RBC's top ideas for what's likely to be a volatile second quarter

Published Fri, Apr 3 20209:42 AM EDT

Jesse Pound @/in/jesse-pound @jesserpound

(This story is for CNBC Pro subscribers only). RBC Capital Markets sent a note to clients with 30 global stocks for the quarter ahead, making major changes to its previous list of top stocks after a tumultuous three months. "While equity markets have recovered off recent lows as central bank intervention has lowered risk within credit and funding markets and Chinese data recovers, we anticipate a volatile market in the months ahead," the note said. Health insurer Cigna is one of the few U.S. health companies to make the list, with RBC projecting that the company's revenue growth will accelerate following its acquisition of Express Scripts. "Cigna's industry-leading medical cost trend, combined with Express Scripts' strong performance with company-record pharmacy cost trend, positions the combined company for strong improvement in affordability," the note said. The stock has held up better than the broader market so far this year, down about 17%. RBC has a price target of $260 for the stock, 42% above where it closed Thursday. The firm is also backing a discount retailer. RBC has an outperform rating on Ollie's Bargain Outlet , which has a market cap of roughly $3 billion. The stock could rise as the company expands into Texas and other markets in the western U.S., the note said. RBC's price target for Ollie's is $57 per share, roughly 22% above where it closed on Monday. RBC also sees a big upside for fast food giant McDonald's . The firm has a $201 per share price target on the stock, about 25% above its Thursday close. Shares of McDonald's are down about 18% for the year. The market is also undervaluing Truist , the newly formed bank from the merger of SunTrust and BB & T, according to RBC. The note said that the bank's target of $1.6 billion in cost savings from the merger is conservative and that the bank's footprint in the fast-growing southeastern United States gives it a competitive advantage. RBC has a $50 per share target price on the stock, more than 75% above where it closed Thursday.

A man wearing a mask walks by the New York Stock Exchange (NYSE) on March 17, 2020 at Wall Street in New York City.

Johannes Eisele | AFP | Getty Images

(This story is for CNBC Pro subscribers only).

RBC Capital Markets sent a note to clients with 30 global stocks for the quarter ahead, making major changes to its previous list of top stocks after a tumultuous three months.

"While equity markets have recovered off recent lows as central bank intervention has lowered risk within credit and funding markets and Chinese data recovers, we anticipate a volatile market in the months ahead," the note said.