As difficult as it may be to believe, we’re about to close the books on 2016 and turn the calendar to the next year. That means a market-wide hunt by individual and institutional investors alike for the best stocks to buy for 2017.
Not that investors should time their trades to coincide with the transition from one year to the next. But it’s certainly not a bad time or reason to rethink your current positions, update your tax strategy and reset your portfolio for the foreseeable future.
Once the new year starts, it’s simply too easy to keep postponing these types of much-needed maneuvers. More likely than not, you have a couple vacation days coming up, so there’s no better time.
With that as the backdrop, traders on the hunt for the best stocks to buy headed into 2017 might want to start (and perhaps even finish) their hunt right here with a close look at these 10 top stocks. They were selected for a variety of reasons, including strong growth, robust dividends and the potential for income growth down the road.
In no particular order, here’s a look at the 10 best stocks to buy for 2017:
The 10 Best Stocks to Buy for 2017: Lam Research (LRCX)
Lam Research Corporation (NASDAQ:LRCX) isn’t a household name, but it still could be among the best stocks to buy for the upcoming year.
The $17 billion outfit makes equipment used by semiconductor manufacturers — a good business to be in, even if it’s a bit cyclical. However, it could be on the verge of being a very good business to be in.
Business-friendly policies from newly elected leaders, here and abroad, are expected to rekindle economic growth on a global basis — to the tune of 3.5% — and the technology sector is on the receiving end of such growth.
Lam Research hasn’t been shy about expressing optimism regarding its future. In November, the company upped its annual revenue guidance for every year through 2020. LCRX is now looking for a top line of between $8.5 billion and $9.25 billion. It has generated $5.9 billion worth of sales over the course of the past four quarters.
Some would call it a brash, arrogant outlook. But it’s unlikely Lam Research would set itself up to disappoint LRCX shareholders.
The 10 Best Stocks to Buy for 2017: Verizon (VZ)
Everyone knows telecom giant Verizon Communications Inc. (NYSE:VZ). The $208 billion behemoth has been around forever, and is going to be around for as far into the future as anyone can fathom.
Aside from the sheer fact that it’s ingrained into the fabric of our economy and society, there’s another reason to put VZ somewhere near the top of your list of stocks to buy sooner than later: It offers a healthy dividend yield of 4.6%, and it has made its payout like clockwork for decades.
The kicker: The race for 5G connectivity is on, and Verizon seems to be leading it. It’s supposed to launch its first 5G technology during the first quarter of 2017, which could draw a crowd of new subscribers.
The 10 Best Stocks to Buy for 2017: Prudential Financial (PRU)
While banks and brokerage firms are usually the first names that come to mind as beneficiaries of rising interest rates, they’re not the only financial institutions to experience some upside.
Insurers and fund managers get the same benefit, and Prudential Financial Inc (NYSE:PRU) looks particularly well primed to ride that wave.
Prudential is about to find that tailwind at a point in time when it’s already doing well, and sharing its wealth. During the third quarter of the year, PRU spent $930 million on stock-buybacks and dividends. For perspective, that’s roughly half of the company’s income for the quarter in question.
There’s plenty of room to continue returning cash to investors, one way or another. And that’s even if rates weren’t about to rise, which they are.
The 10 Best Stocks to Buy for 2017: Bank of America (BAC)
While insurer and asset-management Prudential Financial earned a spot n the list of top stocks to buy for 2017 by being a financial institution other than a banks, there’s still nothing wrong with banks themselves.
Consider investing in Bank of America Corp (NYSE:BAC) for the same reason, as well as for the quirk BofA brings to the table.
The reason banks tend to do especially well in a high-interest-rate environment is that their “cost” — the interest payments they must make on demand deposits like checking and savings accounts — is relatively low compared to the interest banks receive on that very same money when they lend it out.
And Bank of America has spent the past several quarters (arguably more so than other banks) culling its costs.
The 10 Best Stocks to Buy for 2017: UnitedHealth Group (UNH)
The Affordable Care Act initially was expected to be a boon for healthcare plan providers like UnitedHealth Group Inc (NYSE:UNH) and its peers. But as time went on, it became clear the ACA was doing more harm than good for insurers.
So much so that they don’t even want to participate in the program any longer.
