We’ve reached the end of the first quarter, and the theme for the Best Stocks contest seems to be unpredictability. Pot stocks were hot, value stocks were not. The headlines changed from week to week, and even beat-and-raise earnings weren’t always enough to propel a stock forward.
All of this has meant a good deal of shuffling among the contestants over the first three months, and one stock getting out to an astounding lead by the end of March. Which one? Well, read on and find out.
The Best Stocks contest entries are listed below in ascending order of gains as of the end of trading on March 29. Those gains include the dividends, where applicable. And if you want to keep up-to-date on the contest between these quarterly updates, feel free to follow along at our Best Stocks for 2019 leaderboard, which is regularly updated so you can see who’s rising and who’s falling.
But now, without further ado, on to the contestants.
Syrah Resources (SYAAF)
Investor: Eric Fry
Year-to-Date Change Through Q1: -28%
Syrah Resources Ltd. (OTCMKTS:SYAAF) is an all-or-nothing sort of stock pick for a contest like this. SYAAF is set up for long-term growth thanks to the ubiquity of graphite — the main focus of this Australian company.
Graphite is used in a whole lot of the batteries that are going to power our future, including those for electric vehicles. But the company is also a one-mine operation and that mine is in Mozambique, meaning that in the short term, it can have more than its share of volatility.
And that volatility has hit hard to the downside so far in 2019, with disappointing earnings sending the stock tumbling.
That doesn’t have to define the whole year for SYAAF, but the company must show serious improvement to win back investors’ trust. As Fry wrote, “Previously, Syrah had forecast that it would produce positive cash flow from its operations by the back half of 2019. But words are cheap. The company must deliver on that forecast if it expects to retain the trust and interest of shareholders.”
Investor: Charles Sizemore
YTD Change: 2%
LyondellBasell Industries (NYSE:LYB) is a value stock, and this set of market circumstances just aren’t being kind to value stocks. People are riding the continued strength on the back of growth stocks instead. But that doesn’t mean LYB stock is a bad security to be invested in. It just means that it’s poised for a shift in sentiment.
Now, will that happen in time to help with this year’s Best Stocks contest? As Sizemore points out, there are no guarantees. “While I believe that value stocks are ‘due’ for an extended period of outperformance, I could have made the same argument at any time over the past several years, and I’d still be waiting for the reversal,” he wrote.
But even if it just keeps up modest growth, there’s still LYB stock’s 4.4% dividend yield to keep in the back of your mind — or put in your back pocket. And if sentiment turns back to value stocks, LYB could be in for a massive surge.
Investor: Kyle Woodley
YTD Change: 6%
The thesis behind picking Weibo (NASDAQ:WB) for the 2019 Best Stocks contest was simple — good Chinese stocks took a beating in 2018 thanks to the U.S.-China trade war, and that made companies like Weibo excellent rebound candidates. As Woodley wrote, “A quick refresher: Weibo shares hemorrhaged 43.5% in 2018 — a year in which the company also grew revenues by 49% year-over-year and net income by 54% year-over-year.”
It’s a sound thesis, but one that hasn’t yet borne fruit in the first quarter. Part of that has to do with the still-fraught relationship between China and the U.S. And both Weibo and Sina (NASDAQ:SINA), which owns about 46% of WB stock, posted earnings beats in March, but both of the stocks fell hard after earnings, with Weibo off over 10% at one point that day.
Why? As Woodley pointed out, “If you’re going to pick Weibo apart on anything — and investors certainly did, considering the sharp selloff after its Q4 report — it might be the company’s revenue forecast. WB is looking for Q1 sales growth of 20.5% to 23.5%, which doesn’t sound like much compared to Q1 2018’s 76% jump in revenues.”
But … that was really it. WB stock still looks strong, it just needs a nudge to start growing again.
Canada Goose (GOOS)
Investor: Will Ashworth
YTD Change: 10%
Canada Goose (NYSE:GOOS) was flying pretty high at one point in this quarter, before a downgrade from Wells Fargo shot it down.
“The company itself continues to do well heading into 2019’s second quarter. GOOS stock was doing fine through the end of February, trading above $57, putting my pick solidly in third place in InvestorPlace’s 2019 stock picking contest,” Ashworth wrote. “But oh, what a difference a month can make.”
But things haven’t completely soured for Canada Goose. It’s still a sought-after brand name and its most recent earnings were a double beat and raise. GOOS stock still has plenty to offer investors in 2019.
Investor: Jason Moser
YTD Change: 12%
Virtual healthcare company Teladoc Health (NYSE:TDOC) really charged into 2019.
The TDOC stock price stumbled a bit after earnings in February. It wasn’t the hard numbers that were a problem for investors — they just weren’t too keen on the guidance, which was below analyst expectations.
