Credit Suisse Presents: The 25 Best Stocks In America

Printing Money Printing Press Money Quantitative Easing

Photo: Getty Images

In a new note to clients, Credit Suisse’s equity research team compiled a list of the top stock picks from the firm’s 50+ equity analysts.This generated 155 stocks offering significant value.

We flipped through the list and pulled the 25 stocks with the best return opportunity.

The stocks comes from a wide range of industries and offer returns of up to 109 per cent.

McKesson: 14% Potential Return

Ticker: MCK

Industry: Health Care Distribution & IT

Price Target: $105

Price-to-earnings: 15.5x

More aggressive capital deployment and generics put MCK in position to rise, especially with the reasonably low bar they have set with fiscal 2013 guidance.

Source: Credit Suisse

DR Horton: 16% Potential Return

Ticker: DHI

Industry: Homebuilding & Building Products

Price Target: $19.50

Price-to-earnings: 35.1x

DR Horton is a key beneficiary of an improving housing market. The focus on entry-level customers helps sales for those who want to avoid rapidly rising rents.

Source: Credit Suisse

Allstate: 16% Potential Return

Ticker: ALL

Industry: P&C Insurance

Price Target: $33.66

Price-to-earnings: 18.4x

The potential for profit improvement from homeonwers' insurance is underappreciated. With an expected rise of 6-9 per cent through 2013, Allstate is in a very good position.

Source: Credit Suisse

Enterprise Products: 21% Potential Return

Ticker: EPD

Industry: MLPs

Price Target: $59

Price-to-earnings: 18.5x

EPD is the largest energy MLP with access to the most prolific natural gas, NGL, and crude oil plays in the U.S.

Source: Credit Suisse

United Health: 24% Potential Return

Ticker: UNH

Industry: Managed Care

Price Target: $73

Price-to-earnings: 12.2x

United Health's diversified specialty businesses offer investors a higher potential return. They have the best positioned large cap managed care plan and best growth prospects.

Source: Credit Suisse

Starbucks: 24% Potential Return

Ticker: SBUX

Industry: Restaurants

Price Target: $53.96

Price-to-earnings: 31.7x

Starbucks can leverage its loyal customer base to capital beyond stores such as K-cups and other items. The company is expected to spend on initiatives for more consumer products.

Source: Credit Suisse

Macy's: 26% Potential Return

Ticker: M

Industry: Retail, Broadlines

Price Target: $67

Price-to-earnings: 11.3x

Macy's is in a strong position to benefit from its competitor's miscues. Macy's continues to rely heavily on footwear, accessories, and beauty, and maintains disciplined financial management.

Source: Credit Suisse

DCP Midstream: 28% Potential Return

Ticker: DPM

Industry: MLPs

Price Target: $49

Price-to-earnings: 44.1x

DCP will acquire $3 billion of assets from sponsor, and along with additional organic growth it will create an integrated platform and drive distribution growth.

Source: Credit Suisse

St. Jude Medical: 30%

Ticker: STJ

Industry: Medical Devices

Price Target: $49

Price-to-earnings: 10.7x

St. Jude has the best top line in large cap cardio. Credit Suisse expects the implantable cardioverter defibrillator (ICD) market to surprise to the upside, which consists of roughly 20 per cent of St. Jude's sales.

Source: Credit Suisse

VF Corporation: 31% Potential Return

Ticker: VFC

Industry: Apparel and Footwear

Price Target: $182

Price-to-earnings: 16.7

VF Corp has a compelling combination of 15 per cent earnings growth and multiple rerating (a change in the price-to-earnings ratio).

Source: Credit Suisse

Regions Financial: 34% Potential Return

Ticker: RF

Industry: Regional Banks

Price Target: $8.5

Price-to-earnings: 42.4x

Regions Financial is expected to expand its net interest margin and inflection to positive loan growth due to the TARP repayment and sale of a portion of its business.

Source: Credit Suisse

Cytec: 34% Potential Return

Ticker: CYT

Industry: Chemicals

Price Target: $75

Price-to-earnings: 13.5x

Selling Coating Resins could garner $1b of proceeds, and Credit Suisse believes the multiple deserves a re-rating as returns, margins, and growth will be significantly better.

