The market’s wild swings have investors looking for stocks to buy for safety among a number of lower-volatility sectors as a way to survive what could be a rough year for Wall Street.
While playing it safe is a good strategy when the fundamental picture gets as hazy as it is now, there is still something to be said about finding the diamonds in the rough within the market.
We all know that there’s always a bull market to be found — it’s just a matter of finding the best stocks to buy in anticipation for the charge. In our case, we use our database and models to find the next group of stocks that are likely to post double-digit returns while the rest of the market languishes in a range.
So, in no particular order, here’s a look at 10 of the best stocks to buy right now for a quick market pop.
Best Stocks to Buy for a Quick Pop: Cree, Inc. (CREE)
Technically a semiconductor company, Cree (CREE) makes its business in the LED lighting industry. While the transition from old incandescent bulbs is certainly helping Cree’s top and bottom lines, it’s the future that will result in double-digit gains for the company.
Li-Fi technology (yes, transmitting the Internet through light sources) is starting to catch a wave, and Cree will certainly be among the companies that will benefit from this upcoming disruptive technology.
Currently, Cree stock has been a strong relative strength leader in an otherwise weak market. Low analyst buy recommendations suggest that future upgrades will help push CREE higher through 2016.
Our models target a move above $35 — or about 13% higher — this year.
Best Stocks to Buy for a Quick Pop: Chipotle Mexican Grill, Inc. (CMG)
That’s right: Chipotle Mexican Grill (CMG) is set to generate double-digit returns this year as the company comes back from its 2015 bout with multiple health issues.
Chipotle drew a line in the sand on Feb. 8 when it closed its restaurants for additional training. Shortly afterward, the government proclaimed the emergency was over for Chipotle.
The stock is trading more than 30% higher than its 2016 lows, but there’s an opportunity to ride these shares to significant gains as the “crowd” begins this still popular stock back. Consider this: Wall Street’s buy recommendations on CMG stock dropped from 64% in October to its current 36%. The last time it was this low was April 2013 before the stock ran from $350 to $450 in a year as the analysts upgraded shares.
We expect to see CMG shares lead the market as it recovers. In fact, just today, we outlined why we think Chipotle stock will rocket 30% higher in the next year.
Best Stocks to Buy for a Quick Pop: Under Armour Inc (UA)
The warmer-than-normal winter weather took its toll on Under Armour’s revenue and stock price, but the active spring through fall months are right around the corner.
With consumer confidence remaining relatively strong, UA heads into its seasonally strong period of the year ready to perform as it expand its offerings even further from apparel to include electronics. Under Armour stock has spent the last month building a technical base at $80 and the charts are now suggesting that a move above $85 will spark the next technical rally.
We expect this year-to-date laggard to turn into a leader as a result, and are targeting a move to $100 during 2016 — a 20%-plus move from here.
Best Stocks to Buy for a Quick Pop: Darden Restaurants, Inc. (DRI)
Casual dining continues to rule the dinner hour as consumers have figured out that rising food costs have made dining out a relative value. Darden Restaurants (DRI) has been cashing in on this trend for more than a year as it streamlined its operations back in 2014.
Strong fundamentals continue to drive this 3.1% dividend yielding stock higher, but there’s something else. Our models are targeting a continuation in the trend given the light buy recommendations on the stock. Currently, only 39% of the Wall Street analysts covering the stock have it ranked a buy. To put that into perspective, Shake Shack Inc (NYSE:SHAK) currently shows 56% buy recommendation — and that stock has lagged the market and Darden shares dramatically.
The analysts will wake up on Darden stock’s value and start upgrading, helping the shares move to our $70 target, which is a 10% bump from here.
Best Stocks to Buy for a Quick Pop: Cisco Systems, Inc. (CSCO)
The Internet of Everything is benefiting a number of old-school technology companies contribution to the new infrastructure, Cisco Systems (CSCO) is one of them. Cisco stock benefited from a healthy earnings report in an otherwise poor earnings season, bumping shares from $23 to $26 in a fast move. Cisco stock has been resting since, but is likely to forge higher through the year.
