2015 was a rocky year for the stock market as major indices roared to all-time highs, only to be cut down by the first 10% market correction in nearly four years. We enter 2016 as the world’s second-largest economy slows down, commodities prices are in the dirt and U.S. interest rates are on the rise.
Nonetheless, InvestorPlace’s panel of gurus will be calling their shots once again as they name their 10 best stocks to buy and hold for 2016.
The annual Best Stocks contest pits professional money managers, financial experts and business writers against one another, and whoever picks the best-performing stock of 2016 takes the cake at the end of the year.
The 10 Best Stocks for 2016 hail from a variety of industries and sectors, with restaurants, industrial goods, application software, information technology, financials, pipelines and even a paper company making the cut.
Here, in all their glory, are the 10 best stocks to buy for 2016:
10 Best Stocks to Buy for 2016: Total System Services, Inc. (TSS)
Investor: Louis Navellier
Louis Navellier knows a thing or two about beating the markets, with his longest-running publication, Emerging Growth, having pummeled the markets by a 6-to-1 margin over the past 17 years. He also runs the flagship Blue Chip Growth newsletter and the Ultimate Growth letter as well.
As you might guess, he’s a growth guy.
So what stock should you buy for 2016? Today, Louis expects to see continued growth in credit cards; Americans see their situations as improving rosily, but wages actually are rising at anemic levels.
“In order to make up for the shortfall between expectations and reality, Americans will continue to rely heavily on credit cards in 2016,” Louis says.
Hence Louis’ choice of Total System Services (TSS) an electronic payment processor that works with the largest card companies, such as Visa (V) and MasterCard (MA), to woo new merchants, issue new cards and ultimately make your purchases possible.
10 Best Stocks to Buy for 2016: Domtar Corp (USA) (UFS)
Investor: Hilary Kramer
Hilary Kramer, another leading investment manager on Wall Street, is also a frequent guest on financial media mainstays like Fox Business, CNBC and Bloomberg, to name a few. She also finds time to edit a flurry of successful investing newsletters like GameChangers, Breakout Stocks Under $10, High Octane Trader and Value Authority.
Hilary’s thesis going into 2016 is simple: With the Federal Reserve finally tightening, the highflying stocks of yesteryear will be put at serious risk. It’s time to get on the defensive and pick a conservative value stock, which is where Domtar (UFS), this year’s pick, comes in.
The paper producer’s largest end-market is the printing business, though UFS does have a growing “personal care” (read “adult diapers”) business that’s thriving as well. The steady demand in these markets throws off nice free cash flow, which has financed share buybacks — share count is down 30% since 2010 — and a cushy 4.3% dividend.
10 Best Stocks to Buy for 2016: Buffalo Wild Wings (BWLD)
Investor: Charles Payne
We welcome host of Fox Business Network’s Making Money with Charles Payne to this year’s contest. When he’s not on air, the rags-to-riches financial guru is editing his free weekly newsletter, Charles Payne’s Smart Talk, as well as his new newsletter, Charles Payne’s Smart Investing, which allows individuals insights into picks that were formerly only available to institutions.
With commodities prices in the dumps, BWLD stands to benefit as Americans have more cash lining their pockets thanks to lower gas prices. That’s cash, Charles reasons, that Buffalo Wild Wings will be able to claim a chunk of. Not to mention the fact that if chicken prices remain subdued, it’ll mean a beefier bottom line.
10 Best Stocks to Buy for 2016: Energy Transfer Equity LP (ETE)
Investor: Charles Sizemore
Charles Sizemore is a prolific financial writer, longtime prized InvestorPlace contributor, and chief investment officer of Sizemore Capital Management. He’s also a two-time winner of our Best Stocks competition, so he knows how to pick ‘em.
Never one to choose a straightforward company, Charles went with Energy Transfer Equity (ETE) for the Best Stocks for 2016 contest. ETE is a complicated beast, a master limited partnership that’s made up of six other energy companies.
Perhaps the simplest way to think of ETE is as a company with diversified exposure to energy pipelines, which essentially collect tolls as their corporate users send oil and natural gas all across the country.
Energy Transfer is thick on the income front, with a dividend yield sitting at 8.7% currently.
10 Best Stocks to Buy for 2016: Ellie Mae Inc (ELLI)
Investor: Jason Moser
We’re happy to welcome Jason Moser to this year’s Best Stocks competition from over at The Motley Fool, where he’s a senior analyst for the flagship real-money portfolio service, Million Dollar Portfolio. Moser is also a regular on the Fool’s daily podcast, Market Foolery, and its weekly radio show, Motley Fool Money.
Not intimidated by the Fed’s 25-basis-point rate hike in December, Jason chose Ellie Mae (ELLI), a company with a leading cloud product that facilitates and streamlines the mortgage originations process.
