10 Stocks to Buy for a Midterm Rally

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After too many long months of campaign ads and political bickering, the end is in sight. That is, as of Wednesday morning we’ll have chosen our next batch of elected officials, thrilling roughly one half of the country while simultaneously disappointing the other half. So what are the best stocks to buy?

As investors, none of us should really care too much about the outcome despite the fear-mongering from both sides of the table. The third year of any presidency, or the year following midterm elections, tends to be a good one no matter which party is in control and which party loses control of at least one congressional house. Since 1928, the third year of a presidential term averages a gain of just under 14%, making it the most fruitful year of any of the four years of a presidency.

Assuming President Donald Trump’s third year is going to be the typically bullish one regardless of how much representation the Democrats are able to claw back from Republicans, you may want to make sure you’ve got exposure to the equity market sooner than later. Here’s a run-down of ten stocks to buy, as they look particularly well-positioned for strong 2019.

Source: Shutterstock

Alaska Air Group (ALK)

In its long-term industry outlook, aircraft maker Boeing (NYSE:BA) indicated that demand for air travel would grow at an average annualized pace of 4.7% for the next 20 years. Although intended to point to demand for new aircraft purchases, it’s also encouraging for airline investors. After all, it’s the carriers that will be buying these planes to meet that demand.

In most cases, it’s a major name like Delta Air Lines (NYSE:DAL) an investor would opt to own. In this case, though, a smaller player like Alaska Air Group (NYSE:ALK) might be a better choice. And, if the Trump-driven economy continues to grow as it has, Alaska Air is apt to report solid 2019 numbers.

Last quarter’s margins and earnings were both much better than expected, and it looks like the company’s costs-surge are finally starting to abate for good.

Why the Big Rally in PayPal Stock Can Continue

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Paypal (PYPL)

Paypal (NASDAQ:PYPL) isn’t a company that needs an introduction. It’s still the biggest name in online payments, and deals with partners like Visa (NYSE:V) and Mastercard (NYSE:MA) mean it’s also making headway within the all-important point of purchase (POP) market. And, it’s also a direct beneficiary of the convergence of economic growth and an increasingly-digital consumer.

There are a couple of kickers, however, that could make 2019 a huge year for PayPal. One of them is the fact that PayPal has finally started to seriously monetize its peer-to-peer money transfer platform Venmo … something it had been slow to do, wanting to draw people into the ecosystem.

The other bullish argument for the coming year is that the company has earmarked $3 billion per year just to make acquisitions. Each bolt-on bolster’s PayPal’s dominance of the industry.

bank of America stock

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Bank of America (BAC)

This year hasn’t been a particularly good one for Bank of America (NYSE:BAC) shareholders, with BAC stock down roughly 5% year-to-date versus the broad market’s modest gain. Investors are concerned the adverse impact of higher interest rates is more potent than the benefit of higher interest rates.

So far that hasn’t actually been a merited concern. In its third quarter, lending activity was up 1.4%, and margins topped expectations.

To the extent fear of rising rates is the key culprit though, the coming year could be an easier one for shareholders to stomach, making BofA one of several top stocks to buy. Against a backdrop of a rock-solid economy, the market’s only planning on two or three rate hikes for 2019, versus what will almost certainly be four increases this year when all is said and done.

Waste Management (WM)

It often goes unnoticed, just because of the nature of the industry. But, in times of economic growth, the nation’s capacity to create garbage swells. Enter Waste Management (NYSE:WM) … the company that turns garbage into money.

Although revenue is only projected to grow a little less than 3% this year, per-share earnings are expected to swell by 28%. Next year’s projected sales growth of almost 5% should improve the bottom line by a little more than 7%.

Waste Management CEO Jim Fish explained following the release of the company’s third-quarter numbers “those [dumpster rentals] are a really good proxy for how small business is doing, and small business seems to be doing well based on that [last quarter’s rental revenue].

The industrial side of our business is more a proxy for manufacturing, and that’s doing really well too.”

Why Nvidia Stock Could Rally to $400

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Nvidia (NVDA)

One of the early criticisms of the Trump White House has been a lack of a strong government-encouraged plan to advance the development of artificial intelligence technologies.

It’s since been addressed, though the noise of political campaigns has proven distracting. Once the midterms are over though, voters and consumers may be surprised at how close the country’s artificial intelligence players are to reaching something of a critical mass.

