Broad markets continue to perform well in 2017. The Dow Jones Industrial Average, as silly as it is, has set an all-time record for consecutive closing highs. The S&P 500 similarly is at a record. Consumer confidence and other macro indicators, too, are flashing green.
Perhaps most bullish is the fact that many investors remain skeptical of this year’s performance, creating a classic “wall of worry” situation that usually implies the end markets have more room to run.
With industries like retail still normalizing after election-year disruption, and signs of strength in a number of cyclicals, there’s likely still more upside in broad markets.
Should that upside come, equities across the board should benefit. But for these seven stocks, further buying by investors not only would push the stocks higher, but set new records of their own.
Stocks Hitting All-Time Highs: Carnival (CCL)
All-Time High: $58.98, Jan. 19, 2005
Carnival Corp (NYSE:CCL) stockholders have waited a long time for CCL to return to its all-time highs. Back in early 2005, the economy was roaring, and CCL had quadrupled in less than five years. By 2009 — amid the financial crisis — CCL stock had given back most of those gains, as fearful travelers stayed home.
But Carnival has steadily rebounded from the crisis. CCL now trades just 5% off that all-time high and seems likely to clear $59 in 2017. The stock is hardly expensive, trading at just 15 times earnings. The company announced this month that it would begin a full series of sailings to Cuba in June. Continued economic strength in the U.S. should help demand, and the strong U.S. dollar has cost benefits for Carnival as well. (It does hurt international revenue, but that remains a minority of Carnival sales.)
Again, it’s been a long wait for a rebound for CCL shareholders, particularly those who bought at 2005 peaks. But that wait seems likely to end soon.
Stocks Hitting All-Time Highs: Emerson (EMR)
All-Time High: $70.66, Dec. 30, 2013
It may be asking a bit too much for Emerson Electric Co. (NYSE:EMR) to hit its all-time high this year. With EMR stock trading around $60, it needs another 17% appreciation to surpass late-2013 levels.
Then again, EMR is up more than 20% just since early November, buoyed by two straight strong earnings reports and post-election optimism. The stock has pulled back somewhat oddly over the past few sessions after hitting a 52-week high near $64, but EMR might have just needed a breather.
Fiscal 2017 guidance of $2.47 to $2.62 does mean that EMR needs a pretty hefty multiple to reach that all-time high: about 27 times, even at the high-end of guidance. But its first quarter beat both the company’s expectations and Street consensus handily, and another strong quarter or two might increase both FY17 guidance and EMR’s earnings multiple.
Emerson remains a long-term play on automation and a consistent, if sometimes volatile, performer. It’s a classic cyclical play, and if broad markets and macro sentiment continue to hold up, EMR may again take out an all-time high this year — or in 2018 at the latest.
Stocks Hitting All-Time Highs: American Airlines (AAL)
All-Time High: $56.20, Jan. 26, 2015
If it’s good enough for Warren Buffett, it’s good enough for me. The Oracle of Omaha somewhat surprisingly has taken stakes in a number of airlines, including American Airlines Group Inc (NASDAQ:AAL).
It’s not hard to see why. Airlines such as AAL, Southwest Airlines Co (NYSE:LUV) and Delta Air Lines, Inc. (NYSE:DAL) finally have stopped waging unproductive price wars. Fuel prices have come down noticeably, boosting margins. And while customers tend to complain about baggage fees and the end of free meals, they also gladly pay up for those services. American and its U.S. Airways brand combined to rake in more than $1.1 billion in baggage fees in 2015, according to government figures.
Like EMR, AAL might have to stretch a bit to retake its all-time highs: the stock needs about a 20% gain from current levels. But AAL also has lagged peers of late — most notably LUV — and a bit of catching up should help AAL stock tremendously. AAL shares actually have declined modestly year-to-date, while Southwest stock is up 16%. Once that gap narrows — and it should — AAL should be ready to fly (get it?) past those early 2015 highs.
