As the third quarter of 2016 comes to a close, changes are afoot. “Sell in May and go away” has come and gone and the holidays are looming, while we cannot seem to get away from questions about interest rates and the next president of the United States.
In the midst of it all, the battle for the top spot in InvestorPlace‘s Best Stocks for 2016 contest continued apace.
While it’s impossible to tell for sure at this point, some stocks look out of the running for this year, while other have a healthy shot at the top three. Poor earnings doomed some, poor management hit others; and for some, the market just seemed to forsake them.
Spoilers — it didn’t pay to be a restaurant stock in this contest.
So, who’s leading, who’s following and who just hopes that 2017 will get here as quickly as possible? Which of our analysts was prescient enough to pick a winner?
As we start the final leg of this competition, let’s see how they’ve done … for the first nine months, at least. From worst to best:
Best Stocks for 2016 No. 10: Rave Restaurant (RAVE)
Year-to-Date Performance (through Sept. 30): -52.3%
Investor: Rick Rouse
2016 just isn’t Rave Restaurant Group Inc’s (NASDAQ:RAVE) year.
After soaring to an all-time high of $16.20 in March 2015, “this once-high-flying, small-cap stock came into the year at $6.39 and has since lost approximately 56% of its value,” says Rouse.
Now Rave Restaurant Group has sunk to a new 52-week low at $2.70, and things aren’t really looking up.
RAVE owns two different pizza chains — Pie Five and Pizza Inn — with a unique approach to their products, but per-share earnings have been negative for the last four quarters, and analysts aren’t expecting things to change in the near future.
While the current price might look like a bargain to new investors, Rouse cautions, “RAVE would need to stem its losses in future quarters before I would consider committing new money to the stock.”
In other words, let’s make sure Rave Restaurant Group can turn things around first.
Best Stocks for 2016 No. 9: Buffalo Wild Wings (BWLD)
YTD Performance: – 11.8%
Investor: Charles Payne
Even though we’re getting into the meat of football season, Buffalo Wild Wings (NASDAQ:BWLD) can’t seem to overcome its managerial mistakes and take off.
After its most recent earnings boasted a beat in EPS but a miss on revenue, BWLD stock made a sharp leap, followed by months of slow losses. One piece of good news couldn’t overcome all the leadership miscues.
All in all, Charles Sizemore still has hope for BWLD stock as it moves forward, even though 2016 is unlikely to go down as a memorably good year for the company. Not only do these dips make for better entrance points, but he also thinks Buffalo Wild Wings might take a spin through the takeover rumor mill.
Keep an eye on the next earnings report on Oct. 26 to get an idea about the next leg of BWLD’s journey.
Best Stocks for 2016 No. 8: Chipotle (CMG)
YTD Performance: -11.7%
Investor: Mike Turner
It’s not hard to understand why Chipotle Mexican Grill, Inc. (NYSE:CMG) is pretty low on this list. It spent the second half of 2015 on a foodborne-illness tailspin, tried to ascend again through March of 2016, then fell back into the cellar and has pretty much stayed there ever since.
In that time, Chipotle has tried a rewards program, reassured customers about the safety standards at its restaurants and even announced plans to branch into burgers with Tasty Made restaurants. CMG stock managed a 7.5% climb during the third quarter, but that still leaves it down 11.7% on the year, and over 20% from 2016 highs.
When the best news you can muster is that your restaurant chain hasn’t had a major illness outbreak for a few months, that’s just not good (to put it mildly).
If you’re looking for a company to put your money into, there’s always a chance that CMG stock can turn things around. It doesn’t carry long-term debt, it just added chorizo to the menu and no news may indeed be good news on the E. coli front.
However, it’s probably best to just keep an eye on this one until it can get some actual upward momentum behind it again.
Best Stocks for 2016 No. 7: Snap-On (SNA)
YTD Performance: -11.4%
Investor: John Divine
If you like presents from the volatile Mr. Market, then Snap-On Incorporated (NYSE:SNA) might still be a stock worth looking at. After hitting February lows, SNA stock could never quite get sentiment strongly in its favor again.
While Snap-On is down considerably this year (even counting its dividend), it has a lot to recommend it, including a list of earnings beats a mile long, reliable income, growing operating earnings for its financing arm and — at current levels at least — a reasonably cheap entry point.
So while its numbers so far in 2016 aren’t glowing, SNA stock may still be worth a look. Or, as Divine put it:
“While there’s virtually zero chance SNA will stage a rally enormous enough to crack the top three of this year’s Best Stocks competition, I still think Snap-On is a solid buy at these depressed levels.”
Best Stocks for 2016 No. 6: American Express (AXP)
YTD Performance: -7.9%
Investor: Paul R. La Monica
Some stocks go up. Some stocks go down. And some stocks — like American Express Company (NYSE:AXP) — do a whole lot of nothing.
After coming back from the February slump that nabbed just about every stock this year, AXP has spent most of its time stuck between $60 and $65, not posting a big loss but also unable to make a break to the upside.
