, 09:12 AM Reply Like
  • jci12
    , contributor
    Comments (2) | Send Message
     
    Regarding NUE, one may see a difference of opinion based on this report from last week here in case you missed it.

     

    http://seekingalpha.co...;seekingalpha.com/arti... <br/>
    8 Dec 2013, 02:38 PM Reply Like
  • jci12
    , contributor
    Comments (2) | Send Message
     
    Regarding NUE, one may see a difference of opinion based on this report from last week.

     

    http://seekingalpha.co...
    8 Dec 2013, 02:40 PM Reply Like
  • hneumann
    , contributor
    Comments (560) | Send Message
     
    Berloe, thanks for the info
    8 Dec 2013, 04:53 PM Reply Like
  • Steven Brown
    , contributor
    Comments (12) | Send Message
     
    AMD. in the list...
    The stock appears to be following a positive path of turnaround efforts. In the last two years the stock has ranged between $2 and $8. Its $3.35 price is ripe for gains, due to its innovation that has brought tech partners together, which could be a game changer in the high end server market. The company's cash flow is decent while earnings are getting better.
    8 Dec 2013, 09:04 PM Reply Like
  • Oldstockguru
    , contributor
    Comments (83) | Send Message
     
    Stock picking is a skill you build up over time, never take the advice of stock peddlers. Warren Buffett said-"The dumbest reason in the world to buy a stock is because it is going up, you can't buy what is popular and do well." Remember when you follow the herd, you always step in their crap.
    9 Dec 2013, 09:23 AM Reply Like
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