Stocks Hitting All-Time Highs: Alibaba (BABA)
All-Time High: $120, Nov. 13, 2014
It’s hard to say whether the problem with Alibaba Group Holding Ltd (NYSE:BABA) has been that expectations were too high after its September 2014 IPO, or if the market has underappreciated its performance since. In my mind, it’s a bit of both.
Certainly, I don’t think investors give BABA stock quite enough credit. Alibaba already is one of the largest companies in the world, yet revenue grew 54% in its most recent quarter. Alibaba’s dominance of the Chinese market is all but assured at this point, and that market offers much more in the way of growth opportunities than its more developed counterparts.
Like its American peer Amazon.com, Inc. (NASDAQ:AMZN), Alibaba is building out a commercial cloud business. That looks like a secret weapon for BABA stock, and expands its market opportunity to fast-growing India and even the West. To be sure, there are risks here, but I still believe BABA remains sharply undervalued.
Analysts at Goldman Sachs Group Inc. (NYSE:GS) agree, with the firm adding BABA stock to its “Conviction Buy” list with a price target of $135 per share. Should BABA stock near those levels, it would create a new all-time high — and I think it should trade at those levels already.
Stocks Hitting All-Time Highs: ServiceMaster (SERV)
All-Time High: $42.21, Jan. 29, 2016
Servicemaster Global Holdings Inc (NYSE:SERV) seems to struggle every time it clears the $40 mark, having done so repeatedly over the past 15 months, including this month. But 2017 seems like the year when SERV stock will finally break through.
ServiceMaster’s Terminix business is one of the steadier consumer-facing businesses around. But both SERV’s American Home Shield home warranty division and its Merry Maids business should benefit from a stronger economy and higher consumer confidence. With resistance having held twice just above $40, it seems like this year, SERV is due.
Stocks Hitting All-Time Highs: Archer Daniels (ADM)
All-Time High: $53.91, Dec. 4, 2014
One of the world’s premier agricultural concerns, Archer Daniels Midland Company (NYSE:ADM) has struggled with low crop prices and weak farm income over the past few years. And, to be fair, ADM is coming off a rather weak Q4 earnings report earlier this month, which sent ADM stock down in response.
But the stock has rebounded rather sharply of late, and with good reason. Inflation expectations are rising, which bodes well for U.S. farm prices. After three consecutive years of declining farm income, the USDA is projecting an increase in 2017. There’s certainly a “well, it can’t get much worse” sentiment in many rural communities, and it does appear that supply and demand should finally come into better balance this year.
ADM would be a prime beneficiary of a rebound in farm income and crop prices. And another 15% gain in ADM shares would allow it to retake all-time highs, reached just before it became clear that crop weakness would be a multi-year trend. In the meantime, ADM offers a 2.8% dividend yield, and is a “Dividend Aristocrat.” So even if ADM has to wait a bit longer to retake that all-time high, investors can sleep well at night.
Stocks Hitting All-Time Highs: Omnicell (OMCL)
All-Time High: $40.80, July 23, 2015
Omnicell, Inc. (NASDAQ:OMCL) looks to be one of the few healthcare stocks likely to emerge unscathed from any potential changes to the Affordable Care Act (known colloquially as Obamacare). There’s a simple reason for that: Omnicell is simply too valuable to the healthcare ecosystem.
Omnicell manages medicines and medical supplies for manufacturers and providers, while also working to ensure that patients take their medicines. The company provides everything from high-tech software and pharmacy automation solutions to basic packaging that makes it easier for patients to remember what pills they’ve taken, and when.
In the process, Omnicell sales have gone from zero to $700 million in 25 years, and its market cap now sits at nearly $1.4 billion. With the company key for pharmacies such as CVS Health Corp (NYSE:CVS), there seems little risk of displacement. And with OMCL shares just 7% below their all-time highs from two years ago, a new all-time high seems on the horizon — no matter what happens in Washington.
As of this writing, Vince Martin did not hold a position in any of the aforementioned securities.