It’s a development that bodes well for many hardware and software companies, but arguablyNvidia (NASDAQ:NVDA) is among the best of the best stocks to plug into AI mania.

It’s one of the few outfits that’s built artificial intelligence machines from the ground up to do just that, and last quarter’s 83% growth in its data center business largely reflects the young swell of demand for AI architecture.

The coming year could be a huge one for artificial intelligence now that Washington is also on board with its cultivation.

CSX Corp. (CSX)

Regardless of your opinion of him, it’s impossible to deny that Donald Trump has rekindled America’s manufacturing industry. He’s also revived the country’s natural resources industries. Both have, in turn, proven to be a boon for the nation’s transportation industry, which is about as busy as they’ve been in a while hauling newly mined or freshly manufactured goods from one coast to the other.

Rail carrier CSX Corp. (NASDAQ:CSX) has been one of the biggest beneficiaries. Railroads have been busier this year than they’ve been since 2015, and CSX itself is projected to improve its top line by 7.3% this year once the final tally is taken.

The carrier’s real growth, though, is on the bottom line. Last year’s per-share profit of $2.30 is expected to reach $3.82 this year and grow to $4.23 next year, riding the wave of the nation’s revived industrial machine.

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Raytheon (RTN)

Contrary to what it’s looked and felt like of late, there is one thing Democrats and Republicans mostly agree on — the nation needs a strong defense, even if it requires a massive amount of money to muster it.

There are plenty of defense contractors to choose from, but it’s Raytheon (NYSE:RTN) may quietly be one of the top stocks to invest in from the sector. It offers everything from training services to missile systems to cyber warfare to mission control platforms, and more. It’s not only a highly diversified company, it’s a company that’s very much in tune with the nuances of modern-day warfare.

More than anything though, it’s a company on the right side of governmental spending plans. Washington has already budgeted $688.6 billion for military spending in 2019, up 3.5% from 2018’s budget of $664.7 billion. And better still, the government is working with tentative military spending plans of $732.4 billion for 2020.

Makeup brush and beauty supplies

Source: iStockphoto

AptarGroup (ATR)

AptarGroup (NYSE:ATR) isn’t exactly a household name. But, maybe it should be … considering the likelihood that there’s something in every U.S. household wrapped in a package made by Aptar.

Yes, AptarGroup makes a variety of packaging solutions, from pieces of cosmetics containers to condiment bottle flip lids to medical inhalers, and more. It’s another one of the names like Waste Management and CSX. That is, everybody benefits from it, but nobody realizes it. That is, they wouldn’t realize how important Aptar is until the company was gone.

The good news is, Aptar isn’t apt to be going anywhere. This year’s sales are projected to grow nearly 12%, driving more than a 13% improvement in the company’s bottom line. Next year’s expected 8% growth in revenue should bolster the bottom line by 12%.

Source: Shutterstock

FireEye (FEYE)

For years cybersecurity company FireEye (NASDAQ:FEYE) was questioned for spending so heavily on acquisitions, and booking steady GAAP losses as a result.

In retrospect though, there may have been a method to the madness. With so many marketable weapons now at its disposal available in one cloud-based suite called Helix, FireEye has a recurring-revenue machine that’s not only up and running, but running in high gear.

That still doesn’t fully make the case that FireEye is read to end 2018 on a high note and set the stage for a huge 2019. But, this will. Thanks to all the new recurring-revenue customers that have been added of late, last year’s per-share loss of 16 cents is on pace to be a full-year profit of eight cents this year, and grow to earnings of 169 cents per share in 2019. That’s a huge validation of everything the company’s been doing for a long while now.

Dick's stock

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Dicks Sporting Goods (DKS)

Last but not least, add Dicks Sporting Goods (NYSE:DKS) to your list of stocks to buy after the midterm elections are over.

There was a time not too long ago when Dicks Sporting Goods’ future looked bleak. A cyclical wave of sneaker mania and athletic apparel demand peaked a couple of years back, marked by a string of athletic shoe and clothing store closures. Sports Authority’s bankruptcy and Finish Line’s shuttering of 150 locales in 2016 speaks volumes on the matter.

In some ways though, that industry headwind left Dicks Sporting Goods even better positioned to ride the wave of renewed consumerism. With much less competition to contend with, the retailer is expected to start growing its top line again next year.

It’s only projected growth of 2.4%, but the small improvement in sales is also expected to improve the company’s per-share earnings figures at an even faster clip.

