<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Stocks are putting up impressive numbers so far this year. The S&P 500 is up 15%, and the tech-heavy NASDAQ is up 17.9%, and patient investors are reaping the rewards. But as this past May has shown, the markets are still volatile, and it’s tempting to look for ‘safe play’ investment. According to five-star blogger Aaron Levitt (Track Record & Ratings), the right stocks to buy are “the kind of equities that could be immune to the various geopolitical and economic events that are plaguing the markets currently.” So let’s dive into the TipRanks database and look at three stocks that are primed to keep delivering in the second half.” data-reactid=”11″>Stocks are putting up impressive numbers so far this year. The S&P 500 is up 15%, and the tech-heavy NASDAQ is up 17.9%, and patient investors are reaping the rewards. But as this past May has shown, the markets are still volatile, and it’s tempting to look for ‘safe play’ investment. According to five-star blogger Aaron Levitt (Track Record & Ratings), the right stocks to buy are “the kind of equities that could be immune to the various geopolitical and economic events that are plaguing the markets currently.” So let’s dive into the TipRanks database and look at three stocks that are primed to keep delivering in the second half.
<h4 class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="McDonald’s Corporation (MCD)” data-reactid=”12″>McDonald’s Corporation (MCD)
Fast food burgers might not come immediately to mind when you hear the phrase ‘Return on Investment,’ but McDonald’s has been delivering more than just quick eats. The company has gained an impressive 15.7% so far this year, rising from $173 on January 2 to a closing price of $201 on June 10. Even more impressive, between May 3 and June 3, while the S&P 500 was slipping 6.8%, MCD shares were gaining 1.2%.
It’s all part of a steady-growth story going back to May of 2015, when current CEO Steve Easterbrook took over. McD’s had just posted its first sales decline in more than a decade, and the new chief’s mandate was simple: refresh a stale brand. His ‘Turnaround Plan’ got the company back to basics, emphasizing fresher, higher quality ingredients; a streamlined menu; and physical rebuilding efforts in the company’s aging franchise locations. Through it all, McDonald’s has maintained its high dividend; the payout is now $4.64 annually, for a yield of 2.26%.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="The market’s analysts agree that MCD is on a stable upward path. Writing at BTIG, Peter Saleh (Track Record & Ratings) says, “The company’s menu strategy shift has boosted comps. Expect the increased menu focus on bundles and full price items – and away from deep discounts – to drive higher U.S. average check for the next couple of quarters.” Saleh boosted his price target to $220 on MCD, suggesting an upside of over 9%.” data-reactid=”15″>The market’s analysts agree that MCD is on a stable upward path. Writing at BTIG, Peter Saleh (Track Record & Ratings) says, “The company’s menu strategy shift has boosted comps. Expect the increased menu focus on bundles and full price items – and away from deep discounts – to drive higher U.S. average check for the next couple of quarters.” Saleh boosted his price target to $220 on MCD, suggesting an upside of over 9%.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Saleh’s not alone. Weighing in from Merrill Lynch last week, Gregory Francfort (Track Record & Ratings) sees “2Q-4Q same-store sales (including 3.9%-4.2% for the U.S.) looking conservative with more upside potential than downside risk.” Like Saleh, he gives MCD a $220 price target.” data-reactid=”16″>Saleh’s not alone. Weighing in from Merrill Lynch last week, Gregory Francfort (Track Record & Ratings) sees “2Q-4Q same-store sales (including 3.9%-4.2% for the U.S.) looking conservative with more upside potential than downside risk.” Like Saleh, he gives MCD a $220 price target.
Overall, MCD has a ‘Strong Buy’ consensus based on 17 analyst ratings given in the last three months, including 13 buys and 4 holds. The stock sells for $201 as of June 10, and the average price target of $216 indicates an upside potential of 7.44%.
<h4 class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Comcast Corporation (CMCSA)” data-reactid=”29″>Comcast Corporation (CMCSA)
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Like hamburgers, you wouldn’t necessarily pick the cable company as a market outperformer. Comcast has managed just that, however, gaining 20% year-to-date. The secret lies in streaming – by its Hulu agreement with Disney (DIS) Comcast is staking out a position in the future of television.” data-reactid=”30″>Like hamburgers, you wouldn’t necessarily pick the cable company as a market outperformer. Comcast has managed just that, however, gaining 20% year-to-date. The secret lies in streaming – by its Hulu agreement with Disney (DIS) Comcast is staking out a position in the future of television.
The Hulu agreement gives Disney operating control of Hulu now – it already has a controlling stake in the company – while committing both parties to a minimum sale price for Comcast’s shares in 2024. The advantage for Comcast is two-fold: the company can focus on releasing its own streaming service next year, while continuing to enjoy the profits from Hulu. And should Disney work its usual magic and boost Hulu’s valuation, Comcast will sell its share based on the higher valuation.
