After a skid in which stocks experienced their worst two-trading days in four years with close to a 1,900-point drop in the Dow Jones industrials, investors tried to mount a Wednesday rebound. At one point, the venerable index was up 461 points, but that failed and the Dow ending closing down 123 points. While those gains faded, at least investors may have seen a light at the end of the tunnel that was not a selling momentum train trying to run them over.
The coronavirus continues to spread, and we did find out late Wednesday that cases have been reported in the United States. Wall Street is handicapping slowing global growth, so we decided to search for companies in our 24/7 Wall St. research database that basically do all their business in the United States. These companies provide products or services that will be needed almost regardless of the severity or length of the outbreak.
The five companies we found are all rated Buy or Outperform across Wall Street, and while buying big positions of anything with the current volatility is unwise, scaling some money into these stocks now could prove to be a solid short-term and long-term investment.
This is a top telecom and entertainment play. AT&T Inc. (NYSE: T) is the largest U.S. telecom company and provides wireless and wireline service to retail, enterprise and wholesale customers. The company’s wireless network serves approximately 124 million mobile connections, with 77 million postpaid subscribers.
While AT&T’s traditional wireline voice business has undergone a period of secular decline due to wireless substitution and cable competition, the company through WarnerMedia has become a diversified media and entertainment business.
Merrill Lynch noted this when discussing the 2020 potential for the communications giant:
Our price objective is based on a P/E multiple of 12 times our fiscal year 2020 EPS estimate, which is in the middle of AT&T’s historical relative multiple range vs the S&P 500. We think this is warranted based on challenging operating trends within AT&T’s television business, higher leverage, and integration risk, but offset by higher earnings estimates and faster growth after baking in the impact of the company’s stock buyback and cost savings initiative.
Investors receive a 5.56% dividend. Merrill Lynch has a $43 price target for the shares, which compares to the $39.43 consensus target across Wall Street. AT&T stock closed Wednesday at $39.10 per share.
American Electric Power
Merrill Lynch recently added this one to its US 1 list of top stocks. American Electric Power Co. Inc. (NYSE: AEP) is one of the largest electric utilities in the United States, delivering electricity to more than 5.4 million customers in 11 states.
The company ranks among the nation’s largest generators of electricity, owning nearly 38,000 megawatts of generating capacity in the United States. It also owns the nation’s largest electricity transmission system, a more than 40,000-mile network that includes more 765-kilovolt extra-high voltage transmission lines than all other U.S. transmission systems combined.
Shareholders receive a solid 2.80% dividend. Wells Fargo recently raised its price target to $115 from $104, and the consensus target was last seen at $105. American Electric Power stock closed trading at $97.43 on Wednesday.
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