To start the year, InvestorPlace.com offered up its 10 best stocks to buy and hold for the next 12 months. And while the market has been choppy, thus far our 10 Best Stocks for 2014 contest has more winners than losers.
A lot can happen either way in the months ahead.
Remember, our 10 Best Stocks for 2014 list is a buy-and-hold group that is meant to provide long-term returns across the entire calendar year.
But already, there are a few stocks that are up big time … and looking to move even higher.
Let’s take a look at how the entries stack up:
10 Best Stocks for 2014: #1, Emerge Energy Services LP (EMES)
Investor: Jon Markman
YTD Return: +41%
EMES, which mines specialized sand that is used in oil shale fracking, is an independent oil and gas services company with a very unique business model. And thanks to the fracking boom across America, it’s also a very profitable business model, too.
The firm announced its 2013 earnings results a few weeks ago, completing its first full year as a public company, and giving investors even more optimism for the future. Both of EMES’ two operating divisions have exhibited spectacular growth this past year, and despite double digit (even triple digit growth the sand production segment), neither can fully keep up with customer demand.
No wonder shares are up 41% year-to-date to lead the Best Stocks contest.
“Emerge Energy Services remains an unconventional way to to take advantage of the growth in the explosive shale formation fracturing process, so don’t miss out,” Markman wrote recently in an update on the stock.
10 Best Stocks for 2014: #2, Tesla Motors (TSLA)
Investor: Kyle Woodley
YTD Return: +38%
InvestorPlace.com’s Deputy Managing Editor Kyle Woodley is off to a great start with 42% gains in Tesla Motors (TSLA) since Jan. 1.
There are still bears who think TSLA stock is overvalued after gaining more than 300% last year and showing signs of weakness. After all, there’s not much room for error in this electric vehicle manufacturer with all the optimism baked in.
But so far, while TSLA has pulled back in recent weeks, Kyle’s “go big or go home” attitude has paid off.
Tesla stock enjoyed a boost after strong earnings in February, so sentiment could always shift even more negatively if TSLA misses the mark later this year. But with shares up dramatically in the last 18 months, the bears have been burned many times waiting for momentum to fade.
10 Best Stocks for 2014: #3, Banco Santander (SAN)
Investor: Bryan Perry
YTD Return: +8%
While the S&P 500 is pretty flat year-to-date in 2014, foreign banking play Banco Santander (SAN) has managed to tack on 8% — better than the broad Financial SPDR (XLF) that holds a stake in major banking stocks like Bank of America (BAC) and Citigroup (C).
Why? Well, because Banco Santander is located in Spain and has seen a big tailwind from positive developments in Europe lately. As Bryan Perry wrote in a recent update on SAN, “it’s becoming clearer that the region is approaching escape velocity” from the recent recession.
Here’s why Bryan likes the stock:
- Banco Santander never took government bailout money — a testament to prudent management of what was a sovereign mess for most European banks.
- SAN stock carries a hugely attractive yield of 7.1%, with the next quarterly dividend payment slated for early April.
- Shares trade at just 1.14 times book value, and earnings per share are forecast to grow by 15% over the next year.
- The bank’s exposure to Latin America is in my view a tremendous long-term investment theme.
10 Best Stocks for 2014: #4, Financial SPDR (XLF)
Investor: John Jagerson and Wade Hansen
YTD Return: +3%
The banking sector has been choppy in 2014, particularly after the results of the recent Federal Reserve stress tests.
On the plus side, the vast majority of banking stocks won regulators’ stamp of approval and even were granted dividend increases. Then there were a few dogs like Citigroup (C), which failed to pass muster and sold off sharply as a result.
On balance, then, the financial sector hasn’t gone much of anywhere this year despite some big winners and a few big losers. That has kept John Jagerson and Wade Hansen, editors of SlingShot Trader, from posting breakout gains even if they have managed to slightly outperform the market with their call on the Financial SPDR (XLF).
The XLF banking ETF is a great diversified play for long-term investors. But of course, while that diversification means you have a position in a number of high fliers like Bank of America (BAC), which is up by more than 8% since January, you also have a stake in the losers like Citi, which has given up almost 10% in the same period.
Still, if you want to play a cyclical recovery in lending and economic growth, there’s no better place to park your cash than bank stocks — and no better way to play the sector broadly than XLF.
10 Best Stocks for 2014: #5, MTN Group (MTNOY)
Investor: Charles Sizemore
YTD Return: +1%
This year has been a rough one for emerging markets. First, there was the “mini-crisis” in the Argentine peso and waves of protests sweeping Venezuela. Then, there was the Ukraine political crisis that resulted in Russia effectively stealing the Crimean peninsula … and fears that China is about to have its own 2008-style financial crisis.
So the 1% gain year-to-date put up by Charles Sizemore, editor of Macro Trend Investor, with his South African telecom play MTN Group (MTNOY) is actually much more impressive than the modest profit reflects.
After all, many emerging-market equities are deeply in the red so far this year.
But Charles remains very bullish on MTN specifically and emerging markets broadly in the latter part of 2014. He says in a recent update that “the selling simply exhausted itself and that the bad news has already been priced in.” And as for MTN Group…
- It’s the dominant mobile provider in the last great frontier market: Africa.
- It provides a service that is essential to the lives of the new African middle classes.