Sentiment toward Cisco stock remains relatively bearish, with 61% buy recommendations compared to 82% from Apple Inc. (AAPL) and 100% buys for Alphabet Inc (GOOG, GOOGL). With fundamentals improving, we will expect to see upgrades, which will be bullish for Cisco stock.
Technically, Cisco stock’s 50-day moving average is beginning to trend higher — another bullish indication. Historically, a stock is twice as likely to continue to move higher when the 50-day is trending higher. The technical and sentiment factors have our model targeting a move back to $29 — 10% higher — for this thriving old-tech company.
Best Stocks to Buy for a Quick Pop: Sysco Corporation (SYY)
We call Sysco Corporation (SYY) “the other Cisco” (it’s a lot funnier out loud) as this non-tech food supplier’s stock performs like a tech company. Momentum in the casual dining segment has been good to Sysco stock as the company has a grip on the supply chain for the restaurant business. The company has posted earnings beats six of the last eight quarters while growing year-over-year revenue all eight quarters.
Despite the strong balance sheet, sentiment is decidedly negative on Sysco shares. Currently, only 19% of the analysts covering the stock are bullish, a case of Wall Street missing the boat.
The fact that this market leader is far from a “crowded trade” leads to a price target of $48 over the next two quarters as investors discover and buy this leader.
Best Stocks to Buy for a Quick Pop: Dollar Tree, Inc. (DLTR)
Some retailers are beginning to show signs of life; others, not so much. Dollar Tree (DLTR) is among the “haves” in the sector as consumers continue to favor the discount retailers.
The company’s revenue stream has grown stronger over the last three quarters, but not enough to beat bottom line EPS estimates — something that looks to change in the next quarter. DLTR stock is poised for a jump higher on any positive news as shares are trading at their recent highs just below $82. According to our chart analysis, the break above $82 should act as a catalyst for the next double-digit move. We’re currently targeting $90.
Best Stocks to Buy for a Quick Pop: Fastenal Company (FAST)
Industrial company Fastenal (FAST) produces fasteners for everything from your home to industrial applications. The stock is normally tied to the housing industry but has recently been able to decouple itself from that sector due to its wide product reach.
Fastenal shares are on our radar due to their continued relative strength against the market and a swell of negative sentiment that suggests a nice contrarian rally is in the cars.
Short sellers are currently holding 9.5 times the average daily volume in bearish bets against Fastenal stock. A move above $45 will likely force these short sellers to start buying the stock back, creating a short squeeze rally.
The company is set to announce their quarterly earnings results early in April. We often see short-term rallies in Fastenal stock ahead of earnings, which may act as the catalyst for the next rally aimed at our target price of $51, which is 13% better from here.
Best Stocks to Buy for a Quick Pop: Mattel, Inc. (MAT)
Who would have thought that the new Barbie dolls could spark a rally in Mattel (MAT)? It did, to some degree. Mattel is one of those consumer product stocks that people love to hold through economic slowdowns, Let’s face it, we’re not likely to stop buying toys for children. The fact that Mattel stock yields 4.6% in dividends makes it even sweeter for defensively minded investors.
Our models carry a strong buy rating on Mattel shares based on the strong technical pattern, pessimistic sentiment and the upcoming break above $35, a key technical resistance level.
Watch for the move above $35 to attract bulls to Mattel stock helping it to move 18% higher to our target of $40.
Best Stocks to Buy for a Quick Pop: Nvidia Corporation (NVDA)
Nvidia (NVDA) is responsible for the electronics behind so many of the displays that we look at each day. From phones to computers and even to television applications. Recent moves by the company are starting to target living room entertainment, a great long-term strategy as the war over traditional entertainment delivery heats up further.
Nvidia stock is benefiting from solid fundamental growth in revenue and earnings as well some pessimistic sentiment from Wall Street and investors.
This powerful contrarian combination has our models ranking Nvidia stock a strong buy with a target of $35 as the stock breaks 105 higher to above the $32 level.
As of this writing, Johnson Research Group did not hold a position in any of the aforementioned securities.