The near-term forward advantages which Comcast has locked in through the Hulu agreement are only part of the story. Comcast has shown double-digit annual EPS growth 15 times in the last 17 years, and generated $14 billion in free cash over in the last 12 months. Its cable and internet businesses provide a solid foundation to support the content production and technical innovation that the company needs to bring in new customers. The company’s upbeat forward-going prospects are reflected in the EPS estimates over the next three years – continued double digit growth. Add to this company’s attractive valuation and modest-but-reliable dividend, and you’ll understand why the market’s top analysts are so bullish.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="From Morgan Stanley, Benjamin Swinburne (Track Record & Ratings) looks at the details of the Hulu agreement. Acknowledging that Disney has the immediate advantage, he also points out the benefits for Comcast: “The new deal gives it downside protection and content flexibility as it builds out its own streaming plans.” At the end of May, five-star analyst Mike McCormack (Track Record & Ratings), of Guggenheim, upgraded his rating on CMCSA and summed up the company’s position in the simple statement that “[Comcast] is well positioned within a rapidly changing landscape.” McCormack set a price target for the stock at $52, indicating his confidence in a 25% upside.” data-reactid=”37″>From Morgan Stanley, Benjamin Swinburne (Track Record & Ratings) looks at the details of the Hulu agreement. Acknowledging that Disney has the immediate advantage, he also points out the benefits for Comcast: “The new deal gives it downside protection and content flexibility as it builds out its own streaming plans.” At the end of May, five-star analyst Mike McCormack (Track Record & Ratings), of Guggenheim, upgraded his rating on CMCSA and summed up the company’s position in the simple statement that “[Comcast] is well positioned within a rapidly changing landscape.” McCormack set a price target for the stock at $52, indicating his confidence in a 25% upside.
Comcast’s analyst consensus, based on all of its reviews over the last three months, is a ‘Moderate Buy.’ This consensus includes 7 buys and 3 holds. The stock is selling for $41, and the average price target of $48 suggests an upside potential of 17%.
<h4 class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Microsoft Corporation (MSFT)” data-reactid=”50″>Microsoft Corporation (MSFT)
And here’s the mature giant of the tech world, simply doing everything right. Microsoft has gained 32% year-to-date, head and shoulders above the S&P 500 and the NASDAQ indexes, and it has done so quietly, without generating the type of buzz that surrounds the FANG stocks. However quiet it may be, thought, the success is unmistakable. On June 7, Microsoft became the third publicly traded company break above $1 trillion in market cap.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="The immediate driver of the company’s growth is the wild success of its Azure cloud computing service. Arriving several years after Amazon Web Services, Azure has enjoyed faster growth rates, a fact noted by Phillip Winslow (Track Record & Ratings) of Wells Fargo, who added, “The full multi-year impact of Azure’s growth potential is still not properly reflected in consensus estimates for Microsoft.” Winslow’s estimate includes a price target of $145, indicating a possible 9.35% upside to the stock.” data-reactid=”52″>The immediate driver of the company’s growth is the wild success of its Azure cloud computing service. Arriving several years after Amazon Web Services, Azure has enjoyed faster growth rates, a fact noted by Phillip Winslow (Track Record & Ratings) of Wells Fargo, who added, “The full multi-year impact of Azure’s growth potential is still not properly reflected in consensus estimates for Microsoft.” Winslow’s estimate includes a price target of $145, indicating a possible 9.35% upside to the stock.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="That his estimate may be low is suggested by Bernstein’s Mark Moerdler (Track Record & Ratings), who puts a number to Azure’s potential: “Microsoft could generate more than $140 billion in cloud-computing sales over the long term.” Moerdler sees MSFT shares hitting $152, an upside of 14.6%.” data-reactid=”53″>That his estimate may be low is suggested by Bernstein’s Mark Moerdler (Track Record & Ratings), who puts a number to Azure’s potential: “Microsoft could generate more than $140 billion in cloud-computing sales over the long term.” Moerdler sees MSFT shares hitting $152, an upside of 14.6%.
While the successful shift to the cloud and SaaS is powering the company’s current profits and returns, Microsoft is not placing all of its eggs in that basket. The company has made recent public demonstrations of its xCloud game streaming service, and the demos have highlighted several clear advantages in the field: a proprietary library of several thousand game titles; a ready audience in existing xBox customers; a network of data centers already supporting Azure and available to support game streaming. As Phil Spencer, Microsoft’s head of Project xCloud said, on how streaming is the future of gaming, “There are 2 billion people who play video games on the planet today. We’re not going to sell 2 billion consoles. It’s really about reaching a customer wherever they are, on the devices that they have.”
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Oppenheimer’s five-star analyst Timothy Horan (Track Record & Ratings) sees all of this – the success of Azure and the upcoming xCloud release – as linked. He says, “The company has totally restructured itself around the intelligent edge cloud. Microsoft sees Azure as a base layer that customers use to run their applications on top of but also as a building block for its services up the software stack through dozens of new PaaS and SaaS offerings.” Like Winslow (quoted above), Horan gives MSFT a price target of $145.” data-reactid=”55″>Oppenheimer’s five-star analyst Timothy Horan (Track Record & Ratings) sees all of this – the success of Azure and the upcoming xCloud release – as linked. He says, “The company has totally restructured itself around the intelligent edge cloud. Microsoft sees Azure as a base layer that customers use to run their applications on top of but also as a building block for its services up the software stack through dozens of new PaaS and SaaS offerings.” Like Winslow (quoted above), Horan gives MSFT a price target of $145.
Microsoft holds a ‘Strong Buy’ from the analyst consensus, based on no less than 23 buy ratings given in the last three months. The stock’s average price target of $142 gives a 7.7% upside to the current share price of $132.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Find more fresh investing ideas in TipRanks’ Trending Stocks tool. These are the stocks that are attracting Wall Street’s top analysts; visit today, and find out why!” data-reactid=”68″>Find more fresh investing ideas in TipRanks’ Trending Stocks tool. These are the stocks that are attracting Wall Street’s top analysts; visit today, and find out why!
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