Now that we are halfway through 2014, it’s time to check in on our Best Stocks for 2014 lineup and explore what’s working (and what’s not) for the experts on our list.
In previous years, this contest went down to the wire and largely tracked the market… but in 2014, we have a handful of big standouts leading the pack and a runaway winner that is already up 134% and likely will stay at the top of the heap!
So what stocks are the best stocks of 2014, according to our experts, and how have they been doing? Take a look:
Best Stocks for 2014 #10 – Fortegra Financial (FRF)
Investor: Hilary Kramer
YTD Returns: -14%
Fortegra Financial (FRF) isn’t a traditional bank or financial company, offering payment protection plans for businesses, auto club services and even consumer electronics warranties.
Hilary Kramer, editor of Game Changers, picked this stock as her favorite for 2014 thanks to strong growth potential and a string of acquisitions that should unlock new revenue streams. The more economic activity picks up, the more the services of Fortegra will be used by both consumers and businesses alike to protect their transactions.
Of course, a lack of consistency in earnings have held FRF stock back in 2014; Revenue continues to grow briskly but Fortegra has struggled to translate that top-line growth into bottom line success.
Shares are down year-to-date but could snap back significantly if management can turn the numbers around and start beating Wall Street expectations again.
Best Stocks for 2014 #9 – Citigroup (C)
Investor: Greg Harmon
YTD Returns: -10%
Citigroup (C) is another financial stock that’s lagging the market so far this year, but a pick that has big turnaround potential.
Citi once again failed the Federal Reserve’s “stress test” for banks this year, limiting its ability to do stock buybacks or pay shareholders big dividends until regulators are more confident in its balance sheet. However, Citigroup stock seems to have priced most of these challenges in and has remained rangebound between $45 and $55 since early 2013; at the lower part of this range now, it could be a good time to make a bargain buy.
In a cyclical recovery, financial stocks will lead the charge. Though Citi has admittedly faced some headwinds lately, a broader recovery in lending — or a higher interest rate environment that allows Citi to profit from better credit spreads — could lift the bank stock.
Best Stocks for 2014 #8 – ProShares Short Emerging Markets Fund (EUM)
Sector: Emerging markets ETF
Investor: Anthony Mirhaydari
YTD Returns: -6%
Unlike the other investors on this list seeking out opportunities for big gains, investment expert Anthony Mirhaydari is focusing on what can go very wrong in 2014… and how you can still profit anyway.
His pick, the ProShares Short MSCI Emerging Markets ETF (EUM), goes up when the underlying group of emerging markets investments decline. Such an “inverse” fund is a great way to hedge against uncertainty and ensure your portfolio profits even in a down market.
Of course, emerging markets have slowly moved higher in 2014 and that means Anthony’s pick has moved the other way with a modest decline. However, his initial investment thesis of a looming credit crisis in China and inflationary pressures abroad seems sound. And when you throw in continued geopolitical unrest in Ukraine and Iraq, the emerging market picture looks increasingly rocky.
Best Stocks for 2014 #7 – Vanguard Dividend Appreciation ETF (VIG)
Sector: Dividend ETF
Investor: Brendan Conway
YTD Returns: 5%
You’re not going to set the world on fire with a low-cost, low-risk dividend fund. But Brendan Conway of Barron’s has shown yet again that this boring and reliable way of investing can unlock considerable returns.
At the halfway point, his pick of the Vanguard Dividend Appreciation ETF (VIG) is up 5% — which annualizes to an impressive 10% gain per year if this keeps up.
While many investors (including some on this list) try to outperform with sexy small caps, a low-risk and low-cost investment plan with a fund like the VIG can be your best long-term investment strategy. Composed of old income favorites like Coca-Cola (KO), Johnson & Johnson (JNJ) and Exxon Mobil (XOM), the Vanguard Dividend Appreciation ETF is a great bedrock investment for any portfolio.
Best Stocks for 2014 #6 – MTN Group (MTNOY)
Investor: Charles Sizemore
YTD Returns: 5%
What if you could marry the growth potential of emerging markets with the stability and income of an entrenched telecom play? Well, that’s exactly what you’ll find in the pick of MTN Group (MTNOY).
Charles Sizemore, editor of Macro Trend Investor, identified MTN Group as his best stock for 2014 based on the big growth potential of mobile phones in sub-Saharan Africa. While the infrastructure of Africa clearly leaves much to be desired, the good news is that smartphones provide an easy and relatively affordable solution for many consumers and businesses even in remote regions of the continent — and many research firms indicate that Africa will soon be the fastest-growing smartphone market in the world as a result.
Beyond this growth potential, MTN Group is entrenched with over 200 million subscribers and offers a decent 3.8% dividend yield based on the last year’s payouts to boot.
While MTN has basically tracked the market thus far in 2014, it clearly has big breakout potential.
Best Stocks for 2014 #5 – Financial SPDR (XLF)
Sector: Financial ETF
Investors: John Jagerson and Wade Hansen
YTD Returns: 5%
Clearly financial stocks are a bit of a theme in this year’s round of picks. But unlike Fortegra and Citi, which have underperformed, the Financial SPDR (XLF) has managed to keep up with the broader stock market this year.
