According to RBC Capital Markets, the top performing sectors have been the energy and the utility sectors, which they continue to keep a closer watch on. CBS Corporation (NYSE:CBS), Johnson Controls Inc. (NYSE:JCI) and Advance Auto Parts, Inc. (NYSE:AAP) remain the top picks according to Marc Harris, the head of Global Research at RBC Capital Markets. In an interview on CNBC, he said that CBS makes the top of the list as the company continues to invest more capital on shows like ‘CSI’ that are expected to further bolster the company’s revenue and earnings.
Mr. Harris currently has a share price target of $70 on CBS Corporation (NYSE:CBS), which is currently trading around the $57 mark.
“CBS one of the great ones. They have got opportunities to take some of their shows, they have names like CSI and others generate more revenue from them by putting them into other avenues,” said Mr. Harris.
The key to investing in the markets, according to Mr. Harris, is looking for stocks that have underperformed and not had many runs in the markets, while also having that constant appeal to cyclical buyers. Johnson Controls Inc. (NYSE:JCI) is another stock that makes its way. Mr. Harris considers will change its entire portfolio over the course of the next few years.
The sale of Johnson Controls Inc. (NYSE:JCI)’s electronics business has already demonstrated the company’s ability to dispose its non-core operations as it looks to concentrate on operations able to guarantee further growth on the market. Capital returns to shareholders also continue to be one of the other exciting bits about Johnson controls.
“[…] You’ve got a company that three years, I think, is going to look very different we have already seen them take their electronic businesses and selling it. We think there is more of that to go plus obvious capital return to shareholders is the other elements that we like in this list along this themes,” said Mr. Harris.
Advance Auto Parts, Inc. (NYSE:AAP) is a company with great opportunities in terms of growth, having bought a large retailer business that runs a large commercial business, which Mr. Harris believes has a higher margin that should translate to higher earnings.