When it comes to the best stocks to buy now, it’s all about profits. And while we’re certainly talking about profit potential on your initial investment, we’re also talking about balance sheets.
After all, we are in the midst of an “earnings recession” where the S&P 500 Index just saw a first-quarter earnings decline of 4.9% and is projected to see corporate profits shrink 2.7% when Q2 numbers hit, according to FactSet.
That means the best stocks to buy now are the ones that are actually growing their profits — specifically, their per-share earnings metrics — consistently and dramatically. And most importantly, the best stocks to buy now are the ones growing their profits over the next year or two and not just seeing success based on past growth.
That’s what these nine picks offer. Every company on this list is projected to see over 21% earnings growth in the next fiscal year over what they are doing right now. That signals future success investors can believe in.
A few of these picks are admittedly aggressive, in emerging markets or with market caps of under $1 billion, but if you’re looking for 21% growth or better, you’re commonly not going to find it among entrenched mega-cap stocks.
So if you want to follow stocks seeing big growth in their profits with hopes of sharing in that success with profits of your own, here’s a list of nine of the best stocks to buy now — including one I personally own in my own portfolio.
Stocks to Buy Now: Medivation Inc (MDVN)
Market Cap: $10B
YTD Performance: +24% vs. +2% for the S&P 500
Estimated EPS Growth: 67%, from $1.31 this fiscal year to $2.19 cents next year
Estimated Sales Growth: 26%, from $930M this fiscal year to $1.2B next year
Medivation Inc (MDVN) is one of the best stocks to buy now for profit growth. MDVN is a biopharmaceutical company that focuses on serious diseases with few other treatment options, including aggressive forms of prostate and breast cancer. This allows MDVN to sell its existing treatments for top dollar, and has investors hoping that drugs currently in the pipeline will see the same level of success in treating patients and delivering profits going forward. The FDA trials are still ongoing, but Wall Street seems to like what it sees based on stock performance and forward earnings estimates.
Stocks to Buy Now: TreeHouse Foods Inc. (THS)
Market Cap: $5.5B
Sector: Packaged foods
YTD Performance: +23% vs. +2% for the S&P 500
Estimated EPS Growth: 36%, from $3.07 this fiscal year to $4.17 next year
Estimated Sales Growth: 6%, from $6.3B this fiscal year to $6.7B next year
TreeHouse Foods Inc. (THS) produces a range of refrigerated and fresh grocery products including beverages, condiments, healthy snacks and ready-made meals. If you don’t recognize the name, that’s because TreeHouse products are mainly private-label goods produced for sale by retailers and grocery stores under their own branding.
Growth is good, particularly after the acquisition of ConAgra’s private brand business recently, and should continue into 2017 and beyond. The efficiencies and growth potential after this addition make THS one of the best stocks to buy now.
Stocks to Buy Now: Duluth Holdings Inc (DLTH)
Market Cap: $770M
YTD Performance: +66% vs. +2% for the S&P 500
Estimated EPS Growth: 27%, from 72 cents this fiscal year to 92 cents next year
Estimated Sales Growth: 24%, from $376M this fiscal year to $467M next year
Duluth Holdings Inc (DLTH) offers men’s and women’s apparel including Longtail T-shirts, Buck Naked underwear and Fire Hose work pants, among other product lines. This small-cap stock is not quite a household name, but its growth speaks for itself — and is particularly impressive given the challenges for other consumer and retail names in 2016. Its outperformance to the market and its peers make it one of the best stocks to buy now.
Stocks to Buy Now: Irsa Inversiones y Representaciones Sociedad Anonima (IRS)
Market Cap: $900M
YTD Performance: +27% vs. +2% for the S&P 500
Estimated EPS Growth: 111%, from 37 cents this fiscal year to 78 cents next year
Estimated Sales Growth: 31%, from $307M this fiscal year to $403B next year
Irsa (IRS) is a mouthful of a South American real estate company that develops and operates everything from shopping centers to office centers to residential rental units. Growth is brisk, and while the economic prospects of any emerging market are hardly certain now, the performance of IRS stock speaks for itself.
