Well, folks, it’s summertime, and the livin’s easy. Or, at least it’s supposed to be. It’s turned out to be a rather tumultuous summer for investors, with every other day bringing gloom-and-doom headlines on the fates of Greece and China.
Hey, look on the bright side, though: At least it’s halfway through the Major League Baseball season. Not only does that mean we’re a day closer to the time of year when SportsCenter covers something other than pitching duels and mascot races, but it also means the annual MLB All-Star Game, which is set for Tuesday night.
And in the spirit of America’s pastime, don’t investors deserve a similar lineup of all-stars? (That’s a rhetorical question — the answer is a definitive “yes.”
So in the name of summer, baseball, and stock-picking, here are 10 all-star stocks to buy now. Forget the daily gyrations of China and Greece — these stocks are long-term winners.
10 All-Star Stocks to Buy Now: NXP Semiconductors (NXPI)
Market Cap: $23 billion
YTD Performance: +20%
What makes this chipmaker so special is the groundbreaking technology it supports … and one very special corporate customer.
NXP Semiconductors (NXPI) makes the near field communication (NFC) chips that go inside the newest Apple (AAPL) iPhones. Specifically, they allow phones and payment systems to talk to one another; in other words, NXPI’s tech enables Apple Pay to function.
If you’re like me and you think contactless checkouts aren’t just a fad, NXPI is clearly a contender for one of the best stocks to buy now.
If you’re not a believer in the whole Apple Pay thing, NXP still has the payment area covered. It’s a big manufacturer of chip-and-pin technology in credit cards; by reading a unique identifier on the card’s chip instead of a magnetic strip, transactions are more secure and counterfeit cards more difficult to duplicate.
With earnings expected to jump 22% in 2015, NXPI looks like a steal from a valuation perspective, currently trading at a forward price-to-earnings ratio of just 14.
10 All-Star Stocks to Buy Now: Walgreens Boots Alliance (WBA)
Market Cap: $102 billion
YTD Performance: +24%
The company formerly known as Walgreens now has another two surnames, and you’d be wise to acknowledge that. Drugstore chain Walgreens Boots Alliance (WBA) adopted its current name at the beginning of 2015, upon the completion of its $15.3 billion acquisition of Alliance Boots. (Technically, Walgreens already owned 45% of the European drugstore chain and health products retailer, so the $15.3 billion was for the remaining 55%.)
With the purchase, Walgreens went from being the largest drugstore chain in the U.S. to becoming a dominant drugstore in both the U.S. and Europe.
While some might worry that exposure to Europe will hurt WBA stock, that hasn’t been the case thus far. Last week, WBA stock topped both EPS and same-store-sales expectations in its first full quarter as an integrated company.
10 All-Star Stocks to Buy Now: IAC/InterActiveCorp (IACI)
Market Cap: $6.6 billion
YTD Performance: +36%
Part media and tech, part holding company and incubator, IAC/InterActiveCorp (IACI) is one of the more fascinating stocks in today’s lineup.
Led by media mogul and college dropout Barry Diller, IACI’s corporate strategy can be summed up pretty succinctly: “Either build or acquire good, distinct businesses, grow them, then spin them off.”
The current portfolio of brands under the IAC umbrella is too exhaustive to list here, but here are just a few of them: Ask.com, About.com, The Daily Beast, The Princeton Review, Vimeo, Dictionary.com and CollegeHumor.
IAC has benefited enormously from the rise of online dating, and it will spin off its Match Group — which contains dating sites and apps Match.com, Tinder and OkCupid, as well as The Princeton Review for good measure. The Match IPO should complete in the fourth quarter.
10 All-Star Stocks to Buy Now: Ulta Salon (ULTA)
Market Cap: $10.5 billion
YTD Performance: +30%
Ulta’s stubborn and consistent growth in recent years has sent its stock through the roof, with no glass ceilings in sight to stop it — ULTA stock is up 600% in the past five years.
At the beginning of the year, I named ULTA one of the top five stocks to buy for 2015, and after a 30% run-up through the all-star break, I’m sticking to my guns.
My rationale remains the same as it was to begin the year:
“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.”
I know Ulta isn’t yet a household name, but I believe that one day it will be. Despite being a $10 billion company, anyone who buys in today will be participating in the early stages of its growth story.
10 All-Star Stocks to Buy Now: Facebook (FB)
Market Cap: $246 billion
YTD Performance: +15%
Perhaps you haven’t yet noticed, but Facebook (FB) is turning into far more than just a social media company. It’s moving lightning-fast on a number of promising initiatives, from virtual reality to online publishing and video to transforming the way we do messaging.
Trading at 34 times forward earnings, FB isn’t exactly priced for value, but then again, I don’t see anything wrong with paying growth prices for a growth company. Revenues are expected to climb 37% this year and 34% in fiscal 2016.
Back in 2012 when Facebook was going public, many feared that FB wouldn’t be able to monetize mobile — and those people have been proven dead wrong. (I count myself as one of the skeptics, by the way.) Not only has Facebook been able to monetize far better than many expected, but it’s been keeping an ace up its sleeve for years now — and it just slapped it down on the table.
Instagram, which Facebook bought for $1 billion in 2012 when it had 27 million users, today has 300 million users and counting. And for the last three years Facebook has waited patiently, keeping the platform largely ad-free to help grow its numbers. Only last month did FB announce an advertising push, which should drive significantly more revenue from its prized asset.
