We just published our Top Picks issue for my Wall Street’s Best Investments and Wall Street’s Best Dividend Stocks, both packed full of fantastic ideas for 2018. But before I share a few of our top stock picks for 2018 with you, I just have to brag a bit on how well our contributors did with their 2017 Top Picks.
Top Stock Picks in 2017
While the broad markets had a great year—with the Dow Jones Industrial Average (including dividends) gaining 30.20%, the S&P 500 23.34% and the Nasdaq 30.04%—our Top Stocks beat those averages, hands down!
For Wall Street’s Best Investments, Mike Cintolo, chief analyst of Cabot Top Ten Trader won the gold, choosing Arista Networks (ANET), which returned 167.01%! Joseph Cotton, editor of Cotton’s Technically Speaking, brought home the silver, with YY Inc. (YY), which gained 102.53%. And winning our bronze medal was Crista Huff, chief analyst of Cabot Undervalued Stocks Advisor, who chose Vertex Pharmaceuticals (VRTX), which rose 83.76%.
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In Wall Street’s Best Dividend Stocks, Richard Moroney, editor of Dow Theory Forecasts, came in first place with his recommendation of Lam Research (LRCX), which rose an amazing 71.39%. In a tie for second place were Russ Kaplan of Frank, Fox & Hoagstrom’s Heartland Adviser and Jim Powell of Global Changes & Opportunities Report, with gains of 71.23% for their Top Pick, Caterpillar (CAT).
Congratulations to all our contributors for a great year!
Now, for 2018, our advisors came up with more than 70 very interesting ideas for this year. Here are just a few to whet your appetites.
Top Stock Picks for 2018
Top Stock Picks for 2018 #1: The Priceline Group (PCLN)
The Priceline Group is recommended by Ingrid Hendershot of Hendershot Investments: “The Priceline Group Inc. reported that third quarter revenues rose 20.1% to $4.4 billion with net income and EPS each more than tripling to $1.7 billion and $34.43, respectively, as last year’s results included a significant $941 million impairment of goodwill charge related to the OpenTable acquisition.
“During the third quarter of 2017, the company’s global accommodation business booked 178 million room nights, up 19% from the prior year period. Booking.com had 1.5 million properties on its platform, up 41% over last year, which represents 26.9 million potentially bookable rooms, which management believes is the largest and most diverse selection of instantly bookable accommodations in the world.
“Third quarter gross travel bookings were $21.8 billion, an increase of 18% over a year ago. Gross profit increased 22% for the third quarter to $4.4 billion. Free cash flow increased 20% during the first nine months of the year to $3.3 billion with the company repurchasing $1.1 billion of its own shares during the same time period.
“Long-term investors should consider booking a reservation with The Priceline Group, a HI-quality company with strong brands, excellent cash flows and robust long-term growth.”
To get the full list of the 30 top stock picks for 2018 featured in Wall Street’s Best Investments, click here.
Top Stock Picks for 2018 #2: Itron (ITRI)
Itron was chosen by Ari Charney, editor of The Income Millionaire: “Itron is the leading global supplier of standard meters and smart meters to electric, gas, and water utilities. The $2.7 billion company was flying high this year until a third-quarter earnings miss knocked it down. Since then, the stock has staged a moderate rebound, but it still trades at a compelling valuation.
“Itron is reasonably priced for a company that’s poised to grow earnings 18% annually over the next three years. Strong earnings growth is underpinned by a utilities sector that’s still in the midst of a huge long-term buildout. U.S. power utilities have invested an average of $94 billion annually over the past five years to expand and upgrade their networks—and more is on the way.
“Meanwhile, our aging water systems are projected to need nearly $400 billion of investment to bring them up to date. Gas utility infrastructure also is in the midst of a major replacement cycle.
In the future, utilities won’t need to send a guy around to read your meter. They’ll be able to do everything remotely. We’re rapidly moving toward networked systems that can communicate with each other—the so-called Internet of Things (IoT). That makes smart meters and the networks that support them a crucial component of the utilities sector’s upgrades. Utilities are incentivized to make these improvements because they stand to earn a fair return on these investments as part of the regulatory compact. Itron will capture a large amount of spending on smart meters.
