After too many long months of campaign ads and political bickering, the end is in sight. That is, as of Wednesday morning we’ll have chosen our next batch of elected officials, thrilling roughly one half of the country while simultaneously disappointing the other half. So what are the best stocks to buy?
As investors, none of us should really care too much about the outcome despite the fear-mongering from both sides of the table. The third year of any presidency, or the year following midterm elections, tends to be a good one no matter which party is in control and which party loses control of at least one congressional house. Since 1928, the third year of a presidential term averages a gain of just under 14%, making it the most fruitful year of any of the four years of a presidency.
Assuming President Donald Trump’s third year is going to be the typically bullish one regardless of how much representation the Democrats are able to claw back from Republicans, you may want to make sure you’ve got exposure to the equity market sooner than later. Here’s a run-down of ten stocks to buy, as they look particularly well-positioned for strong 2019.
Alaska Air Group (ALK)
In its long-term industry outlook, aircraft maker Boeing (NYSE:BA) indicated that demand for air travel would grow at an average annualized pace of 4.7% for the next 20 years. Although intended to point to demand for new aircraft purchases, it’s also encouraging for airline investors. After all, it’s the carriers that will be buying these planes to meet that demand.
In most cases, it’s a major name like Delta Air Lines (NYSE:DAL) an investor would opt to own. In this case, though, a smaller player like Alaska Air Group (NYSE:ALK) might be a better choice. And, if the Trump-driven economy continues to grow as it has, Alaska Air is apt to report solid 2019 numbers.
Last quarter’s margins and earnings were both much better than expected, and it looks like the company’s costs-surge are finally starting to abate for good.
Paypal (NASDAQ:PYPL) isn’t a company that needs an introduction. It’s still the biggest name in online payments, and deals with partners like Visa (NYSE:V) and Mastercard (NYSE:MA) mean it’s also making headway within the all-important point of purchase (POP) market. And, it’s also a direct beneficiary of the convergence of economic growth and an increasingly-digital consumer.
There are a couple of kickers, however, that could make 2019 a huge year for PayPal. One of them is the fact that PayPal has finally started to seriously monetize its peer-to-peer money transfer platform Venmo … something it had been slow to do, wanting to draw people into the ecosystem.
The other bullish argument for the coming year is that the company has earmarked $3 billion per year just to make acquisitions. Each bolt-on bolster’s PayPal’s dominance of the industry.
Bank of America (BAC)
This year hasn’t been a particularly good one for Bank of America (NYSE:BAC) shareholders, with BAC stock down roughly 5% year-to-date versus the broad market’s modest gain. Investors are concerned the adverse impact of higher interest rates is more potent than the benefit of higher interest rates.
So far that hasn’t actually been a merited concern. In its third quarter, lending activity was up 1.4%, and margins topped expectations.
To the extent fear of rising rates is the key culprit though, the coming year could be an easier one for shareholders to stomach, making BofA one of several top stocks to buy. Against a backdrop of a rock-solid economy, the market’s only planning on two or three rate hikes for 2019, versus what will almost certainly be four increases this year when all is said and done.
Waste Management (WM)
It often goes unnoticed, just because of the nature of the industry. But, in times of economic growth, the nation’s capacity to create garbage swells. Enter Waste Management (NYSE:WM) … the company that turns garbage into money.
Although revenue is only projected to grow a little less than 3% this year, per-share earnings are expected to swell by 28%. Next year’s projected sales growth of almost 5% should improve the bottom line by a little more than 7%.
Waste Management CEO Jim Fish explained following the release of the company’s third-quarter numbers “those [dumpster rentals] are a really good proxy for how small business is doing, and small business seems to be doing well based on that [last quarter’s rental revenue].
The industrial side of our business is more a proxy for manufacturing, and that’s doing really well too.”
One of the early criticisms of the Trump White House has been a lack of a strong government-encouraged plan to advance the development of artificial intelligence technologies.
It’s since been addressed, though the noise of political campaigns has proven distracting. Once the midterms are over though, voters and consumers may be surprised at how close the country’s artificial intelligence players are to reaching something of a critical mass.