“Its primary offering, Encompass, is a cloud-based one-stop shop for mortgage originators, allowing them to manage the loan process from start to finish,” Moser says. And by streamlining the process, Ellie Mae’s Encompass “increases efficiency and loan quality, reduces documentation errors, and helps keep everyone out of regulatory trouble.”
With trailing revenues just below $250 million, Moser pegs the market opportunity as a $5 billion pie, and thinks ELLI will prove to be one of the best stocks to buy for 2016.
10 Best Stocks to Buy for 2016: American Express Company (AXP)
Investor: Paul R. La Monica
Paul La Monica, longtime Digital Correspondent at CNNMoney, is also a longtime contestant in InvestorPlace’s Best Stocks competition, and in 2015 he took home the gold by picking a little-known search engine and tech company, Google (GOOG, GOOGL).
This year, he’s going with another mega-cap, picking American Express (AXP) to outperform the markets. But as La Monica is hasty to note, AXP is also wildly different than his Google pick — it’s a stagnating company where value is the only virtue, not a high-growth digital empire with more room to expand.
With shares going for a mere 12.7 times earnings, Mr. La Monica deems AXP too cheap to pass up. And with prominent corporate raiders lurking in the shadows ready to pounce on management if the company can’t deliver, a potential spinoff, management shakeup or restructuring could also drive shares higher.
10 Best Stocks to Buy for 2016: Rave Restaurant Group Inc (RAVE)
Investor: Rick Rouse
And he’s doing so with a familiar pick.
Rouse is sticking with his 2015 Best Stocks entry for this year’s competition. His selection is Rave Restaurant Group (RAVE), which owns Pie Five Pizza, a fast-casual pizza joint that Rouse thinks is changing the industry with its unique ovens.
Says Rouse: “The company is on track to open 500 Pie Five locations over the next few years, and we are still in the early innings of this ballgame.”
10 Best Stocks to Buy for 2016: Globant SA (GLOB)
Investor: Jon Markman
Jon Markman is a renowned financial journalist whose notable awards include recognition from the Society of Professional Journalists for his work covering Enron and the post-Sept. 11, 2001, investment environment. A man of many talents, Markman also was a portfolio manager at a hedge fund between 2002 and 2005. He currently runs the investment newsletters Trader’s Advantage and CounterPoint Options.
Markman is going for the gold with his pick this year, Globant SA (GLOB). At a valuation of $1.3 billion, this small-cap IT company designs and develops a variety of bespoke solutions for its clients, which include the likes of Google, LinkedIn (LNKD), Electronic Arts (EA) and Disney (DIS).
Globant essentially specializes in developing capabilities for its clients that utilize emerging tech trends. Markman notes examples in the past decade like social media, cloud computing, software as a service and Internet mobility.
10 Best Stocks to Buy for 2016: Chipotle Mexican Grill, Inc. (CMG)
Investor: Mike Turner
Fusing his knowledge of software and the stock market, Mike Turner and a team of engineers developed a trade timing and recommendation system called Turner Analytics. He also is editor of Signal Investor, which provides a managed portfolio of stocks, while his Perfect 10 Trader and Quick Hit Trader focus on shorter-term trades.
Turner is going contrarian in 2016, picking Chipotle Mexican Grill (CMG) as his entry into the Best Stocks for 2016 competition. Chipotle certainly has been one of the best stocks to buy in years past; CMG stock has earned a return of 930% in the past decade, beating the S&P 500’s 105% return by more than a little bit.
Brushing off the recent supply problems that resulted in dozens of customers getting sick from E. coli, Turner believes the stock can return to the $700 range when the business recovers from its current rough patch.
10 Best Stocks to Buy for 2016: Snap-on Incorporated (SNA)
Investor: John Divine
The final contestant in this year’s Best Stocks competition is yours truly. I will admit that I don’t have the same experience or prestige that the other competitors do, but I do follow the markets closely, and have been ever since high school, when I first began investing.
I don’t have any newsletters of my own, but I’ve been a paid financial writer since 2012, and in late 2013 I got together with a few buddies and started a small options fund. Our modest investment is up 128% since inception, compared to a 23% gain for the S&P 500.
Snap-on Incorporated (SNA) is my choice for the Best Stocks for 2016 competition. At a market cap of $10 billion, I doubt it will double over the next year, as some of the smaller companies in this competition might be able to.
That said, Snap-on, which manufactures and markets hand tools and diagnostic equipment, is a rock-solid company with an attractive valuation and impressive growth. It goes for 22 times earnings, pays a consistent and modest dividend, and has been around since 1920.
As cars get more tech-heavy and complicated, newer tools and better diagnostics will be needed — and that’s SNA’s bread ‘n’ butter.