Top 10 Best Stocks to Buy until the end of the year
The past year has been exciting, if not a little stomach-churning. A raucous 25% rally to start the year unwound a miserable last few months of 2018, but that big advance has been chopped by one-third just since the beginning of May.
Thus, when picking the best stocks to buy for the rest of 2019, you have to approach your selections with volatility – namely, avoiding it – in mind.
Maybe the year’s second act will be a little less exciting and a little more consistent for investors than the first. But with Chinese trade relations in limbo, Brexit still in the air and uncertainty about the Federal Reserve’s future plans for interest rates, calm is far from a guarantee.
To that end, here are the best stocks to buy for the rest of 2019. Not only are these stock picks a little less vulnerable to the volatility we’ve seen of late, but they each have solid backstories and/or fundamentals that should prove attractive if the hazy backdrop remains.
Market value: $753.8 billion
Google parent Alphabet (GOOGL, $1,086.30) has a full plate. Not only is the search market maturing and becoming saturated, but Alphabet repeatedly is brought up as an example of what happens when tech companies know too much about consumers.
Alphabet’s shares were upended earlier in June on mere rumors of an antitrust probe. That added to a post-earnings loss fueled by revenues that missed analyst estimates. All told, GOOGL is down more than 16% from its April peak.
But one key detail has been glossed over amid the stock’s volatility: Only once in the past 10 years has Alphabet reported a year-over-year decline in quarterly revenue. The same can’t be said of profits, to be fair, particularly of late. The broader slowdown in smartphone sales (now that most everyone who wants one has one) has stymied its Android operating system as a profit center, and desktop/laptop search has seen “cost per click” prices slide for years now. It was only a matter of time before GOOGL ran into a fiscal headwind.
Nevertheless, betting against Google’s parent has proven to be ill-advised for the long haul. Alphabet has its finger on the pulse of the internet, and the tech giant rarely fails to find ways to muster more growth. Thus, this current dip might be one to buy.
Amazon.com, Inc, is an American multinational technology company based in Seattle, Washington that focuses on e-commerce, cloud computing, digital streaming and artificial intelligence. It is considered one of the Big Four technology companies along with Google, Apple and Facebook.
Amazon is known for its disruption of well-established industries through technological innovation and mass scale. It is the world’s largest e-commerce marketplace, AI assistant provider, and cloud computing platform as measured by revenue and market capitalization. Amazon is the largest Internet company by revenue in the world. It is the second largest employer in the United States and one of the world’s most valuable companies. Amazon is the second largest technology company by revenue.
Market value: $195.3 billion
“For all of Boeing’s troubles, there have been very few 737 MAX order cancellations,” says Interactive Advisors portfolio manager Barry Randall. “Why? In part because the world’s airlines are highly motivated to maintain some semblance of competition between Boeing and Airbus.”
The drama came and went relatively quickly.
In March, following the second crash of a 737 MAX 8 in less than six months, problems with the plane’s software-based safety systems were fully uncovered. Although fixable in time and addressable in the meantime, concerned airline customers canceled some orders of the highly lauded passenger jet that had only been in commercial service for a couple of years. Boeing (BA, $347.16) shares took a bath in the wake of the crash and some airlines’ subsequent self-imposed grounding of these aircraft.
The 737 MAX still is permitted to fly in the U.S., however, and carriers that continued to use the aircraft haven’t reported new incidents. Software updates are being made. The problem appears to be fixed, and investors seem to be putting the past in the past.
Boeing, then, could be one of the best stocks of 2019’s second half because of the rebound proposition. The stage is set for an eventual recovery of the stock’s long-term uptrend, says Randall, who owns BA shares for himself as well as on behalf of clients of the Boston-based advisory. “It’s highly likely that existing 737 MAXs will be flying again by year end,” he notes, in turn meaning “Boeing’s cash flow machine will be turned back on.”
Sooner may be better than later, though. Randall concludes, “Thoughtful investors will buy now in anticipation of that happening.”
Market value: $24.3 billion
Tech/industrial outfit Corning (GLW, $30.91) isn’t the head-turner it used to be. But don’t overlook this blue-chip name that too many investors have forgotten about. Not only is the company still producing steady sales and earnings growth, but Corning also is quietly setting itself up for future growth that may not yet be reflected in analysts’ long-term projections.