It’s one of the few outfits that’s built artificial intelligence machines from the ground up to do just that, and last quarter’s 83% growth in its data center business largely reflects the young swell of demand for AI architecture.
The coming year could be a huge one for artificial intelligence now that Washington is also on board with its cultivation.
CSX Corp. (CSX)
Regardless of your opinion of him, it’s impossible to deny that Donald Trump has rekindled America’s manufacturing industry. He’s also revived the country’s natural resources industries. Both have, in turn, proven to be a boon for the nation’s transportation industry, which is about as busy as they’ve been in a while hauling newly mined or freshly manufactured goods from one coast to the other.
Rail carrier CSX Corp. (NASDAQ:CSX) has been one of the biggest beneficiaries. Railroads have been busier this year than they’ve been since 2015, and CSX itself is projected to improve its top line by 7.3% this year once the final tally is taken.
The carrier’s real growth, though, is on the bottom line. Last year’s per-share profit of $2.30 is expected to reach $3.82 this year and grow to $4.23 next year, riding the wave of the nation’s revived industrial machine.
Contrary to what it’s looked and felt like of late, there is one thing Democrats and Republicans mostly agree on — the nation needs a strong defense, even if it requires a massive amount of money to muster it.
There are plenty of defense contractors to choose from, but it’s Raytheon (NYSE:RTN) may quietly be one of the top stocks to invest in from the sector. It offers everything from training services to missile systems to cyber warfare to mission control platforms, and more. It’s not only a highly diversified company, it’s a company that’s very much in tune with the nuances of modern-day warfare.
More than anything though, it’s a company on the right side of governmental spending plans. Washington has already budgeted $688.6 billion for military spending in 2019, up 3.5% from 2018’s budget of $664.7 billion. And better still, the government is working with tentative military spending plans of $732.4 billion for 2020.
AptarGroup (NYSE:ATR) isn’t exactly a household name. But, maybe it should be … considering the likelihood that there’s something in every U.S. household wrapped in a package made by Aptar.
Yes, AptarGroup makes a variety of packaging solutions, from pieces of cosmetics containers to condiment bottle flip lids to medical inhalers, and more. It’s another one of the names like Waste Management and CSX. That is, everybody benefits from it, but nobody realizes it. That is, they wouldn’t realize how important Aptar is until the company was gone.
The good news is, Aptar isn’t apt to be going anywhere. This year’s sales are projected to grow nearly 12%, driving more than a 13% improvement in the company’s bottom line. Next year’s expected 8% growth in revenue should bolster the bottom line by 12%.
For years cybersecurity company FireEye (NASDAQ:FEYE) was questioned for spending so heavily on acquisitions, and booking steady GAAP losses as a result.
In retrospect though, there may have been a method to the madness. With so many marketable weapons now at its disposal available in one cloud-based suite called Helix, FireEye has a recurring-revenue machine that’s not only up and running, but running in high gear.
That still doesn’t fully make the case that FireEye is read to end 2018 on a high note and set the stage for a huge 2019. But, this will. Thanks to all the new recurring-revenue customers that have been added of late, last year’s per-share loss of 16 cents is on pace to be a full-year profit of eight cents this year, and grow to earnings of 169 cents per share in 2019. That’s a huge validation of everything the company’s been doing for a long while now.
Dicks Sporting Goods (DKS)
Last but not least, add Dicks Sporting Goods (NYSE:DKS) to your list of stocks to buy after the midterm elections are over.
There was a time not too long ago when Dicks Sporting Goods’ future looked bleak. A cyclical wave of sneaker mania and athletic apparel demand peaked a couple of years back, marked by a string of athletic shoe and clothing store closures. Sports Authority’s bankruptcy and Finish Line’s shuttering of 150 locales in 2016 speaks volumes on the matter.
In some ways though, that industry headwind left Dicks Sporting Goods even better positioned to ride the wave of renewed consumerism. With much less competition to contend with, the retailer is expected to start growing its top line again next year.
It’s only projected growth of 2.4%, but the small improvement in sales is also expected to improve the company’s per-share earnings figures at an even faster clip.
As of this writing, James Brumley held a long position in Alaska Air (ALK). You can follow him on Twitter, at @jbrumley.