“In mid-September, Itron announced it would acquire one of its main competitors, Silver Spring Networks (SSNI), in an all-cash deal for $830 million. The merger will vault the company past most of its U.S. peers in advanced metering infrastructure networks, giving it a market share of 52%.”
To get the full list of the top dividend picks for 2018 featured in Wall Street’s Best Dividend Stocks, click here.
Top Stock Picks for 2018 #3: Nektar Therapeutics (NKTR)
Nektar Therapeutics is from John McCamant, editor of The Medical Technology Stock Letter: “Nektar Therapeutics had an incredible 2017 as its wholly-owned pipeline emerged on multiple fronts, and the company is poised for a big 2018.
“NKTR-181 delivered positive Phase III data and the company in agreement with the FDA will file for approval in April of 2018. NKTR-181 is a less addictive opioid that can deliver pain relief without the buzz and is wholly-owned by Nektar. The company is working on a corporate partner for further development and global commercialization of NKTR-181, so next year is likely to witness another significant deal.
“The company’s track record of forming high value-added collaborations makes us believe a sizable deal for ‘181 is due in the near-term, especially now that the regulatory path/timeline has been defined. In our view, ‘214 is emerging as an excellent immune oncology candidate and has the potential to be the backbone drug in combo therapy through its ability to work in both PDL-1 + and negative tumor types.
“With this very impressive ‘214 cancer data, Nektar now has two potential wholly-owned blockbuster drugs with ‘181 and ‘214. Nektar is a buy under 60 with a target price of 75.”
Top Stock Picks for 2018 #4: Quarterhill (QTRH.TO)
Quarterhill is recommended by Benj Gallander, editor of Contra the Heard Investment Newsletter: “A year ago, Quarterhill Inc. was a one-trick pony in the patent troll space. Revenues were about $93 million. This past quarter as it entered the arena of the Internet of Things, sales exploded to about $86 million, with net income of more than $26 million. More is likely in the pipeline if new CEO/President Douglas Parker works the same magic that he did at OpenText, where over $2.5 billion in takeovers were made under his watch with associated accretive revenues. The stock price skyrocketed.
“Though not fat, the dividend works out to better than 2%. Previously, the payout was about 4X the current distribution, as when the company was experiencing some difficulties, it was conservative and cut it back. It would not surprise me to see it increase again.
“Debt is negligible. The company trades well below the book value. The current trading price of less than $2 is a huge distance from the days when it was above $9.00. With growth-oriented Parker at the helm, the glory days may return.”
Top Stock Picks for 2018 #5: Vale S.A. (VALE)
Vale is recommended by Vivian Lewis, editor of Global Investing: “The smart way to invest in the coming switch of cars and trucks from gasoline or (gasp) diesel fuel to electricity is not to buy the high-risk specialist electric vehicle stock whose name is on every lip. It is to buy miners of the metals needed to make vehicle batteries.
“Miners are increasing their cobalt production, creating a socially responsible Canadian source of a metal in high demand as a key component of electric cars, as an alternative to the Democratic Republic of Congo, which produces roughly two-thirds of the world’s cobalt, or about 66,000 metric tonnes/yr, but has political, legal and labor issues. The major miner, Vale SA (VALE), has a cobalt mine in Sudbury, Ontario and is raising funds to increase exploratory drilling. Thanks to Vale, Canada is already the world’s third-biggest producer of cobalt, after the Congo and China.
“Meanwhile, Canada accounts for about 6% of global cobalt supply, according to the U.S. Geological Survey. The metal is a crucial component of lithium-ion batteries used to power electric vehicles and portable electronic devices, as it can conduct electricity when stacked with other metals such as lithium and nickel.
“The demand for socially responsible cobalt sources comes as the price of the metal has soared to $75,000 a metric ton on the London Metal Exchange, more than double the price at the start of 2017. Moreover, Bank of Montreal Capital Markets expects current cobalt prices to double again in the next two years as demand for electric-vehicle batteries continues to outstrip existing supply.
In addition to their fundamental value, the technical indicators for each of these companies look very positive. I hope you will find one or more of these ideas worth your review and possible inclusion in your 2018 portfolios.
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