- Its markets are far from saturated, and it has virtually unlimited growth potential due to the inevitable shift to smartphones and higher-margin data plans
- It’s very reasonably priced at a forward P/E of 14 and pays a high and growing dividend that yields 4.8% right now.
10 Best Stocks for 2014: #6, Vanguard Dividend Appreciation ETF (VIG)
Investor: Brendan Conway
YTD Return: +1%
Brendan Conway is a columnist at Barron’s who runs the Focus on Funds blog. In our Best Stocks for 2014 contest, he has picked a favorite among investors everywhere: the Vanguard Dividend Appreciation ETF (VIG), which boasts roughly $19 billion in assets and ranks as one of the 20 largest exchange-traded funds on Wall Street.
Of course, the idea of a Vanguard ETF is about diversification and low cost — not necessarily outperformance. And as a result, Brendan’s pick has largely tracked the S&P 500 year-to-date.
Focused on large-cap dividend payers like consumer staples giant Procter & Gamble (PG) and healthcare stock Abbott Laboratories (ABT), you can be sure that even if the VIG fund doesn’t blow the doors off with gains, it will hang tough in any market.
If things get choppy for stocks thanks to geopolitical unrest in Crimea or an emerging-market meltdown, Brendan’s pick may move to the head of the pack later in 2014.
As he wrote in a recent update on his pick, “If the market gets rockier, you can expect investors to flock to megacap stocks and dividend payers.”
10 Best Stocks for 2014: #7, ProShares Short MSCI Emerging Markets ETF (EUM)
Investor: Anthony Mirhaydari
YTD Return: Flat
Unlike the other players in our Best Stocks for 2014 contest, Anthony Mirhaydari has taken the unique angle of betting against this market instead of going long on a stock or ETF.
His reasons to be bearish include:
- Continued negative sentiment in China, Brazil and elsewhere after recent underperformance.
- Risks from the Federal Reserve “tapering” that will suck capital out of emerging markets.
- The end of the “demographic dividend” in China as the nation faces the harsh reality of slowing growth and an aging workforce.
It’s uncommon to see an investor bearish enough to bet against a region for a whole year. But Anthony was ahead early and still is right up against the S&P 500’s returns, so there might be something to the story of a breakdown in emerging markets.
10 Best Stocks for 2014: #8, Fleetcor (FLT)
Investor: Louis Navellier
YTD Return: -3%
Fleetcor is best known for providing payment processing services and private-label fuel credit cards to gas station operators and owners of vehicle fleets. In addition to fleet cards, the company’s other payment products include food cards and corporate lodging discount cards.
Currently, FleetCor serves more than half a million commercial accounts, covering millions of cardholders across North America, Europe, Africa and Asia. Last year alone, the company processed nearly 304 million transactions.
If you’re looking to play a cyclical recovery in business spending and travel, FleetCor is a unique way to do that.
And despite recent underperformance, the fundamentals of FLT stock are strong. In its February earnings report, Fleetcor reported adjusted EPS growth of 32% in Q4 and set its profit outlook for fiscal 2014 at a 22% growth rate.
Those numbers mean FLT stock is still in the race long-term even if it hasn’t put up big gains just yet in 2014.
10 Best Stocks for 2014: #9, Citigroup (C)
Investor: Greg Harmon
YTD Return: -8%
Well, Greg Harmon of Dragonfly Capital took a flier with his 2014 stock pick of Citigroup (C) on the hope that the charts were shaping up into a big rally for the megabank this year.
Unfortunately, the news got in the way.
Citigroup asked for a bigger buyback and dividend plan, but instead of granting it, the Federal Reserve decided to slap the company with a failing mark in its latest “stress test.”
As regulators put it:
“While Citigroup has made considerable progress in improving its general risk-management and control practices over the past several years, its 2014 capital plan reflected a number of deficiencies in its capital planning practices, including in some areas that had been previously identified by supervisors as requiring attention, but for which there was not sufficient improvement.”
The stock was doing OK through mid-March, but after this gut punch, shares quickly gave up about 9% and have settled well into the red YTD.
Of course, it’s worth noting that the wound is still fresh. There’s a lot of time left in 2014 for Greg’s pick to validate itself and deliver a profit to shareholders if things turn around.
10 Best Stocks for 2014: #10, Fortegra Financial (FRF)
Investor: Hilary Kramer
YTD Return: -15%
Hilary Kramer’s GameChangers stock-picking newsletter focuses on stocks that are ambitious and changing the way businesses and consumers function. Fortegra (FRF) is a great example of that, since this non-traditional financial stock has a unique business model.
FRF provides payment protection for things such as warranties and motor club services, as well as other insurance services. It has worked to expand its product offerings in the fastest-growing areas of insurance to increase its customer base while meeting their biggest demands. That growth potential is strong, and a string of acquisitions will also help build the company’s business and open up new sources of revenue.
Of course, with a game-changing player there are always going to be challenges, and FRF has seen some trouble early on in 2014 as the company posted not just an earnings drop in early March, but also a profit figure that fell short of forecasts.
This came after a weak start to the year, and sentiment has been pretty negative over the last few months.
But remember, our Best Stocks for 2014 contest isn’t won in just a few weeks or months. Stocks need to show their power over the long haul, and there’s plenty of time for FRF to get back in gear before year’s end.