At the end of every year, Wall Street research firm RBC Capital Markets puts together a list where it identifies the 30 best stocks to buy for the next 12-month period.
While most of the companies on the list are based in the U.S., it’s a global idea list, so there are a few gems from overseas sprinkled in as well. And compared to its benchmark MSCI Developed World Index, RBC’s Top 30 Global Ideas for 2015 is crushing it.
The scorecard at mid-year: RBC’s Top 30: +5.9%. MSCI Developed World Index: +1.5%.
But what are some of the best stocks to buy today, just over six months after these picks were made? Five of RBC’s top picks in particular stand out as great opportunities:
5 of RBC’s Top Stocks to Buy for 2015: Marathon Petroleum (MPC)
First Half 2015 Performance: +14.2%
Market Capitalization: $30.2 billion
Implied Upside (from 6/30/15): 20.4%
RBC still sees plenty of runway left for Marathon Petroleum (MPC) stock, despite its solid performance so far this year. The company, which refines and markets oil and gas, enjoys “a unique combination of cheap inland crude supplies and access to waterborne export markets,” with its exposure to both the Gulf Coast and the U.S. midwest
And that’s just the skinny on its refining operations. Then there’s the retail side:
“In our opinion, Marathon’s retail business, Speedway, is the most attractive retail franchise in our coverage universe. We see significant opportunities for Marathon to grow the Speedway business going forward, especially given the recent acquisition of Hess’s retail business.”
RBC rates MPC stock a “top pick” and has a $62 price target on shares.
5 of RBC’s Top Stocks to Buy for 2015: Air Lease Corporation (AL)
First Half 2015 Performance: -1.5%
Market Capitalization: $3.4 billion
Implied Upside (from 6/30/15): 86.4%
Air Lease Corporation (AL) isn’t reinventing the wheel. It’s business is simple: It buys commercial planes directly from industry leaders like Boeing (BA) and Airbus (AIR), then leases the planes to airlines who don’t want to lay out the money for planes of their own.
“1) lessors continue to gain a larger market share of the commercial aircraft finance pie, as the supply of bank lending and other financing declines;
2) significant number of new aircraft deliveries ahead will create sizable capital needs for funding aircraft;
3) favorable future supply and demand dynamics for commercial aircraft and funding”.
RBC rates AL stock a “top pick” and has a $63 price target on shares.
5 of RBC’s Top Stocks to Buy for 2015: Reynolds American (RAI)
First Half 2015 Performance: +17%
Market Capitalization: $47.7 billion
Implied Upside (from 6/30/15): +24.1%
In June, Reynolds American (RAI) completed a merger with Lorillard (LO), creating a tobacco superpower with 42% of the U.S. cigarette market. And while it’s widely known that there’s a war on tobacco by regulators and advocacy groups, RBC still likes RAI stock:
“Cigarette volume declines have been trending below average and cigarette pricing has been trending above average. Both dynamics have been driven by a shift in consumption by tobacco consumers to cigarettes from other forms such as roll your own, smokeless and e-cigarettes as well as a decline in gasoline prices/increase in discretionary income.”
RBC rates RAI stock a “top pick” and has a $90 price target on shares.
5 of RBC’s Top Stocks to Buy for 2015: Brookdale Senior Living (BKD)
First Half 2015 Performance: -5.4%
Market Capitalization: $6.2 billion
Implied Upside (from 6/30/15): +21%
Brookdale Senior Living (BKD) runs senior living communities in the U.S., making it a rather reliable cash cow. There’s nothing wrong with reliable cash cows of course, but how could BKD possibly be one of the best stocks to buy in today’s go-go market?
Just listen to RBC:
“We believe there is significant operating leverage in the existing portfolio, as an uptick in the residential housing market or general consumer confidence could help improve occupancy, which would carry high incremental margins and significant leverage.”
Calling companies like Brookdale a “pure play” on the so-called “graying of America,” BKD stock looks like a relatively low-risk play with some nice upside.
RBC rates BKD stock a “top pick” and has a $42 price target on shares.
5 of RBC’s Top Stocks to Buy for 2015: Ryder (R)
First Half 2015 Performance: -5.3%
Market Capitalization: $4.6 billion
Implied Upside (from 6/30/15): +44.8%
You probably know Ryder (R) as a rent-a-truck service, but it’s also big into fleet management and supply chain solutions. And believe it or not, there are “new lines of business” RBC thinks Ryder can successfully enter, which is central to its bullish thesis.
“R continues to explore how it can further leverage its nationwide network of service and repair facilities by providing these services to a new customer base.”
Specifically, RBC believes Ryder enjoys some sustainable competitive advantages it should be able to exploit. For example:
“… it can offer maintenance service at a lower price than an operator would be able to find at a dealer or independent service shop.”
It also doesn’t hurt that the age of Ryder’s fleet is getting younger, sparking earnings growth and margin improvement in the process.
RBC rates R stock a “top pick” and has a $125 price target on shares.
As of this writing, John Divine did not hold a position in any of the aforementioned securities. You can follow him on Twitter at @divinebizkid or email him at firstname.lastname@example.org.
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