RBC Capital: Top 10 Global Ideas for 2018 (Part I)

RBC Capital has now released updated guidance for its Top 30 Global Ideas for 2018. From this list of 30 stock picks, we select only the 10 stocks with a Strong Buy consensus from the Street.

With the market so volatile right now this consensus rating provides reassurance that the Street as a whole has a bullish outlook on these stocks. At the same time, we take a deeper look into why these analysts- many of whom have a very high ranking on TipRanks– believe that these stocks represent the most compelling investment opportunities.

Year-to-date, RBC Capital says its top 30 list has significantly outperformed the MSCI Developed World Index, which makes this a very interesting list indeed… Here we look at the first five of these top stocks- and we will publish five more in our next blog post.

Find your own ‘Strong Buy’ stocks for Q2 with the Top Analyst Stocks tool>>

1. Parsley Energy (NYSE:PE)

Basic materials stock Parsley Energy focuses exclusively on the Permian Basin, one of the most resource-rich oil basins in the world. For RBC Capital analyst Scott Hanold, PE is primed to outperform its rivals over the next 12 months. “PE’s production growth profile, balance sheet, and oil hedge book are best-in- class and differentiate from peers” writes Hanold on April 2. He sees PE reaching $36 (27% upside potential). As we can see from the TipRanks’ chart below, this comes out marginally under the Street’s expected $38 average price target. This suggests impressive upside potential of 35%.

2. Gartner (NYSE:IT)

IT consulting firm Gartner snapped up CEB for $2.6 billion back in March 17. This was a savvy move according to RBC Capital’s Gary Bisbee. He is confident that IT’s management team has what it takes to transform CEB’s sales and retention for the long-term.

“We continue to view Gartner’s acquisition of CEB favorably, which we see as a good fit, and we remain bullish on the many ways that IT can improve CEB’s growth. We see potential for not only several years of elevated ~20% profit growth but also moderate valuation expansion over 18 – 24 months as Gartner proves its ability to improve CEB’s growth.”

This five-star analyst is betting on IT as his Top Stock Pick for 2018 with upside potential of over 23%. We can see that this “Strong Buy” stock has scored 5 recent buy ratings and just 1 hold rating. This is with a $138 average analyst price target. Plus, be aware that you can click on the screenshot below for further IT stock insights:

3. Aptiv Plc (NYSE:APTV)

UK-based tech auto stock Aptiv is undergoing a smart transition from auto supplier to more of a ‘mobility enabler’. Indeed, the company’s goal is to “develop safer, greener and more connected solutions, which enable the future of mobility.” Luckily for investors, top RBC Capital analyst Joseph Spak approves. His Top Pick rating comes with a generous $110 price target (33% upside potential).

According to Spak, Aptiv’s outperformance versus global industry production will continue over the coming years. He believes this strong top-line growth will be driven by a product portfolio which is “well aligned with three important secular themes in auto: safe, green, and connected.” This should allow for further margin expansion and more aggressive M&A or shareholder cash returns. We can see that Aptiv has the Street’s seal of approval with 11 buy ratings vs 1 hold rating:

4. Facebook (NASDAQ:FB)

RBC Capital’s Mark Mahaney is one of the best-ranked analysts on TipRanks. And despite Facebook’s recent data scandal, the social media giant remains his Top Stock Pick for 2018. He sees multiple catalysts driving growth from video ads to high engagement levels and its very large, growing user base.

“Facebook has more than 2B active users and is still growing this in the teens % Y/Y. The large amount of data collected on these users is a unique and valuable asset for ad and content targeting” concludes Mahaney. Bearing all this in mind, the stock is looking very undervalued right now. His $250 price target is noticeably above the $222 consensus and indicates huge upside potential of 60%. Note that FB has easily retained the Street’s backing. Overall, FB shows 30 recent bullish calls and only 3 bearish ratings in the last three months.

5. Raytheon (NYSE:RTN)

On the back of multiple international defense contract wins, this “Strong Buy” stock has big Street support. In the last three months, analysts have published 7 recent buy ratings vs just 1 hold rating. RBC’s Matthew McConnell believes that RTN boasts leading exposure to critical defense markets. He highlights RTN’s solid 2018 outlook including impressive 4% to 6% revenue growth.

“We view Raytheon as among the most favorably positioned defense companies based on its leading market positions in missile defense systems and missiles, which are seeing intense investment that we expect to continue for the foreseeable future.” Meanwhile, McConnell’s $244 price target suggests 15% upside potential for the coming months.

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