Part of that is because John Jagerson and Wade Hansen, editors of the options trading service SlingShot Trader, opted for the diversification of this ETF instead of putting all their eggs in one basket. This is always a great approach to long-term investing, and a good way to protect yourself from the volatility that comes with individual equities.
John and Wade believe in the same general investment thesis for financial stocks as others: that net interest margins will improve, that a brisk economic environment will help lending and that valuations in financials aren’t as stretched as in other sectors.
They’ve been right so far in 2014… and should do quite well as we enter the second half of the year and the hangover from a rough Q1 for the U.S. economy is put behind us.
Best Stocks for 2014 #4 – Fleetcor (FLT)
Sector: Business Support & Services
Investor: Louis Navellier
YTD Returns: 14%
An interesting twist on the focus on financials that we’ve already seen on our Best Stocks list is Fleetcor (FLT). Though not a pure financial stock, since it only deals with payment processing and not lending and credit, FLT is very much linked to the same theme of economic recovery boosting spending and card swipes nationwide.
Fleetcor is a smaller company that provides businesses with gas cards or connects them directly with fuel suppliers. It also has a smaller arm that deals with other fleet and travel issues, including lodging and public transportation as well as vehicle tracking.
The idea is simple: Economic recovery means more business travel and more goods moving around the global economy. Fleetcor operates worldwide and is a great way to play the simple secular recovery in business and manufacturing in the months ahead.
That play has been profitable thus far in 2014, with 14% gains thanks to the shrewd call of Blue Chip Growth editor Louis Navellier. And judging by recent financials, that trend should continue in the second half of the year.
Best Stocks for 2014 #3 – Banco Santander (SAN)
Investor: Bryan Perry
YTD Returns: 19%
The best performing bank stock on this list is one of the riskiest plays of the past few years, Banco Santander (SAN). This Spanish bank ran into serious troubles in 2010 and 2011 thanks to the European debt crisis, and then lagged the market considerably in 2013 as emerging markets continued to struggle and its operations in Latin America felt the pain … but 2014 is the year of Santander’s turnaround, and investors have been richly rewarded.
Bryan Perry, editor of the dividend investing newsletter Cash Machine, didn’t just jump into Santander for the snap-back in share price though. Based on the last 12 months of distribution, this stock still yields a hefty 7.9% dividend — so even if shares don’t do much for the rest of the year, investors can lock in a great cost basis and a mammoth dividend yield for the long term.
This stock clearly is a bit riskier than domestic megacap financials. But considering Bryan has racked up over three times the returns of the S&P 500, that risk has paid off for him and his investors big time.
Best Stocks for 2014 #2 – Tesla Motors (TSLA)
Investor: Kyle Woodley
YTD Returns: 59%
If you’re looking for an exciting momentum stock, then the company of the moment is certainly Tesla Motors (TSLA). This electric vehicle manufacturer has it all — a sexy product consumers love in its Model S sedan, an innovative CEO in Elon Musk and ambitious plans for the future including an all-electric SUV and a “Gigafactory” that will produce high-powered batteries for hybrid and electric vehicles around the world.
The million dollar question, of course, isn’t whether Tesla stock is legit… but whether it is fairly valued. After all, the company is sitting on a forward price-to-earnings ratio of almost 80 and a heck of a lot of optimism has been priced in to TSLA shares. That doesn’t leave much room for error.
Just consider the fact that Tesla still hasn’t reclaimed its peak of $265 per share from four months ago as proof that it may be difficult for the stock to keep up this strong momentum.
However, InvestorPlace editor Kyle Woodley already enjoys a hefty 59% gain year-to-date on this call … so even while new money may not have the same profit potential, this insufferable Ohioan is sitting pretty.
Best Stocks for 2014 #1 – Emerge Energy Services (EMES)
Sector: Oil and Gas Services
Investor: Jon Markman
YTD Returns: 134%
While a number of stocks on this list have posted great gains year-to-date, the runaway winner is Emerge Energy Services (EMES). Picked by Jon Markman, editor of Trader’s Advantage, this stock has exploded to more than double investors’ money so far in 2014.
What’s the secret of EMES stock? Well, while many investors haven’t heard of this name it does have a connection to one of the fastest-growing businesses in the U.S .right now: fracking.
Emerge mines specialized sand that is used in oil shale fracking, and continues to soar as a result. The best news is that EMES doesn’t participate in the exploration or extraction process itself and simply provides materials to other oil and gas companies — meaning it is protected from volatility in oil prices or the costly and drawn-out process of obtaining mineral rights and tapping finds.
Emerge simply connects with other fracking companies to help them. And shareholders like Jon Markman have been racking up big gains this year as a result of this simple way to tap into the fracking boom.
Jeff Reeves is the editor of InvestorPlace.com and the author of The Frugal Investor’s Guide to Finding Great Stocks. As of this writing, he did not hold a position in any of the aforementioned securities. Write him at [email protected] or follow him on Twitter at @JeffReevesIP.