The loss of its relationship with Costco Wholesale Corporation (NASDAQ:COST) this summer probably had a lot to do with that, as some analysts think the effects of that have been underestimated. We’ll know more when AXP stock reports earnings on Oct. 19.
The reason La Monica gave for his decision certainly made a lot of sense at the time:
“I think most of the bad news is now priced into the stock. Shares trade for just 12.5 times earnings estimates. That’s a huge discount to the valuations of rivals Visa Inc (NYSE:V) and MasterCard Inc (NYSE:MA).”
At this point, three-quarters of the way through the year, the thesis unfortunately just hasn’t panned out.
Best Stocks for 2016 No. 5: Total System Services (TSS)
YTD Performance: -5.3%
Investor: Louis Navellier
After a strong rally of over 40% off February lows, electronic payments processor Total System Services, Inc. (NYSE:TSS) may have gotten snakebit by its $2.35 billion acquisition of Transfirst.
The acquisition led to second-quarter earnings for TSS stock that were down 15% from a year ago, and that led some investors to take their money elsewhere. The company’s stock price never really recovered, and badly needs a positive catalyst to break it out of its malaise.
All this means now may not be the best time to take a gamble on TSS.
While he still holds out hope for Total System Services in the future, Navellier has put the kibosh on recommending the stock to new money. Hold it if you’ve got it, but now isn’t a good time to step in.
Best Stocks for 2016 No. 4: Domtar (UFS)
YTD Performance: 0.5%
Investor: Hilary Kramer
Things should have been looking up for Domtar Corp (USA) (NYSE:UFS).
After all, it managed a second-quarter beat on both the top and bottom lines — and the earnings beat wasn’t chump change, it was over three times the expected number. Add to that higher paper prices and lower costs, and things should have been great.
And for a while, they were — the stock leapt after the earnings were announced, and struggled for half a month to remain aloft. However, the volatility remains, and much of the past month’s trend has been downward.
But don’t forget — all those tailwinds remain in place. Costs are expected to remain low, which is always a help, and paper prices seem unlikely to take a massive nosedive. It’s also expanding its personal care section’s reach with its purchase of Home Delivery Incontinent Supplies Co. for $55 million. This follows the purchase in June of Butterfly Health Inc. to bolster the same division.
All in all, Kramer believes that there is still some upside to UFS stock … and the dividend isn’t bad, either.
Best Stocks for 2016 No. 3: Globant (GLOB)
YTD Performance: 12.3%
Investor: Jon Markman
Are you excited about the growth of the Internet of Things? Globant SA (NYSE:GLOB) certainly is — and its positioning in that growing market is just one reason GLOB stock has been doing a great job so far in 2016.
In the digital era, Globant helps companies connect with their customers in ways that hopefully won’t cause too many headaches for either party — as it says on the Globant website, they aim for “cultivation of deeper relationships with users through personalized, memorable experiences.”
Since February, the stock has shown a slow and steady climb, making new all-time highs in the process. Analysts expect GLOB to grow revenues in the neighborhood of 20% a year for the foreseeable future as well.
And hey, if the IoT doesn’t work out, Globant has 11 other divisions under its umbrella so it can be well-positioned for whatever steps up in that sector’s place.
Best Stocks for 2016 No. 2: Energy Transfer Equity (ETE)
YTD Performance: 22.2%
Investor: Charles Sizemore
It might be hard to believe, but at the end of the first quarter, Energy Transfer Equity LP (NYSE:ETE) was in last place on this list, having lost almost half its worth along with its CFO.
What a difference half a year makes.
Now in second place and with some potential tailwinds (or headwinds) in the news, ETE stock has a chance to make a push for the top spot.
The big question mark is going to be the Dakota Access Pipeline, which has drawn opposition from some political leaders as well as scores of protesters. Sizemore writes:
“Recently, a federal appeals court gave the go-ahead to ETE to resume construction, which had previously been halted by court order. But the Obama Administration is still opposed to the project, and there is the risk that this turns into another cause célèbre like the protests over the Keystone Pipeline. We’ll see.”
Regardless, it’s up big on the year and offers an attractive dividend, so ETE is definitely worth a look.
Best Stocks for 2016 No. 1: Ellie Mae (ELLI)
YTD Performance: 74.8%
Investor: Jason Moser
Right from the beginning of the year, Ellie Mae Inc (NYSE:ELLI) took the lead and more or less hasn’t looked back. Is that fact going to change?
Well, in the words of Jason Moser, “Ellie Mae has been on a tear so far this year and there’s no reason to believe it won’t continue.”
The biggest problem an investor might have with Ellie Mae right now is that its 2016 success has made it a bit expensive. Or as Moser says, high multiples are “reflective of not only continued strong performance, but also the company’s overall competitive position in the market.”
Analysts are overall bullish. EPS and revenue are both expected to be higher when ELLI stock reports earnings on Oct. 27. If anyone else wants the top spot for 2016, they’re going to have a tough hill to climb.
As of this writing, Jessica Loder did not hold a position in any of the aforementioned securities.