The 3 Best Stocks to Buy Even at All-Time Highs 

With investors’ increasing skepticism of the S&P 500’s continued rise to all-time highs, it’s hard to imagine stocks going much higher given the “wall of worry” they have to climb.

3 Best Stocks to Buy at All-Time Highs

Market strategist Thomas Lee, however, believes several reasons exist why the S&P 500 will test new all-time highs by the end of May — lower dollar, oil prices bottoming, stocks better value than bonds on a relative basis, retail investors jumping into the market — and it won’t likely give those gains back anytime soon.

If the S&P 500 is worth owning despite hitting all-time highs, there must be some stocks to buy that also fit the bill. As of April 27, there were 41 stocks at all-time highs.

Here are my three best stocks to buy from that group.

Best Stocks to Buy at All-Time Highs: Armstrong Flooring Inc (AFI)

Stock to Buy at All-Time Highs: Armstrong Flooring Inc (AFI)On April 1 Armstrong World Industries Inc (AWI) spun off its flooring business into Armstrong Flooring Inc (AFI), an entirely separate public company. In a tax-free distribution to shareholders, every two shares held in the parent was worth one new share in AFI.

AFI generated $17.9 million in operating profits in 2015 from $1.2 billion in revenue. That’s a big decline from the $83.6 million in operating profits generated in 2012.

According to its form 10, AFI has two business segments — resilient flooring, which includes laminate and vinyl products; and wood flooring, which the company sells under the Armstrong and Bruce brands. Its resilient flooring business generated approximately 59% of its 2015 revenue while wood flooring counted for the remainder. All but 10% of its 2015 revenue was in North America.

Why do I like a flooring company that has to compete with the likes of Mohawk Industries, Inc. (MHK), a company whose annual earnings are larger than Armstrong Flooring’s market cap?

Because a rising tide lifts all boats.

In case you hadn’t noticed, the housing sector in this country is doing very well, thank you very much, and companies providing flooring — whether it’s for new construction or renovations — are going to continue to benefit from this renaissance.

As we sit here today, AFI has a book value of $22 per share [$618 million in shareholder equity divided by 28 million shares] while its shares trade around $15 or 0.68 times book. MHK trades at 3 times book.

One of two things is going to happen here. Either its share price rises to meet its book value or it gets bought out. In both scenarios, investors win.

Best Stocks to Buy at All-Time Highs: Ulta Salon, Cosmetics & Fragrance, Inc. (ULTA)

Stock to Buy at All-Time Highs: Ulta Salon, Cosmetics & Fragrance, Inc. (ULTA) Back in March, I recommended Ulta Salon, Cosmetics & Fragrance, Inc. (ULTA) as one of three debt-free stocks to buy. It’s up 11% in a little over a month since. Despite testing all-time highs, it has got a lot of gas left in the tank.

I’ve liked the company a long time. I won’t lie.

I first came across ULTA in 2011 when I debated whether investors should buy it or Sally Beauty Holdings, Inc. (SBH). At the time, I considered Sally to be the better buy because I thought SBH had the better business model.

I was wrong.

The combination of products and services provided at its 874 locations across the U.S. and online makes it a retail winner for years to come. While comps might ebb and flow, ULTA will continue to delight shareholders.

How much delight?

Well, I don’t know about a 32% total annualized return as it did over the past five years, but I do believe it ought to be able to continue setting all-time highs in 2016 and beyond.

Best Stocks to Buy at All-Time Highs: ViaSat, Inc. (VSAT)

Stock to Buy at All-Time Highs: ViaSat, Inc. (VSAT)On Tuesday, S&P Dow Jones Indices announced changes to its three major indices. Most notable in relation to this story is the addition of ViaSat, Inc. (VSAT) to the S&P MidCap 400.

That alone will push VSAT higher as money managers pile into its stock. In with the new, out with the old, and all that.

ViaSat provides consumers, businesses, governments and the military with the communication tools to remain connected whether it be on land, in the air or out at sea.

In mid-April it announced it was rolling out its in-flight high-capacity Ka-band wi-fi service on Virgin America — now a part of Alaska Air Group, Inc. (ALK). Currently on 10% of the airline’s fleet, that number will grow by mid-year as it makes further installs of the connectivity solution.

The big deal on the product is that Virgin America will be charging by flight distance and the rates are fixed. For example, if you’re flying from New York to San Francisco, it will cost passengers $17.99 for the entire flight. That’s less than $4 per hour. The only downside is you pay for the entire flight even if you only use wi-fi for an hour or two.

VSAT stock has done well in recent days, gaining 29% year-to-date and 6.8% in the last month alone. Longer term it has also done well, up 14.4% on an annualized basis over the past five years, 295 basis points higher than the S&P 500.

As long as people want to be connected, I expect VSAT to continue testing its all-time high.

As of this writing, Will Ashworth did not hold a position in any of the aforementioned securities.

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