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Highlights From Barclays' 2016 Top Picks' List

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Highlights From Barclays' 2016 Top Picks' List
  • As 2015 comes to an end, a team of analysts at Barclays compiled their list of top picks for 2016.
  • The analysts noted that ongoing headwinds, such as China concerns, do not imply a retreat from equities in the near term.
  • The analysts added that equity valuations are in-line with their long-term average, and the key to continued appreciation rests with earnings.

The analysts pointed out that from a historical perspective, early stages of U.S. Federal Reserve tightening have not derailed global equities. In fact, the market's "eventual resilience" following the Fed's decision to end its QE program in October 2014 provides "recent evidence of the market's hitherto relatively relaxed approach to the withdrawal of extremely loose monetary conditions."

With that said, the analysts presented their top picks, all of which are Outperform rated.

Here is a summary of some of the more notable picks.

Apple

Apple Inc. (NASDAQ: AAPL) has three major characteristics that could contribute to a 10 percent or better earnings growth: 1) a loyal consumer base, 2) the recently announced iPhone financing program, and 3) an underappreciated growth coming from the iPad Pro.

Shares are Overweight rated with a $155 price target.

Facebook

As advertising dollars continue shifting online, Facebook Inc (NASDAQ: FB) will prove to be a "major beneficiary of this seismic shift." In fact, the company has already shown an "impressive transition" from desktop to mobile as 78 percent of its ad revenue is derived from mobile devices.

Shares are Overweight rated with a $140 price target.

MobileEye

Simply put, Mobileye NV (NYSE: MBLY) is in the "sweet spot" of the "fast-growing" advanced driver assistance systems and semi-autonomous driving markets.

Shares are Overweight rated with a $76 price target.

Nasdaq

Nasdaq Inc (NASDAQ: NDAQ) is the most compelling investment case among its peers due to: 1) the stock trading at a "meaningful" discount to its peers and the overall market, 2) a "strong" free cash flow that can continue supporting "outsized" capital return initiatives, and 3) a consistently-growing revenue profile.

Shares are Overweight rated with a $64 price target.

PepsiCo

PepsiCo, Inc. (NYSE: PEP) "offers the best of both worlds" within the U.S. beverage space: a "robust" fundamental outlook and the potential for longer-term strategic action within both its beverage and snacks business.

Shares are Overweight rated with a $111 price target.

Salesforce

salesforce.com, inc. (NYSE: CRM) has demonstrated an impressive ability to sustain growth through a "healthy" combination of development and strategic acquisitions while simultaneously improving profitability. The investment case is further solidified by the fact that the company is "creating a difficult environment for challengers."

Shares are Overweight rated with a $90 price target.

Sprouts Farmers Market

As the ongoing "health and wellness" continues to expand, Sprouts Farmers Market Inc (NASDAQ: SFM) is "well positioned" given its unique store format, targeted product assortment, and price advantage in produce that are at least 20 percent below its competitors.

Shares are Overweight rated with a $30 price target.

Steel Dynamics

Steel Dynamics, Inc. (NASDAQ: STLD) inclusion to the top ideas list may be surprising given the stock lost more than 25 percent over the past year amid plunging steel prices. Nevertheless, the analysts expect the company to outperform its peers by maintaining its industry-high operating rates, refining its product portfolio and establishing a "solid" free cash flow generation.

Shares are Overweight rated with a $24 price target.

United Continental

United Continental Holdings Inc (NYSE: UAL) is best positioned among its peers given its "outsized" international exposure that is Atlantic and Pacific based rather than the "more economically challenged" Latin American markets. In addition, the return of the company's CEO Oscar Munoz will "reinvigorate" the company's efforts to close the margin cap versus its legacy peers in 2016.

Shares are Overweight rated with a $78 price target.

Valera Energy

Valera Energy Corporation (NYSE: VLO) is a top pick among refiners given its "commitment to pursuing growth opportunities" while simultaneously returning cash to shareholders. In fact, the analysts expect the company to buy back $500 to $600 million of its stock every quarter through the end of the decade while raising its annual dividend payout by at least 10 percent per year.

Shares are Overweight rated with a $93 price target.

Latest Ratings for AAPL

DateFirmActionFromTo
Aug 2019Initiates Coverage OnEqual-Weight
Jul 2019MaintainsHold
Jul 2019MaintainsBuy

View More Analyst Ratings for AAPL
View the Latest Analyst Ratings

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