Well, the Federal Reserve gave its stamp of approval not only for this year, but going into next year. All is steady as she goes.
That’s good news for stocks that are doing well right now. And because we have plenty of those, there’s no real point in buying potential comeback stocks or bottom fishing.
The seven “A”-rated stocks to buy before 2020 are the cream of my Portfolio Grader favorites. They represent mostly small- and mid-cap companies, because these sectors should do especially well as the economy continues to expand.
Remember, in election years, neither party wants to take away the punch bowl. They will let the good times roll until January 2021. These stocks are the best ways to take advantage of that.
‘A’-Rated Stocks: Essential Properties Realty Trust (EPRT)
Essential Properties Realty Trust (NYSE:EPRT) is part of a larger empire run by Todd Boehly, a former managing partner of global financial giant Guggenheim Partners. Boehly built a new company starting with insurer Security Benefit, and then created a larger holding company, Eldridge Industries.
EPRT is one of the few companies in this growing empire that is publicly traded. And it was only launched last year. This real estate investment trust (REIT) focuses on middle market, single-tenant, service-oriented buildings like convenience stores.
It also is a triple-net lease REIT, which means the tenants pay taxes, upkeep and insurance. That means the REIT doesn’t have any of those hassles or expenses.
Since its mid-2018 launch, U.S.-based REITs have been very hot, and that’s no exception for EPRT. The stock is up almost 80% in its first year, still has a 3.8% dividend and has a trailing price-to-earnings ratio of 41.8.
First Majestic Silver (AG)
First Majestic Silver (NYSE:AG) is Canada-based silver mining company that has most of its production and mines in Mexico. It has been around since 1979, so it is a survivor.
While its $2.2 billion market capitalization makes it a small stock, it’s a pretty big player in metals markets.
Generally speaking, silver does a decent job tracking gold prices. The difference between the metal and the miners is that mining stocks are usually a bit more leveraged — on the upside and downside — than the actual metal.
Silver is now trading around $16.80 an ounce, but in September it was up to nearly $20 an ounce. All the same, it started the year around $14.80, so it has settled down a bit.
Silver differs from gold slightly because there is more of it, and it’s considered both a precious and industrial metal due to its availability. Like gold, it’s a good hedge against currency-based equities like stocks and bonds. But it also does well when demand rises on the industrial side.
The stock is up 107% in the past year, which shows the leverage miners get when the economy is improving.
Hilltop Holdings (HTH)
Hilltop Holdings (NYSE:HTH) is a holding company that operates the regional bank PlainsCapital Bank in Texas. It has 60 branch offices and $9.3 billion in assets.
Regional banks are in a very good spot right now, and that should last for a while. Interest rates are stable, so it’s easier to manage their stockpile of U.S. Treasury bonds they hold as cash reserves. It also means they can set interest rates and manage their lending with better intermediate-term visibility.
Also, some of the legislation they were under with the Dodd-Frank Wall Street Reform and Consumer Protection Act has been eased. This means fewer regulatory hoops and that means healthier margins.
And while neo banks and digital banking are both looming threats, good-sized banks are partnering with financial technology companies rather than competing directly with them.
HTH stock is up 40% in the past year, yet its trailing P/E is below 12. That’s a bargain.
Pilgrim’s Pride (PPC)
Pilgrim’s Pride (NASDAQ:PPC) is one of the largest chicken producers in the U.S. and the No. 2 chicken producer in Mexico. It also has operations in Europe and exports its products around the world.
PPC has been around since 1946, but in 2009 it went bankrupt. It is now a majority Brazilian-owned company but has its headquarters in Greeley, Colorado.
The stock was doing very well until January 2018. That was when the trade war started to take a bite out of the stock. At the time, PPC stock was trading above $37. Now it’s at $32.
And it’s been a wild ride in between. By January 2019, PPC stock was trading in the mid-$15 range. In the past year, the stock is up 90%. That’s the kind of momentum I look for in a stock-market buy.
In November, China said it would again start buying U.S. chicken products. That is very encouraging news moving forward. Even if the trade war lingers on for some sectors, big outfits like Pilgrim’s Pride now have a significant market back, which should help the stock continue its rise.
PulteGroup (NYSE:PHM) is the third largest home construction company in the U.S. It primarily operates across 23 states. It has a variety of brands that meet every price point, from first-time homebuyer, to upscale communities, to age-restricted 55-plus communities.
With over 65 years in the business, PHM has remained ahead of the trends and delivered quality and value.
As a U.S.-focused firm, it doesn’t have to worry about trade wars. And in the current low-interest rate, low unemployment economy, with the Federal Reserve buying up mortgage-backed securities, PHM is in a great position.
What’s more, the stock is a bargain. It’s up more than 53% in the past 12 months, yet its trailing P/E is a mere 12.
At this point in the housing cycle, inventories for new homes are low, so that means mild growth can keep PHM on an upward path.
Teledyne Technologies (TDY)
Teledyne Technologies (NYSE: TDY) has been known as a leading aerospace and defense company.
While this is still a great sector for the company — and recent defense spending shows why — its work for such demanding customers means its equipment is also perfectly suited for the rigors of other industries as well.
For example, its work in drones and aerospace electronics means it can supply these military-grade products to the for-profit aerospace industry looking into drone delivery services.
Also, equipment that can endure the rigors of space can also be very valuable when exploring and producing offshore oil. And on the renewable side, its battery technologies have a new potential revenue source.
With a market cap just above $12.6 billion, its size also means it has the opportunity to grow more easily than its larger-cap brethren. Its numbers are also encouraging, with industry-leading earnings growth and strong free cash flow.
The stock is up 68% in the past year, but its P/E is only half of that.
Ross Stores (ROST)
Ross Stores (NASDAQ:ROST) seems like an odd stock to have in a story based on a strong economy and a confident consumer. I mean, this discount retailer doesn’t even have an e-commerce site.
That’s right, while other retailers are getting their lunch eaten by companies that have focused on e-commerce, ROST hasn’t moved to digital, and it’s still doing very well.
Part of its allure is the concept of bargain hunting. If you know millennials, you know they love to thrift shop. And ROST is basically kind of upscale thrift shopping. You never know what bargains you’ll find.
Plus, after the financial crisis and the long decade of struggle to get beyond it, a lot of shoppers left the premium-priced department stores and landed in Ross stores. And those customers have never left.
The stock is up 69% in the past 12 months and it’s averaging more than 23% gains annually over the past 3 years. Whether the economy is hot or cold, ROST keeps chugging along.
That being said, the U.S. jobs market continues to improve. The unemployment rate dipped to 3.5% in November, down from 3.6% in October. Unemployment is now sitting at the lowest level in 50 years.
Now, the strong data doesn’t just mean great things for the U.S. economy, it also means great things for the stock market. It’s why I’m so bullish on 2020. So, I partnered with my friend and InvestorPlace colleague Matt McCall, who is equally as excited about the New Year, to create the Power Portfolio 2020. We don’t want you to do “average” next year, we want you to bring in extraordinary returns.
So, the Power Portfolio 2020 is our exclusive guide for positioning your portfolio to take advantage of all next year will have to offer investors. We’ve honed in on 9 stocks we expect to crush the market and released all the names on Tuesday. And already one stock is up about 6%!
Louis Navellier had an unconventional start, as a grad student who accidentally built a market-beating stock system — with returns rivaling even Warren Buffett. In his latest feat, Louis discovered the “Master Key” to profiting from the biggest tech revolution of this (or any) generation. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.