2014 has been a tremendous year for the U.S. economy. With the post-crisis recovery finally gaining some steam, 2014 was the best year for jobs growth since the go-go days of 1999.
Stronger labor markets and higher investment outlays by businesses helped U.S. third-quarter GDP come in at 5%, the highest quarterly growth rate since summer of 2003.
Investors were net buyers of the stock market this year as well, with the S&P 500 index logging 12.7% year-to-date gains. The Dow Jones Industrial Average reached 18,000 for the first time ever last week to boot.
With the U.S. economy now chugging along merrily, stocks still look like a great investment. Hailing from brewers to obscure retailers, here are the top 5 stocks to buy for 2015:
Top 5 Stocks to Buy for 2015: #1 — Boston Beer Co Inc (SAM)
Market Capitalization: $3.8 billion
YTD Return: +22%
Boston Beer Co Inc (SAM) is the largest craft brewer in the United States. The company enjoys the benefits of being a trendy craft brewer while maintaining some of the scale advantages and distribution arrangements that Molson Coors Brewing Company (TAP) and Anheuser Busch Inbev SA (ADR) (BUD) enjoy.
Of the top stocks to buy in 2015, Boston Beer is one of the most interesting. Boston Beer’s stock ticker symbol is SAM because its flagship brand is Samuel Adams, although it also sells products under the Twisted Tea and Angry Orchard brand names. SAM stock has reaped enormous benefits of maintaining its craft brewery status from the Brewers Association: in 2013 total beer sales were down 2%, while craft beer sales roared 17% higher.
SAM stock was lucky that when it sold 2.3 million barrels of beer in 2010, the Brewers Association changed its definition of a craft brewery from brewers that make less than 2 million barrels of beer annually to those who brew less than 6 million barrels annually.
SAM is still pretty far away from that 6 million barrel threshold, selling 3.4 million barrels in 2013. Despite blistering sales growth of 27% in 2013 and expected sales growth of 24% this year, Sam Adams is still just 1 percent of the total beer market.
With plenty of growth potential ahead, SAM is a top stock to buy for 2015.
Top 5 Stocks to Buy for 2015: #2 — Walgreen Company (WAG)
Market Capitalization: $72.7 billion
YTD Return: +33%
While Walgreen Company (WAG) stock has posted great returns for patient investors this year, there were more than a few bumps in the road. WAG stock returns were trailing the returns of the S&P as recently as October, when there was a decidedly negative sentiment surrounding the drug store industry.
InvestorPlace contributor Grelyn Terzo outlined some of the headwinds facing WAG in an Oct. 1 article. While Walgreen’s should benefit from an aging population, impressive prescription growth and other factors, she said,
“…it’s also up against lower reimbursement payments, Medicare Part D and generic-drug inflation, evidenced by a 90-basis-point drop in the pharmacy chain’s Q4 gross profit margin to 28%.”
But Walgreen’s fiscal first quarter painted a different picture, as 16% earnings growth topped expectations and WAG stock shot up 3%.
Also, Walgreen’s is light-years ahead of the competition when it comes to embracing new technology and health solutions. Its partnership with the groundbreaking blood testing company Theranos is potentially a game-changer for WAG stock in the long run, and its an important reason I see WAG as a top stock to buy for 2015.
Top 5 Stocks to Buy for 2015: #3 — Ulta Salon, Cosmetics & Fragrance, Inc. (ULTA)
Market Capitalization: $8.3 billion
YTD Return: +32%
Ulta Salon, Cosmetics & Fragrance, Inc. (ULTA), a Bolingbrook, Illinois-based beauty retailer, is one of the least-championed darlings of Wall Street in recent memory. Despite boasting 620% returns over the last five years, ULTA stock is hardly a household name.
ULTA has been able to consistently deliver enviable year-over-year revenue growth for years now. In the last four fiscal years, revenue growth has come in between 19% and 25% every year, like clockwork. Wall Street expects ULTA to do it again in fiscal 2015, with calls for 20.1% revenue growth.
More important, sales are being driven not only by Ulta Salon’s aggressive expansion policy but by impressive same-store-sales increases. According to the company’s most recent quarterly report,
“The 9.5% comparable sales increase consisted of 8.2% increase at the Company’s retail and salon stores and a 46.7% increase in the Company’s e-commerce business.”
With a strong record of operational excellence under its belt and a $300 million share repurchase program recently approved in September, ULTA stock is one of 2015’s top stocks to buy.
Top 5 Stocks to Buy for 2015: #4 — Chevron Corporation (CVX)
Market Capitalization: $214.1 billion
YTD Return: -9%
Chevron Corporation (CVX) is by no means an unknown, under-the-radar company with its best days ahead of it. It’s easily the largest of 2015’s top stocks to buy — in fact, it’s so massive that its sheer size alone suggests strongly that CVX stock won’t be doubling any time soon.
So how did CVX earn a spot on today’s list?
Despite constrained short-term upside potential, CVX is a solid stock you can build a portfolio around. The dramatic fall in oil prices has taken its toll on CVX shares this year, but for contrarian investors CVX stock is now an attractive long-term opportunity.
Whether you’re a value-seeker, an income investor, or just someone looking for a low-risk opportunity, Chevron trades at compelling levels right now.
Chevron is an integrated oil and gas company, meaning it has both upstream (extraction and production) and downstream (refining, distribution, and selling) operations, CVX doesn’t suffer through violent swings when oil fluctuates wildly. When oil prices are low, CVX earns better margins on its refining activities. When oil prices are high, its reserves become more valuable.
With a dividend yield at 3.8% and 28 consecutive years of dividend growth to its name, CVX stock is a top stock to buy for 2015.
Top 5 Stocks to Buy for 2015: #5 — Wayfair Inc (W)
Market Capitalization: $1.7 billion
YTD Return: -28.3%
Unlike Chevron, Wayfair Inc (W) is not even close to being a household name. By far the smallest of 2015’s stocks to buy, Wayfair is an online home goods retailer. Unlike Amazon.com, Inc. (AMZN) Wayfair is focused on a niche area of retail, choosing to do what it does best. Wayfair, which just debuted on the NYSE in October, is a relatively new kid on the block.
I outlined a few core reasons I think Wayfair is a better buy than AMZN stock on Dec. 5:
Wayfair only became aggregated as a single entity — founders Niraj Shah and Steven Conine began in 2002 with 240 micro-sites — in 2011. By 2012, total sales from the Wayfair name clocked in above $600 million. Revenue soared 52% in 2013 and Wall Street expects 39% sales growth this fiscal year and another 27% sales growth in 2015.
While it’s great to just throw out growth numbers, how does Wayfair’s growth compare to that of its industry peers? Well,
By contrast, analysts expect sales growth between 11% and 20% this year from AMZN, eBay Inc (EBAY), and Overstock.com, Inc. (OSTK).
As if gaudy growth from Wayfair weren’t enough, the tailwinds of an improving labor market and U.S. economy should be a boon to the real estate market — and therefore home goods retailers — as well. That’s why I think Wayfair is one of the top stocks to buy for 2015.
John Divine is assistant editor of InvestorPlace.com. As of this writing he did not hold a position in any of the aforementioned stocks. You can follow him on Twitter @divinebizkid.
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