But things are still looking up for Teladoc, as the trend is going its way. As Moser points out:
“Virtual healthcare and telemedicine are happening; it’s no longer a matter of if but when, and Teladoc has done a lot to grow and diversify the business in a relatively short amount of time. One could also say that this business played an integral role in actually helping shape the legislation that is allowing virtual healthcare to become a part of the global healthcare landscape.”
And with Medicare Advantage 2020 set to add tens of millions of new potential clients to its rolls, there’s still plenty of room for TDOC stock to run even higher.
Investors: John Jagerson and Wade Hansen
YTD Change: 18%
Adobe (NASDAQ:ADBE) has been hanging around in the top half of the Best Stocks contest so far this year, but that has translated to more-than-acceptable gains of 18% for the quarter.
Adobe has made the sort of tech shift that companies like Microsoft (NASDAQ:MSFT) have also been making — the shift to a subscription model instead of a plain sales model for some of its most popular software.
As Jagerson and Hansen put it, “One of the important benefits of ADBE’s shift into services, subscription and cloud products over the last few years has been an improvement in margins. This is particularly critical right now as investors prepare for poor first-quarter earnings reports from the components of the S&P 500.”
All in all, the Best Stocks for 2019 contest is far from over for ADBE stock.
Investor: Readers’ Choice
YTD Change: 19%
Amazon (NASDAQ:AMZN) continues to have a strong showing, and no wonder. While plenty of people, up to and including President Donald Trump, have taken aim at Amazon, it seems to shrug off every salvo with a deftness that most other massive companies envy. And while they waste their time on those antics, Amazon just keeps on trying new things, bolstering the things that work, and generally being the elephant in any number of rooms.
But for Amazon to really challenge for the lead in the Best Stocks contest, it will probably need for one of its new or burgeoning business ideas to really take off. If it could take off like AWS has, that would be a game-changer, but that sort of massive success is extremely hard to come by.
Still, Amazon has a lot going for it and keeps trying new things, which means that a success big enough to move the needle is certainly possible.
Viper Energy Partners (VNOM)
Investor: Neil George
YTD Change: 32%
Oil prices have been undergoing a steady rise through most of the year so far (and even more so since the market bottom on Dec. 24, 2018), and Viper Energy Partners (NASDAQ:VNOM) has benefited significantly from that growth.
Whether or not oil prices continue their growth will control how well VNOM continues to perform to some extent, but it’s not the only factor. The company is in a different position than many of its oil sector peers. As George wrote, “Viper Energy is the leading landlord of the petroleum patch primarily in the Permian Basin which is at the center of the shale oil development in the U.S. market. As a landlord, the company doesn’t drill or operate a single well — but instead, leases out its land for exploration and development companies (E&P) for fee income and royalties on the oil and gas that gets pumped out of its land.”
So VNOM stock is set up to profit even if OPEC increases their oil flow. That means the company is probably going to be in the running for the Best Stocks title all year.
Investor: Louis Navellier
YTD Change: 35%
Lululemon Athletica (NASDAQ:LULU) has been one of the primary beneficiaries of the athleisure trend, but that is only the tip of the iceberg when looking at why it has surged so strongly through the first quarter.
A feature LULU shares with tech titan Apple (NASDAQ:AAPL) is how both companies are able to charge premium prices for their goods, a move which can only help with the financials. And the financials for Lululemon are great. Looking at the earnings reports can lead you to another of the spectacular reasons LULU is surging.
As Navellier puts it, “Lululemon’s same-store sales for the past fiscal year were up a staggering 16%. Usually, high single-digit growth is impressive.”
A membership program. Brand loyalty. Pricing power. Any investor looking for reasons to get into Lululemon can find a full plate of them, and LULU stock seems poised to keep flexing through the rest of the Best Stocks contest.
Charlotte’s Web Holdings (CWBHF)
Investor: Matt McCall
YTD Change: 81%
CBD stock Charlotte’s Web Holdings Inc (OTCMKTS:CWBHF) took the top spot in the first quarter of our 2019 Best Stocks contest.
There are plenty of reasons for this. Marijuana companies have been hot lately, for a start. Charlotte’s Web has a great story and a leadership position in the CBD sector. According to McCall, “It produces and distributes CBD wellness products to nearly 3,700 retail locations. It sells everything from tinctures to topicals to capsules, both online and in stores. It also has a line of pet-focused products, which is a niche area that is booming right now.”
And with the Farm Bill making changes to the federal legality of hemp, that sector could be expanding.
And earnings recently put a bow on this pretty package. As McCall wrote, “Fourth-quarter 2018 results were released after the close on March 28 and marked the 12th consecutive quarter of revenue growth for the company. The top line came in at $21.5 million, up 71% from one year earlier and 21% from the third quarter. Both figures are extremely impressive.”
It looks like more good things could be ahead for CWBHF, and if the trend continues, it could take the 2019 Best Stocks title going away.
Jessica Loder is an assistant editor for InvestorPlace.com. As of this writing, she did not hold a position in any of the aforementioned securities.