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Source: Investor Place

Market Preview: Post Midterm Elections, Earnings from Disney, Activision Blizzard, and GNC

Markets like certainty. The generally expected election results, with Democrats taking control of the House of Representatives and Republicans solidifying control of the Senate, seemed to please investors Wednesday. Markets rose across the board with the Nasdaq putting in the largest percentage gain at 2.64%. The S&P 500 rose 2.12% and the DJIA tacked on 2.13%. President Trump added to market gains by striking a conciliatory tone and implying he could work with a Democratic House to pass an infrastructure bill. Whether investors believed the rhetoric, or if they are relying on a split government to “do no harm” is unclear. But, since both beliefs can lead to a higher market, investors headed multiple calls from CNBC talking heads that post midterm elections the market generally moves higher.

Walt Disney (DIS), Activision Blizzard (ATVI) and Johnson Controls (JCI) all report earnings on Thursday. Analysts will be looking for Disney to provide an update on the acquisition of Twenty-First Century Fox (FOXA) assets. Investors will be paying particular attention to metrics around direct-to-consumer subscription services which will eventually be utilizing the Fox assets. If Disney can get the mix of investments necessary to promote and push out its media services in line with profit predictions, the market may look favorably on the company headed into next year. While Activision’s latest iteration of Call of Duty has been a hit, the stock has taken a beating over the last month. Analysts fear an oversaturation in the gaming market may be impacting stocks like Activision.

The economic headline Thursday will arrive at 2pm when the Fed releases its statement following a two day meeting. While no action is expected on rates, investors will be monitoring the announcement closely for any change in wording. Jobless claims, released Thursday morning, are expected to drop slightly to 213k. The number has been on a fairly steady decline for over two years now. Friday’s consumer sentiment number is expected to ease slightly from the 98.6 reported in October to a flat 98 in November. Also coming on Friday are wholesale trade numbers and the producer price index (PPI). PPI is expected to rise slightly, .2%, month-over-month.

Closing out the first full week of November earnings are GNC Corp. (GNC) and Potbelly (PBPB). GNC delayed its earnings announcement a few days to attempt completion of a strategic investment by a Chinese investor, Harbin Pharma. Investors will be looking for an update on the investment and possible joint venture activity with the Chinese partner. Potbelly is expected to announce positive earnings as a new management team is attempting to revamp the sandwich maker. Analysts will be looking for bold moves from the brand on hopes of powering the stock higher.

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Buy These 2 Dividend Stocks When the Market’s Unsettled

The latest chapter in the current stock market story centered around Apple. The company announced it would no longer report how many units it sells of its iPhone. While many are speculating why Apple is doing this, I believe it’s because they want to make less transparent the loss of market share in the emerging markets, where competitors like China’s Huawei are gaining share rapidly.

This episode made me think back to when I was still a licensed investment professional and would sit down with clients to discuss their financial situation. Sadly, I found a very common mistake, which I’m sure is still true today…

 A lack of diversification.

Usually, clients would have way too much money in one sector – U.S. technology companies. That’s all well and good until the market hits a weak patch. Then, as we saw most recently, the heaviest losses occur in technology – the sector that had the biggest gains.

I suggested that clients move a little of money invested in technology stocks into what could be called ‘sleep well at night’ stocks. That is, quality conservative stocks, but that have a growth component. I would like to look for steady-as-you-go firms, but those that have some ‘trigger’ that will push the company into a faster growth mode from its past growth trajectory.

Just so you are clear on what exactly I mean, let me give you two examples from the consumer staples sector of two rock-solid companies – one domestic and one foreign – that are in the midst of a makeover that will lead to faster growth.

Coke and Coffee

The first company is no other than Coca-Cola (NYSE: KO). I believe its new CEO, James Quincey, has just begun a change in Coke that is larger than what McDonald’s CEO Steve Easterbrook did to the change the fortunes at the ‘Golden Arches’.

First, Coke pulled off a $5.1 billion deal to buy the Costa Coffee chain from Britain’s Whitbread. The transaction represents a full-fledged leap into the global coffee market, where it has little presence currently. “Hot beverages is one of the few remaining segments of the total beverage landscape where Coca-Cola does not have a global brand,” said James Quincey, president and CEO of Coke. “Costa gives us access to this market through a strong coffee platform.”