Source: Credit Suisse

Penn National: 35% Potential Return

Ticker: PENN

Industry: Gaming and Lodging

Price Target: $60

Price-to-earnings: 18.6x

Penn National has a growth pipeline with flexibility as well as best-in-class management and a proven acquisition platform.

Source: Credit Suisse

Watson Pharmaceuticals: 38% Potential Return

Ticker: WPI

Industry: Specialty Pharmaceuticals

Price Target: $98

Price-to-earnings: 24.6x

Watson has strong strategic and financial benefits from the acquisition of Acavis, as well as best-in-class growth.

Source: Credit Suisse

Marathon: 41% Potential Return

Ticker: MPC

Industry: Integrated Oil and Refining

Price Target: $60

Price-to-earnings: 6.1x

Credit Suisse believes MPC is oversold due to rising earnings, attractive cash flows, and a positive existing shareholder focus.

Source: Credit Suisse

AFLAC: 42% Potential Return

Ticker: AFL

Industry: Life Insurance

Price Target: $57

Price-to-earnings: 6.3x

The derisking process is substantially completed, making the concerns of European exposure overblown. Margin concerns have been alleviated and share repurchases are set to begin in 2013.

Source: Credit Suisse

Owens Illinois: 59% Potential Return

Ticker: OI

Industry: Paper and Packaging

Price Target: $29

Price-to-earnings: 7.0X

Owens' valuation is overly pessimistic, which allows Owens to have a compelling risk-to-reward ratio. OI should realise solid operating leverage as markets recover in 2013.

Source: Credit Suisse

Apache: 64% Potential Return

Ticker: APA

Industry: Oil and Gas E&P

Price Target: $135

Price-to-earnings: 6.8x

Apache has a low expectation due to its geopolitical concerns. With incremental growth, these concerns should fade away making Apache a solid opportunity.

Source: Credit Suisse

Apollo Global Management: Potential Return 66%

Ticker: APO

Industry: Brokers and Exchanges

Price Target: $21

Price-to-earnings: NM

Credit Suisse believes Apollo is an attractive means of gaining exposure to secular growth in alternative investments. Investors are under appreciating the company's ability to harvest gains and return cash to shareholders.

Source: Credit Suisse

EnerNOC: 68% Potential Return

Ticker: ENOC

Industry: Clean Energy

Price Target: $11

Price-to-earnings: NM

ENOC is trading at 1.4x 2013 EBITDA with operating leverage potential, revenue visibility, and not many capital needs.

Source: Credit Suisse

Freeport-McMoRan: 74% Potential Return

Ticker: FCX

Industry: Metals and Mining

Price Target: $55

Price-to-earnings: 7.4x

Project pipeline will drive 25 per cent volume growth over the next five years. FCX has a high correlation with copper prices and is already pricing in lower copper.

Source: Credit Suisse

GulfMark Offshore: 78% Potential Return

Ticker: GLF

Industry: Shipping, Oil, and Gas Equipment

Price Target: $55

Price-to-earnings: 16.7x

Lower oil prices have not slowed the demand for offshore supply boats. The risk is skewed toward the upside.

Source: Credit Suisse

Health Management: 79% Potential Return

Ticker: HMA

Industry: Health Care Facilities

Price Target: $12

Price-to-earnings: 8.5x

HMA is the fastest growing hospital compared to its competitors, should see accelerated growth from recent deals, and is trading at depressed valuation from overblown news events.

Source: Credit Suisse

Citigroup: 80% Potential Return

Ticker: C

Industry: Multi-line Banks

Price Target: $48

Price-to-earnings: 5.1x

Risk has been materially reduced, the balance sheet has been strengthened and profitability has been improving. This creates a compelling risk against reward play.

Source: Credit Suisse

Rosetta Resources: 109% Potential Return

Ticker: ROSE

Industry: Small-cap E&P

Price Target: $70

Price-to-earnings: 15.8x

Rosetta has increased drilling inventory to almost 500 locations, and Eagle Ford represents one of the best rate-of-return plays among US onshore.

Source: Credit Suisse

NOW WATCH: Money & Markets videos

Want to read a more in-depth view on the trends influencing Australian business and the global economy? BI / Research is designed to help executives and industry leaders understand the major challenges and opportunities for industry, technology, strategy and the economy in the future. Sign up for free at research.businessinsider.com.au.