The advent of 5G connectivity will forever change the landscape of wireless telecom. Not only will 5G speeds usher in the Internet of Things, digital data loads that were unthinkable just a couple of years ago will become the new norm, handling everything from improved industrial output to all sorts of entertainment.
That massive manipulation of data won’t be handled entirely over airwaves, however. In fact, most of work will be done with wired connections, using the speeds that only fiberoptic cables like those supplied by Corning can provide.
Investors have already seen evidence that 5G is driving growth. Corning believes its Optical Communications division, though still sporadic, will grow 10% this year from last year’s total, reaching annual sales in excess of $5 billion.
Faster growth may be waiting beyond this year’s sales. Lisa Youngers, CEO of the Fiber Broadband Association, wrote in a 2018 column that “the United States will require an estimated $130 billion to $150 billion in fiber investment over the next five to seven years to adequately support broadband competition, rural coverage and wireless deployments for future network technologies such as 5G.”
In the meantime, Corning continues to work its technology-screen business line.
Market value: $27.5 billion
Electronic Arts (EA, $92.73) shares tried to snap out of Q4 2018’s steep diver earlier this year, but the effort failed by mid-February. Worse, EA has lost a third of its value over the past 12 months.
The punishment is understandable but overdone. Between a couple of disappointing quarterly reports, the surprising rise of hit indie game Fortnite and delays of the release of its own Battlefield V, investors simply didn’t find enough to like.
However, EA might be one of the best stocks to buy for the rest of 2019 … and potentially much further down the road.
Jeff Bilsky, portfolio manager and senior analyst for the large-cap equity investment team at Chartwell Investment Partners, doesn’t think the foreseeable future is going to look like the recent past, however.
The key is EA’s updated portfolio of games, and how they’re sold. “The majority of EA’s revenue is derived from its FIFA and Madden franchises, but it has significant upside with the recent release of Fortnite competitor Apex Legends,” he says. “Long-term, EA should also benefit from a greater shift to digital downloads (which comes with much higher margins) after the console upgrade cycle next year, increasing in-game purchases, and the growing popularity of eSports.”
Bilsky thinks the upshot of the company’s recent development work is already materializing, saying, “The company gave revenue guidance for the game of $300 million to $400 million for the fiscal year, but this could be conservative given its already generated around $200 million in the first quarter and Fortnite earned an estimated $2.4 billion in revenue last year.”
Market value: $57.3 billion
Intuitive Surgical (ISRG, $496.54) has been an erratic performer since last fall, and understandably so. ISRG missed its first-quarter earnings estimates, and analyst responses were mixed following the post-report plunge.
Raymond James analyst Lawrence Keusch remained steadfast in his bullishness however, calling the pullback a buying opportunity put in place by a misunderstanding of how the company’s business model is changing.
Taking a cue from several software and cloud computing outfits, Intuitive Surgical has entered the subscription business. Rather than selling its da Vinci robotic surgical equipment outright, it has begun to lease – the companies uses the term ‘place’ – some of its products rather than selling them.
The response has been positive. Intuitive Surgical placed 235 systems during the first quarter of the year using this new, alternative financing approach – up 27% from the year-ago period’s deliveries. The new business model sacrifices one-time revenue now in exchange for recurring revenue in perpetuity.
Keusch suspects the new model is gaining even more traction than initially suspected, saying about the company’s Q1 results, “The net impact of the greater number of leases vs. our assumption was $30M less revenue, or 3.5% y/y growth, implying the top-line would have handily exceeded Street estimates.” The Raymond James analyst goes on to tout “ease of upgrade, smoother revenue cadence and standardization on Gen 4-systems/higher instrument mix” as reasons to anticipate more long-term growth than other analysts expect.
Thus, ISRG still may live up to its billing as one of the best health-care stocks to buy for 2019.
Market value: $98.9 billion
It remains to be seen if Raytheon (RTN) and United Technologies (UTX) will be allowed to merge. But if they are, the change could prove distracting and disruptive. It also opens the door to other defense companies becoming more superior stock picks in the space.
Daniel Milan and Matthew Essmann, managing partners of Michigan-based Cornerstone Financial Services, now see Lockheed Martin (LMT, $350.14) as a top name in aerospace and defense.