This move continues Coke’s process of diversifying away from the fizzy and sugary drinks that made the company famous. These type of drinks have declined in popularity among increasingly health-conscious consumers. The deal is all part of the company’s effort to reposition itself as a “total beverage company”.

According to Euromonitor, the global coffee industry is valued at more than $80 billion, and has been expanding at an annual rate of more than 5%. Here in the United States – the world’s biggest coffee market – most of the growth is coming from a resurgence in the café culture among millennials aged 18 to 34.

According to a recent survey conducted by the National Coffee Association, 15% of millennials had their last cup of coffee in a café and 32% had an espresso-based drink the day before the survey, the highest share for any age group. These are the type of consumers Coke is trying to reach through its purchase of Costa.

As Mr. Quincey points out, coffee is among the “strongest growing [beverage] categories in the world” and the company was missing out on this macro trend. As the chart below shows, the potential for growth of coffee beverages versus soft drinks is high.

And consider that Costa has recently begun its push into China, where it pitches its drinks to Chinese consumers as a luxury treat. It still has only 460 shops there, so the potential for growth is enormous. Starbucks has 600 shops in Shanghai alone. Costa did not have the financial firepower for a big push into China, but now with Coke’s financial muscle, it does.

Coke and Pot

And there’s more to the transformation of Coke than coffee… it may go to pot too.

Coke says it is looking at the possibility of infusing CBD into “functional wellness beverages around the world.” The company is no doubt looking to broaden the reach of cannabis-infused beverages into functional wellness categories, enabling the company to potentially one day ‘own’ the non-recreational cannabis-infused beverage category.

I have no doubt that drinks containing cannabidiol (CBD), a non-psychoactive marijuana ingredient focused on pain management, could become a very big business for Coke.

Related: Buy These 3 Stocks to Profit From Marijuana Legalization

Cannabis research firm Brightfield Group, recently raised its projections for the CBD industry, finding it could reach $22 billion in market size by 2022. If Coke is able to capture just 10% of that projected market size, it would bring in $2.2 billion in revenue by 2022.

Even before the company-altering changes, Coca-Cola is already coming alive. In the latest quarter, it produced a 6% rise in organic sales, helped by bottled water and lower sugar alternatives to the soft drink. Latin America led the way, up 19%, while Europe, the Middle East and Africa rose 9%. North America was slower, up 2%.

Make Up for Losses With L’Oreal

The second company in the consumer sector comes from Europe and is best known for its cosmetics, France’s L’Oreal (OTC: LRLCY). And here the main story is Asia and China.

Its stock surged more than 7% after its recent earnings report thanks to Asian demand for its high-end beauty products showing no sign of waning, despite the trade war. Sales in the Asia-Pacific region soared 25.8%. This demand pushed third-quarter sales to the highest quarterly growth rate in a decade!

The acceleration in growth in the third quarter was led by the company’s luxury division, home to brands such as Lancôme, Yves Saint Laurent and Giorgio Armani, which grew by 15.6%. Its active cosmetics division lifted revenue by 13.1%, driven by demand for so-called dermo-cosmetics, products that focus on skin health.

Its travel retail and e-commerce divisions are also achieving rapid growth. L’Oréal said that travel retail gained 29.9% during the quarter, while e-commerce was up 38.3% and now represents almost a tenth of total sales. E-commerce is accelerating thanks to the success of L’Oréal’s luxury brands on sites such as Alibaba’s Tmall platform in China.

I fully expect L’Oreal to continue to perform well because Asia’s enthusiasm for skincare and makeup is unlikely to fade. Even if an economic slowdown hits, sales of low-ticket luxury items will hold up better than more costly items. And Chinese per capita spending on makeup is still just a small fraction of the U.S. figure, so there is ample scope for growth there.

Neither company will go up 25% a year, as do tech stocks when they’re hot. But they will allow to sleep well at night and give you a decent total return. That’s why I do own both companies.

Buffett just went all-in on THIS new asset. Will you?
Buffett could see this new asset run 2,524% in 2018. And he's not the only one... Mark Cuban says "it's the most exciting thing I've ever seen." Mark Zuckerberg threw down $19 billion to get a piece... Bill Gates wagered $26 billion trying to control it...
What is it?
It's not gold, crypto or any mainstream investment. But these mega-billionaires have bet the farm it's about to be the most valuable asset on Earth. Wall Street and the financial media have no clue what's about to happen...And if you act fast, you could earn as much as 2,524% before the year is up.
Click here to find out what it is.

Source: Investors Alley