There are three things to know as an investor — what stocks to buy, what stocks to sell and when to pull the trigger.
That said, as we head into 2016, we can at least help you with a third of this challenge. We’ll look at 10 stocks that have received straight “A” grades (quantitative, fundamental and total) from my Portfolio Grader service as of New Year’s Eve 2015 — and that includes my top stock pick to buy and hold for 2016!
Most of these best stocks to buy for the new year put up a great performance in 2015, but given strong fundamentals and other factors, their runs could be far from over.
So, in no particular order, here are the 10 “best of the best” stocks to buy for 2016, including my top buy-and-hold pick for the year:
“Best of the Best” Stocks to Buy: AMN Healthcare Services, Inc. (AHS)
AMN Healthcare (AHS) is a niche player in the healthcare sector. And what it does is crucial for one of the biggest long-term growth sectors in the markets today.
It offers staffing services — daily, temp and permanent — for clinician and physicians at healthcare facilities and private practices in the U.S. AMN staffs up and down the chain — aides, nurses, doctors, even CEOs.
AMN also has begun to offer management consulting services to healthcare organizations to optimize their facilities’ staffing and operational challenges. Doctors who begin practices don’t have a lot of background in business management and if their practice grows, the business grows along with it.
AHS stock will finish 2015 up roughly 60%. The long-term trend in U.S. healthcare plays perfectly into AMN’s strengths.
“Best of the Best” Stocks to Buy: INCR Research Holdings Inc (INCR)
INC Research (INCR) is in a rapidly growing sector on the drug development side of things.
It costs nearly $3 billion to put a drug through the safety trials these days. And for that kind of money, pharmaceutical companies want to make sure they put forward the best product and get it through trials as effectively as possible.
For many companies these days, the best way to make this work is to use a subcontractor that specializes in getting drugs through trials — following the protocols, reporting, staffing and recruiting patients.
That’s what INCR is all about. You make the drug or device, and they will run the trials. This is a boon to smaller, leaner biotechs, but the big players like the outsourcing option as well.
“Best of the Best” Stocks to Buy: TAL Education Group (ADR) (XRS)
The Chinese take education very seriously. Performance is crucial, especially for rising middle-class families hoping to get the next generation on the upwardly mobile economic path. But competition is fierce, so many families are looking for an edge.
TAL Education Group (XRS) provides that edge. It offers tutoring services to K-12 students throughout China, in almost any subject you can imagine.
It also offers online classes for students that live in further-flung regions and can’t make it one of its more than 550 centers in 19 cities throughout China.
XRS is a pure China play on a long-term trend that will continue to grow regardless of the nation’s broader economic challenges.
“Best of the Best” Stocks to Buy: Ormat Technologies, Inc. (ORA)
Ormat (ORA) is a very interesting play on the renewable energy sector without having the cost issues that are inherent in solar and wind and many other renewables.
ORA builds, operates and sites utility-scale geothermal energy plants all around the world.
Geothermal is a unique way to tap into sources of low-heat geothermal water to high temperature geothermal steam heat and turn it into electricity. Iceland has gotten a decent chunk of its electricity (currently 26%) from geothermal heat for decades.
ORA has been in business for more than three decades, so it knows how to survive as a renewable energy company. It also partners with larger utilities to add more renewables to their energy mix as emission rules get tighter for big energy companies and their corporate customers.
The stock will finish up 35% for the year, which is pretty impressive for an energy company these days.
“Best of the Best” Stocks to Buy: Ctrip.com International, Ltd. (ADR)
One of the major long-term consumer trends that has been overlooked by many investors recently is the enormous growth in travel in Asia, especially in China.
This is one of those less-noticed aspects of a growing middle class. They don’t all rush out and buy homes and cars — they buy name-brand clothing and accessories or they add to their wardrobe.
Or, in this case, they start to travel more.
Ctrip.com (CTRP) is the major travel source provider for China and has a very strong position in the market. So much so that U.S. travel firm Priceline (PCLN) and an unnamed investment firm are each putting $500 million into CTRP.
