CITI: Here Are The 23 Best Stocks In The Market

With stock market correlations down, 2014 is likely to reward the savvy investors who know how to pick stocks.

“Several signals suggest that a more cyclical portfolio orientation is appropriate for 2014,” Citi’s Tobias Levkovich wrote in a note to clients. “While a positive posture has been in place for improved IT spending, various lead indicators intimate better overall capex trends in coming months, including attractive funding costs to business surveys and recent economic data points.”

Levkovich is “a bit more reserved on Insurance after near 50% outperformance in 2013,” but he still likes financial stocks, specifically diversifieds and REITs.

Citi’s equity strategy department picked out 23 stocks for its US Equity Strategy Recommended List. It includes everything from Starbucks to eBay.

1. Starwood Hotels & Resorts

Sector: Consumer Discretionary

Price target: $US85

Forward P/E: 26.1

Dividend Yield: 1.7%

Commentary: 'Leverage to cyclical recovery in hotel demand, global growth opportunities.'

Source: Citi

2. Harley-Davidson

Sector: Consumer Discretionary

Price target: $US79

Forward P/E: 18.2

Dividend Yield: 1.2%

Commentary: 'Improving retail trends, investment in consumer recovery.'

Source: Citi

3. Charter Communications

Sector: Consumer Discretionary

Price target: $US167

Forward P/E: 52.6

Dividend Yield: 0.0%

Commentary: 'Robust FCF trajectory.'

Source: Citi

5. Ralph Lauren

Sector: Consumer Discretionary

Price target: $US204

Forward P/E: 17.3

Dividend Yield: 1.0%

Commentary: 'Accelerating revenue bonds, continued margin expansion.'

Source: Citi

6. Starbucks

Sector: Consumer Discretionary

Price target: $US93

Forward P/E: 24.5

Dividend Yield: 1.3%

Commentary: 'Progression in U.S. turnaround, international improvement.'

Source: Citi

7. Newell Rubbermaid

Sector: Consumer Discretionary

Price target: $US36

Forward P/E: 16.0

Dividend Yield: 1.9%

Commentary: 'Attractive FCF yield, aggressive cost cutting will help offset tough environment.'

Source: Citi

8. Procter & Gamble

Sector: Consumer Staples

Price target: $US95

Forward P/E: 17.4

Dividend Yield: 3.0%

Commentary: 'Healthy FCF, business model with relatively dominant market share and balanced brand portfolio.'

Source: Citi

9. Valero

Sector: Energy

Price target: $US56

Forward P/E: 9.6

Dividend Yield: 1.7%

Commentary: 'Has a significant advantage with crude-on-crude competition increasing in U.S. Gulf Coast.'

Source: Citi

10. Dresser-Rand

Sector: Energy

Price target: $US66

Forward P/E: 16.3

Dividend Yield: 0.0%

Commentary: 'Long cycle play on global investment in oil and natural gas infrastructure.'

Source: Citi

11. Blackstone

Sector: Financials

Price target: $US35

Forward P/E: 13.1

Dividend Yield: 3.7%

Commentary: 'Strong strategic positioning, market share gains, rising alternative allocations.'

Source: Citi

12. JP Morgan Chase

Sector: Financials

Price target: $US72

Forward P/E: 13.3

Dividend Yield: 2.6%

Commentary: 'Strong capital position should allow mgmt to grow market share.'

Source: Citi

14. Macerich Co

Sector: Financials

Price target: $US68

Forward P/E: 16.7

Dividend Yield: 4.2%

Commentary: 'Trading at a discount to peers, solid balance sheet, good internal & external growth drivers.'

Source: Citi

15. Aetna

Sector: Health Care

Price target: $US72

Forward P/E: 12.2

Dividend Yield: 1.3%

Commentary: 'Earmings upside potential.'

Source: Citi

16. Armstrong World Industries

Sector: Industrials

Price target: $US65

Forward P/E: 27.5

Dividend Yield: 0.0%

Commentary: 'Improving outlook for non-residential construction, attractive valuation.'

Source: Citi

17. General Electric

Sector: Industrials

Price target: $US32

Forward P/E: 16.5

Dividend Yield: 3.2%

Commentary: 'Valuation attractive, share repurchases remain a priority.'

Source: Citi

19. Applied Materials

Sector: IT

Price target: $US20

Forward P/E: 16.1

Dividend Yield: 2.3%

Commentary: 'Expect better top-line growth and gross margin expansion.'

Source: Citi

20. Texas Instruments

Sector: IT

Price target: $US45

Forward P/E: 22.9

Dividend Yield: 2.8%

Commentary: 'Likely continuation of share gain, better-than-expected mgmt of expenses.'

Source: Citi

21. Amphenol

Sector: IT

Price target: $US93

Forward P/E: 23.7

Dividend Yield: 0.9%

Commentary: 'Strong end-market growth, org & inorg expansion, product mix improvement.'

Source: Citi

22. LyondellBassell Industries

Sector: Materials

Price target: $US91

Forward P/E: 13.4

Dividend Yield: 3.0%

Commentary: 'Beneficiary of the US shale gas advantage, robust FCF.'

Source: Citi

23. American Tower Corp

Sector: Telecom Services

Price target: $US89

Forward P/E: 42.2

Dividend Yield: 1.4%

Commentary: 'Improving valuation metrics, upside potential from int'l investments.'

Source: Citi

And now for the economy at large...

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