Lockheed Martin is “taking a leadership position in future, next-gen aerial systems like hypersonic strike weapons, laser weapon systems, autonomy and artificial intelligence, which could lead to future revenue growth,” Milan says. He continues, “Their largest program is the F-35 stealth fighter jet and LMT recently issued a bullish forecast for the F-35 sales.”
“Lockheed Martin has shown much improved earnings growth over the last five quarters – at least 30% each quarter – and raised its full-year guidance in April,” Milan says. Analysts are on board with the company’s optimistic outlook, too. As a whole, they expect earnings of $20.56 per share this year, up 17% from last year’s $17.59. Then in 2020, they see another 21% leap to $24.89 per share.
Lockheed has issues, sure, including a very underfunded pension plan. But that doesn’t keep LMT from being among the best stocks to buy for the rest of this year.
Market value: $7.5 billion
You probably haven’t heard of $7.5 billion medical technology outfit Masimo (MASI, $141.08). That’s fine – just don’t be fooled by its obscurity. Its shares are up more than 500% over the past five years.
Matt Litfin, Columbia Acorn Fund’s lead portfolio manager, believes there’s more upside in store.
“Smart R&D investments over the last several years are just beginning to drive very profitable growth,” Litfin says. “Masimo has recently released a slate of new hospital automation solutions that directly address critical needs of the health care system such as the ballooning cost of care, the nursing shortage and the opioid crisis.”
Masimo’s claim to fame is its Signal Extraction Technology (SET) pulse oximetry, which serves as the basis for its cutting-edge blood oxygen saturation and pulse-rate monitoring equipment.
Litfin says about the hardware, “Masimo’s far superior pulse oximetry, a test to monitor blood oxygen levels, and other proprietary non-invasive vital parameters are transforming the way patient vital signs are monitored in the hospital and the home.”
Its pulse oximetry wares are, in fact, the preferred technology used in most of America’s top hospitals. Analysts believe the hospital market will continue buying up this hardware, too, driving 7% sales growth this year and accelerating its top-line growth to the tune of 10% in 2020.
Market value: $27.5 billion
The promise of 5G connectivity is finally becoming a reality, with commercial use of the ultra-high wireless technology already beginning. We’re just scratching the surface; it’s only available in roughly a couple dozen American cities. The bulk of the market as well as its consumers have yet to tap into the game-changing wireless service.
This budding ramp-up in 5G adoption – which should lead to $700 billion worth of annual global spending by 2025 -leads Jack Murphy, CIO of New York-based asset management firm Levin Easterly, to Nokia (NOK, $4.95).
“We believe Nokia will show continued improved execution in future earnings reports, especially with regard to the profile of the upcoming 5G cycle and improved cash flow from operations,” Murphy says of the organization that offers an end-to-end lineup of solutions, including the software and services needed to keep 5G connections up and running.
Nokia has the fiscal wherewithal to holds its place as a 5G leader and deliver value to shareholders, too. “Nokia’s balance sheet should continue to support a high degree of stock repurchase, supplemented by further restructuring,” Murphy says.
Market value: $136.5 billion
The rise of Square (SQ), the development of a payment app from Apple (AAPL) and even an entry into the money-transfer business by Facebook (FB) are just a small sampling of available options for digitally delivering cash. There are few barriers to entry in the business. A countless number of players are capitalizing on the chance to enter a payment market that Research and Markets expects to be worth $168 billion by 2026.
But sometimes the best-established player in the business also is the top stock to buy. In this arena, that’s PayPal (PYPL, $116.17).
“We believe PayPal is a structural winner in the payment processing sector,” notes William O’Neil + Co. executive director and analyst Dean Kim, adding “PayPal has a strong hold in mobile and e-commerce with over 270 million active users and 22 million merchants.”
The next big growth driver has already presented itself too, in Venmo. Kim explains, “PayPal has also successfully grown its reach to millennials via its Venmo platform, which processed $21 billion in transaction volume out of the total $161 billion in just the first quarter of this year.”
Bottom line? “We believe PayPal will continue to maintain its outpaced growth for years to come on the back of continuing global shift to digital forms of payments from physical cash,” Kim says.
Latest posts by HEFFX Australia (see all)
- Bitcoin: USD/BTC (BTC=X) risks falling back to recent lows below $9,500 - August 21, 2019
- UK FTSE 100 (.FTSE) All eyes on Fed minutes - August 21, 2019
- Japanese Yen: USD/JPY (JPY=X) increased demand for risk overnight - August 21, 2019