Stocks to Buy Now: Zoe’s Kitchen Inc (ZOES)
Market Cap: $722M
YTD Performance: +35% vs. +2% for the S&P 500
Estimated EPS Growth: 67%, from 15 cents this fiscal year to 25 cents next year
Estimated Sales Growth: 21%, from $280M this fiscal year to $338M next year
I’m eating my own cooking (pardon the pun) with Zoe’s Kitchen Inc (ZOES) on this list of one of the best stocks to buy now. I personally own stock in this fast-casual restaurant concept, and have eaten regularly at its Mediterranean-inspired restaurants. With fresh-baked pita, tasty kabobs and scratch-made hummus, it’s a refreshing alternatives to burgers and burritos. There are about 170 locations across the U.S. now, with plans to open 34 to 36 new restaurants across 2016 and even more in the years to come.
Stocks to Buy Now: Yirendai Ltd – ADR (YRD)
Market Cap: $765M
YTD Performance: +45% vs. +2% for the S&P 500
Estimated EPS Growth: 81%, from $1.24 this fiscal year to $2.25 cents next year
Estimated Sales Growth: 79%, from $413M this fiscal year to $750M next year
Yirendai Ltd – ADR (YRD) is an online finance marketplace that operates in China. There is obviously a lot of risk here being a both a small-cap stock and a financial stock in a battered region that many think could see a financial crisis of its own in the near future. The growth speaks for itself, however, as do the 2016 returns for investors.
Stocks to Buy Now: Weibo Corp (ADR) (WB)
Market Cap: $5.5B
YTD Performance: +40% vs. +2% for the S&P 500
Estimated EPS Growth: 69%, from 55 cents this fiscal year to 93 cents next year
Estimated Sales Growth: 36%, from $621M this fiscal year to $848M next year
Weibo Corp (ADR) (WB) is another aggressive China pick. Even though it’s a larger company, it is perhaps even more high-octane than Yirendai because it is a social media platform used in China that is often compared to Twitter Inc (TWTR). Volatility is the norm, but performance has been great — as is the future growth projection for WB — making it one of the best stocks to buy now for quick profit potential.
Stocks to Buy Now: Equinix Inc (EQIX)
Market Cap: $25B
Sector: Technology services
YTD Performance: +62% vs. +2% for the S&P 500
Estimated EPS Growth: 21%, from $13.97 this fiscal year to $16.91 cents next year
Estimated Sales Growth: 12.5%, from $3.6B this fiscal year to $4.1B next year
Equinix Inc (EQIX) is a global technology company that offers data center services to help businesses connect with their customers, and is part of the “big data” and “cloud computing” crazes that have so many investors and tech geeks talking. Enterprise technology has faced headwinds in the last few years, but the cloud computing and big data slivers of that pie continue to grow nicely — and EQIX stock reflects its success tapping into this market.
Stocks to Buy Now: YPF SA (ADR) (YPF)
Market Cap: $8B
Sector: Oil & Gas
YTD Performance: +30% vs. +2% for the S&P 500
Estimated EPS Growth: 44%, from $1.92 cents this fiscal year to $2.77 cents next year
Estimated Sales Growth: 14%, from $15.8B this fiscal year to $18B next year
YPF SA (ADR) (YPF) is an Argentina-based integrated energy company, including both exploration and downstream sales of crude oil and natural gas. Like many players in the space, YPF was battered by crashing commodity prices over 2015, but has bounced back nicely in 2016 and is looking to future growth now that things have stabilized.
Jeff Reeves is the editor of InvestorPlace.com and the author of The Frugal Investor’s Guide to Finding Great Stocks. Write him at firstname.lastname@example.org or follow him on Twitter via @JeffReevesIP. As of this writing, he owned a position in ZOES but no other stocks mentioned here.