And those are only a few of the many reasons FB is one of the best stocks to buy.
10 All-Star Stocks to Buy Now: Chevron (CVX)
Market Cap: $178 billion
YTD Performance: -16%
Let’s just acknowledge the elephant in the room, shall we? 2015 has been a bad year for energy stocks, and oil stocks in particular.
But Chevron (CVX) isn’t just an “oil stock.” It’s an integrated oil and gas major — one of the five largest in the world — and apart from oil and natural gas, Chevron has its hands in alternative energy like solar power, geothermal energy, wind power and biofuels.
In short, Chevron is an all-around diversified energy stud, even if its year-to-date performance doesn’t reflect that. As Warren Buffett likes to say, “Buy under gunfire, sell under fireworks!” Bullets might as well be whizzing past Chevron’s ears in today’s market.
As if fire sale prices and broad exposure to an essential industry weren’t enough, CVX also rewards investors with a hefty dividend. The payout’s been growing annually for the last 29 years, and today the dividend yield sits at 4.5% — though I’d be shocked if it were still that high a year from now.
10 All-Star Stocks to Buy Now: Wayfair (W)
Market Cap: $3.2 billion
YTD Performance: +95%
Like Ulta Salon, Wayfair (W) isn’t quite a household name today. Also like Ulta, Wayfair made my list of the five best stocks to buy for 2015, and I expect most American households will be familiar with the name in a matter of years.
This online retailer can be thought of as a more specialized version of Overstock.com (OSTK) or Amazon.com (AMZN). But unlike Overstock and Amazon, Wayfair sticks to one thing — home goods — and does it really, really well.
Just as Home Depot (HD) is a direct beneficiary of the resurgence of the U.S. housing market, so too is Wayfair. As new homeowners settle into their fresh digs, they’ll naturally need some furniture, decorations and other various furnishings to make it truly feel like home.
The numbers don’t lie: Revenue soared 52% in 2013 and 44% in 2014, and is expected to jump another 41% this year. While the company isn’t yet profitable, it has beaten EPS estimates in each of its first three quarters as a public company, so there’s a good chance it’ll be in the black sooner than Wall Street expects.
10 All-Star Stocks to Buy Now: Gilead Sciences (GILD)
Market Cap: $167 billion
YTD Performance: +22%
Gilead Sciences (GILD) is one of the most revered stocks in healthcare, and boy, do its returns show it. In the past five years, GILD has roared 561% higher. But even after those meteoric gains, I consider GILD a veritable Wall Street all-star, and one of the best stocks to buy in today’s market.
Gilead makes everything from HIV and hepatitis treatments to an antiviral medication for the flu. And even though the stock’s earnings are expected to roar 33% higher this year, shares trade at a measly 10 times forward earnings.
“GILD is also on the acquisition hunt to keep its earnings growing. The rumor is a bid for Vertex Pharmaceuticals Incorporated (VRTX) for about $40 or $50 billion. However, some analysts think buying 10 companies at $1 billion each would make more sense.
Either way, look for GILD to make headlines with merger and acquisition activity in the near future.”
Only time will tell if GILD snaps up a smaller company to spark earnings growth, but even if it doesn’t, Gilead is strong enough to stand on its own two legs.
10 All-Star Stocks to Buy Now: Disney (DIS)
Market Cap: $200 billion
YTD Performance: +25%
What better stock to tee off with than Disney (DIS), the multinational entertainment giant that owns ESPN and its flagship show, SportsCenter?
As it turns out, ESPN itself is one of the many reasons to be bullish on Disney stock; the sports network is such a selling point for cable customers that in 2014, cable providers had to pay more than four times as much to put ESPN in their package than the next-most expensive network, TNT.
For my money, Disney also has one of the shrewdest and most visionary CEOs on the planet: Bob Iger. Although still at the helm of the iconic company, his legacy surely will be defined by a series of prescient acquisitions that have minted the company and its shareholders billions of dollars. Under Iger, Disney bought Pixar Studios in 2006, then Marvel Entertainment in 2009, and then Lucasfilm in 2012.
With the reboot of the Star Wars series expected to haul in record numbers when it hits theaters later this year, there’s plenty more magic in store for DIS.
10 All-Star Stocks to Buy Now: FleetCor (FLT)
Market Cap: $14 billion
YTD Performance: +5%
Rounding up the list of all-star stocks to buy is FleetCor (FLT), a payment services provider specializing in fuel cards and telematics, allowing corporate customers to cut down on fuel costs and keep tabs on their employees when they’re on-the-go.
FleetCor also does food and lodging cards, and with its 2014 purchase of Comdata, a Canadian e-payments company processing more than $54 billion in transactions each year, FLT is beefing up.
Growing revenue between 20% and 36% per year for each of the last four fiscal years, analysts expect FLT to actually exceed that growth in 2015, with consensus estimates calling for 37% revenue growth. FLT stock has a sound underlying business, and at 21 times forward earnings, it’s reasonably priced.
It’s an all-star in my book.
As of this writing, John Divine was long shares of AAPL stock, W stock, and NXPI Jan 2017 $105 calls. You can follow him on Twitter at @divinebizkid or email him at firstname.lastname@example.org.
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