You may have missed the move this year — it will finish 2015 up a whopping 314% — but there’s still plenty of growth left here.
“Best of the Best” Stocks to Buy: Comfort Systems USA, Inc. (FIX)
Comfort Systems USA (FIX) is a national HVAC (heating, ventilation, air conditioning) systems engineering and maintenance company for industrial, professional and government clients.
Commercial real estate is still one of the hot sectors going. As long as companies have a pile of cash sitting around one great place to put it to work is real estate. Because of the uneven and hard-to-read recovery, businesses continue to hold back on investing in the workforce, but they are seeing the value in picking up land and property and upgrading.
HVAC firms like FIX are also experts in making old buildings run like new ones, upgrading equipment and building in new systems. FIX is a national leader in helping make buildings smarter.
FIX stock will finish up 68% in 2015, and that’s including a small selloff after the Federal Reserve’s rate hike in early December.
“Best of the Best” Stocks to Buy: Flagstar Bancorp Inc (FBC)
Flagstar Bancorp (FBC) is a Michigan-based bank. And like most banks, FBC has used its piles of cash very well in the past couple of years.
The Fed’s zero-interest-rate policy has meant that banks can borrow at virtually 0% from the government and can lend at significantly higher interest rates for mortgages, loans and credit cards. The Fed’s recent rise means those margins may be slightly smaller, but they’re still doing very well.
And regional banks like FBC are the biggest winners because they don’t have all the legal issues and trading desks to deal with what the majors do. What’s more, all the money that FBC holds in cash just got a nice little rate bump as well when rates rose.
It’s all good for FBC, which will finish up nearly 50%.
“Best of the Best” Stocks to Buy: American Woodmark Corporation (AMWD)
American Woodmark (AMWD) is one of the largest makers of cabinetry in North America.
This is a direct play on the residential home market, but it’s a winner whether you’re looking at the new or existing home market, and whether you’re talking rental or owned properties.
Many big firms have stepped up their homebuying of distressed properties, then renovating them and flipping them, or simply renting them. AMWD sells the products that are foundational in a home renovation — cabinets.
It’s the most efficient way to update and upgrade a property, and usually cabinetry is in the two most important rooms of house — the bathroom and kitchen.
Even in this less-than-robust real estate market, AMWD almost doubled in 2015.
Imagine what will happen when the economy really catches fire.
“Best of the Best” Stocks to Buy: United Fire Group, Inc. (UFCS)
United Fire Group (UFCS) is a property and casualty (P&C) and life insurance company.
And the Fed’s recent rate rise really helped boost the fortunes of insurers like UFCS.
UFCS is all about cash flow. It receives premiums (cash) from clients that can be put to work by the insurance company until it’s needed to pay out claims. It has to hold some of those monies in reserve just in case there’s a major disaster and there is a call for a lot of money quickly. United Fire keeps those reserves in U.S. Treasuries, which essentially are cash equivalents.
When interest rates rise, UFCS’ Treasuries’ rates rise as well. That rate rise is added profits for UFCS.
That money-making cash stash is a key reason why this conservative insurer was up 30% in 2015.
“Best of the Best” Stocks to Buy: Total System Services, Inc. (TSS)
TSS is one of the new breed of payment solutions companies. It works with financial institutions and businesses to develop secure and efficient systems for all of their clients B2C, B2B and employee needs.
Total System Services started in the late 1950s working with credit card companies into building card programs with banks. And by the ’70s, it was pioneer the outsourcing of data processing for card companies.
TSS has been public since 1983, so it has been at the vanguard of the payment solutions industry much long than most companies in the industry have even existed — that kind of perspective and management is key.
The stock is set to finish 2015 up roughly 48%, and I think it will lead the market ahead in 2016.
Louis Navellier is a renowned growth investor. He is the editor of five investing newsletters: Blue Chip Growth, Emerging Growth, Ultimate Growth, Family Trust and Platinum Growth. His most popular service, Blue Chip Growth, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.