It remains to be seen what Donald Trump means by his intent to “repeal and replace” the Affordable Care Act and the ripple effect it has had on the healthcare plan industry. There’s little doubt, however, that it can only be better for the insurers.
UnitedHealth Group is one of the best-managed names in the group.
The 10 Best Stocks to Buy for 2017: Walmart (WMT)
Wal-Mart Stores, Inc. (NYSE:WMT) hasn’t made it onto many lists of best stocks to buy lately. Between the added cost of company-wide pay raises and the fact the retailer has been forced to spend heavily on its e-commerce effort just to catch up with Amazon.com, Inc.’s (NASDAQ:AMZN) online presence, profits haven’t been easy to produce.
There does come a point in time, however, when investments finally start to pay off and problems are put in the past. The coming year looks like it’s going to be such a comeback year for Walmart.
The cherry on top? Walmart is finally starting to out-innovate, too. Its “Pickup and Fuel” service meets you at a gas station to deliver the groceries you ordered online.
The 10 Best Stocks to Buy for 2017: Home Depot (HD)
Is the homebuilding market actually slowing down, or are all the stumbles of late just a little volatility? It’s difficult to tell.
Either way, to the extent the looming Donald Trump presidency has already ignited some economic optimism, odds are good the housing market is going to heat up again even if it was headed into a cyclical low.
Home Depot Inc (NYSE:HD) is the way to make this play.
And yes, Home Depot is the better buy than rival Lowe’s Companies, Inc. (NYSE:LOW). It’s simply a better-managed, more efficient retailer. Last quarter, Home Depot’s EBITDA and net margins improved on a year-over-year basis. Lowe’s saw its EBITDA and net margins fall year-over-year.
This is not an unusual disparity between the two companies.
The 10 Best Stocks to Buy for 2017: Alphabet Inc (GOOGL)
Say what you want about Alphabet Inc (NASDAQ:GOOG, NASDAQ:GOOGL). Say it’s losing its edge as the world’s use of the web transitions to a mobile-based one, where Google’s ad business doesn’t dominate the way it did on the desktop. Say it wastes too much time and money on “other bets” like Verily, self-driving cars and Google Glass.
Just don’t say it’s not growing the way it used to. That wouldn’t be true.
Reality: Alphabet is well into more than a decade’s worth of reliable annual revenue growth, and income has grown just as reliably for just as long.
In spite of a lot of chatter that Alphabet’s best days are behind it, the company continues to roll ahead like it did in its infancy. There’s a reason.
The 10 Best Stocks to Buy for 2017: Lockheed Martin (LMT)
Speaking of the impact Trump’s policies may have on the economy and certain sectors in particular, put defense contractor Lockheed Martin Corporation (NYSE:LMT) on your list of the best stocks to buy for a strong 2017.
The President-elect has already made it clear he intends to rebuild the United States’ military prowess. Lockheed Martin is in a prime position to make that happen. After all, LMT makes the F-35 fighter jet, electronic warfare hardware, unmanned vehicles and more. These are the kinds of equipment that win modern wars (and modern non-wars).
Yes, the F-35’s future is actually a bit in question with Trump at the helm. But the fighter plane isn’t a make-or-break matter for the company. Services, spare parts, training equipment and logistics mean Lockheed’s revenue-bearing product base is very diverse, and translates into significant opportunity.
For example, while demand for a handful of F-35s may be pared, the company is looking to modify the Korean-made T-50 to meet the call for 350 new jet training craft.
The 10 Best Stocks to Buy for 2017: Hasbro (HAS)
Last but not least, add Hasbro, Inc. (NASDAQ:HAS) to your list of stocks that could dish out a pleasant surprise in 2017 … and beyond.
Hasbro is the name behind some of the world’s most popular toys, including Transformers, Nerf, Star Wars and one of this holiday season’s hottest games, Pie in the Face. Star Wars in particular could be a huge game-changer for the toymaker.
Hasbro and Walt Disney Co (NYSE:DIS) have been effective marketing partners for some time. One of the biggest and best licensing deals the two outfits have enjoyed is the licensing of Star Wars toys. Last year’s December release of The Force Awakens was a boon for Hasbro, but also just the beginning.
Disney has at least four more Star Wars movies planned even beyond the release of Rogue One later this month, each of which will be a massive opportunity for Hasbro.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.