RBC Capital: Top 5 Global Stock Ideas for 2H18

It’s not too late to jump into these success stories.

RBC Capital is now out with its top stock list, updated for the second half of the year. As you can see here we take a closer look at the stocks that have outperformed year-to-date. This is a promising sign that these stocks are on an upward trajectory- but still with further growth potential ahead.

At the same time, we use TipRanks’ data to ensure that the stocks covered below all score highly on a wider Street basis. As you will see each of these stocks scores a ‘Strong Buy’ analyst consensus rating. This is based on ratings from the last three months. Another valuable insight that we can also extract here is the success rate of the analyst making the recommendation. Again, a top-performing analyst is more likely to succeed with their stock picks in the future.

Let’s take a closer look at these top stocks now:

Aptiv Plc (NYSE:APTV)

Irish-based Aptiv is the top stock idea from RBC Capital’s Joseph Spak. Aptiv is a is a global technology company that develops safer, greener and more connected solutions. The company has an ambitious goal: it wants to enable the future of mobility. So far, year-to-date Aptiv is up 8.5%.

According to Spak “Our Outperform rating is based on our view that Aptiv’s outperformance versus global industry production will continue over the coming years. This is driven by the company’s product portfolio, which is well aligned with three important secular themes in auto: safe, green, and connected.” Plus Aptiv’s strong top-line growth should allow for further margin expansion. He has a $115 price target on the stock (26.5% upside potential).

One other bullish catalyst to bear in mind is the company’s strong cash generation. He believes this should allow the company to do M&A be more aggressive in returning cash to shareholders via share repurchases and dividends.

This ‘Strong Buy’ stock has an impressive Street score- 7 buy ratings in the last three months. No hold or sell ratings here. This is with a $113 price target (24% upside potential).

Raytheon (NYSE:RTN)

Defense giant Raytheon is the world’s largest producer of guided missiles. “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.”

This is the outlook from RBC Capital’s Matthew W. McConnell who is predicting big upside potential of 37.5% upside from current levels Raytheon stands out from the crown in terms of the quantity and quality of its research, says McConell. And this gives the company a key advantage in terms of creating strong technologies in high-demand product categories.

Right now RTN, a ‘Strong Buy’ stock, is up 3.7% year -to-date. The company has received 3 recent buy ratings vs 1 hold rating, along with a $239 average analyst price target (22% upside potential).

Facebook (NASDAQ:FB)

Facebook deserves to remain on the investor radar for 2H18 according to five-star RBC analyst Mark Mahaney. His No.1 reason for this bullish analysis is based on the company’s 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” writes Mahaney.

With this in mind he selects FB as his top stock idea, and predicts that shares can soar 29% from current levels. Bear in mind that this is already following a 10% return on shares year-to-date. According to Mahaney, Facebook still has many growth levers left to pull, not least of which is video advertising. Plus Mobile Ad Revenue is now showing significant growth.

Our data reveals that the Street shares this optimistic outlook. Out of the 29 analysts polled by TipRanks, 27 rate the stock a buy, with only 1 hold and 1 sell rating. On average, these analysts see shares rising 15% in the coming months.

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. RBC Capital analyst Scott Hanold is confident that PE is primed to outperform its rivals over the next 12 months. “We believe PE shares should outperform the company’s peer group over the next 12 months. PE’s production growth profile, balance sheet, and oil hedge book are best-in- class and differentiate from peers” wrote Hanold on July 2. Factor in improving operational efficiency, and the future certainly seems bright for this high-quality oil play.

The stock is currently up 3% year-to-date, and Hanold forecasts 22.2% further growth for the coming months. As we can see from TipRanks, PE has substantial support from the Street right now. In the last three months, 8 analysts have published PE buy ratings with only 1 analyst staying sidelined.

Magna International (NYSE:MGA)

Canadian global automotive supplier Magna International is trading at very attractive levels right now. For five-star analyst Steve Arthur, its discount to the peer group is unwarranted.

He writes: MGA shares trade at an attractive 5.3x 2019E EBITDA, below the peer group average of 5.6x. With MGA’s earnings growth outlook, diversification, global footprint, dividend and balance sheet, we believe that MGA should trade at least in line with, if not at a small premium to, this group.

As a result, Arthur sees shares spiking 33% from current levels. This is on top of the 4% gains year-to-date. Looking out to the Street consensus, this ‘Strong Buy’ stock has received 3 recent buy ratings vs 1 hold rating. This is with a $78.50 average analyst price target (36% upside potential).

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