U.S. equities are threatening to break up and out of a multi-month consolidation range with the Dow Jones Industrial Average testing its April high alongside the psychologically important 25,000 level.
Investors have a lot of positives to be encouraged by, including a cooling of long-term interest rate increases, a calming of geopolitical tensions and ongoing labor market strength. Moreover, a calming of inflationary pressures is easing worries about an aggressive pace of Federal Reserve rate hikes this year.
Investors are piling into highly leveraged turnaround plays. Especially in the energy sector. But key technology plays look ready to surge as well, in areas left for dead like electric vehicle charging. Here are some stocks to watch:
Best Cheap Stocks To Invest In 2019: Autodesk, Inc.(ADSK)
This groundbreaking 3D design company makes software for people who make things. This includes software for architects, animators, constructors and engineers. In the last month prices have pulled back by 3.4%. But its growth trajectory is nonetheless very impressive, with prices up 25% year-to-date.
And this is just the beginning according to the Street. In the last three months, Autodesk, Inc. (NASDAQ:ADSK) has received an impressive 13 buy ratings with a $154 average price target (16% upside). Two of these ratings stand out. Top Oppenheimer analyst Koji Ikeda calls ADSK his Top Stock Pick in Saas/ Applications Software. He explains: “Autodesk is a well-established franchise and industry leader and operates as an industry-standard, must-have technology in nearly every industry it operates in.”
Looking forward, Ikeda sees big growth potential as “the business is well positioned in a large but lightly penetrated construction industry that is yearning for next-generation technologies, like Autodesk’s, to help digitize the industry.”
Similarly, five-star Robert W Baird analyst Robert Oliver calls ADSK a “Fresh Pick.” He ramped up his price target from $145 to $155 (20% upside) while praising the company’s strong execution.
Best Cheap Stocks To Invest In 2019: Realty Income Corporation(O)
In the same sense that income-oriented utility stocks make for solid retirement investments, no list of retirement stocks to mull is complete without at least one real estate investment trust (or REIT), which are explicitly designed as tax-efficient ways to deliver rental income to shareholders. And one of the top names in the game is Realty Income Corp (NYSE:O), which owns shopping centers, renting out spaces to retailers.
It seems like a rough business to be in these days, with the so-called “retail apocalypse” upon us, with even the biggest names in the business seeming to close a few more stores than they’ve closed in the past. That worry is a big part of the reason O shares have fallen 22% since their mid-2016 peak.
As it turns out though, Realty Income is handling the headwind better than one might expect. Sales and earnings were up in 2017, and they’re projected to grow again in 2018. The dividend is along for the ride; the REIT boasts 81 consecutive increases in its quarterly payout.
Best Cheap Stocks To Invest In 2019: Exxon Mobil Corporation(XOM)
It’s true that ExxonMobil shares have been underperforming its peer group in the past year, but in my view, that underperformance is presenting an excellent opportunity for income investors to add this big oil stock to their forever portfolio.
ExxonMobil’s lackluster share price returns are in part due to concern over decelerating production, including a 2% dip in 2017. Declining production isn’t helping the top line, but there’s reason to think that once a few of ExxonMobil’s key projects begin pumping out oil, they’ll be able to more than offset the declines associated with maturing oil.
The project offshore of Guyana, for instance, is a massive one that could generate 500,000 barrels of oil per day, including 120,000 barrels per day as early as 2020. Guyana’s even more attractive because a low $26 per barrel breakeven point means that if oil prices remain anywhere near where they are today, it will be a boon to ExxonMobil’s bottom line.
Other projects, including U.S. shale and offshore Brazil, also offer significant opportunity. Exxon’s Permian Basin and Bakken shale production grew 18% year over year in Q1, and the company has over 2 million net acres offshore of Brazil that could help move the needle in a few years.
It also shouldn’t be ignored that ExxonMobil’s financial results are down from five years ago because of lower oil prices, but oil prices have been climbing this past year, and as a result, the company has an opportunity to leverage the cost-cutting it did during oil’s downturn for higher earnings in the future.
Overall, higher oil prices, the potential for production to grow over time, and a juicy 4.4% dividend yield make ExxonMobil one of my favorite set-it-and-forget-it stocks.
Best Cheap Stocks To Invest In 2019: Cirrus Logic, Inc.(CRUS)
Cirrus Logic, Inc. (NASDAQ:CRUS) is an audio technology company that serves a range of industries including automakers and mobile gadget companies. This includes noise cancellation technology and voice-controlled interfaces for consumer technology.
Founded in 1984, Cirrus Logic has nearly 2,500 patents (and counting) on its best-in-class hardware and software. And considering it boasts existing relationships with gadget giant Apple, it clearly has a respected pedigree.
Of course, with a heavy reliance on Apple to keep its revenue humming, many investors worry Cirrus Logic is a risky play. After all, losing a contract with the Cupertino, California-based giant would cause sales to dry up in a hurry. However, CRUS has increasingly diversified away from Apple-related revenue — including a big win to get one of its chips on the Samsung Galaxy 8 recently. Beyond that, Cirrus is pushing into mid-range smartphones across the board as higher-end hardware is becoming standard even on “entry-level” devices.
The downside risk is very real for Cirrus if it gets completely cut out of the new iPhone ecosystem, but frankly I don’t think that’s likely. Instead, risk-averse investors are likely discounting the stock right now until they have confirmation … and once the “all’s well” sounds, it’s off to the races.
That means now is an ideal time to get into CRUS stock under $45 a share. Recent disappointing results for the iPhone X launch in late 2017 have held back this stock, but an uptick for sales and a renewed upgrade cycle for Apple will surely get Cirrus logic back on track in a big way this year.
Best Cheap Stocks To Invest In 2019: Western Digital Corporation(WDC)
Memory solutions giant Western Digital also reported its latest quarterly results last week. The company notched adjusted earnings of $3.63 per share, comfortably surpassing the Zacks Consensus Estimate of $3.31 per share. WDC also posted revenue of about $5 billion, edging out our consensus estimate of $4.94 billion and improving 7.5% year over year.
Western Digital’s strong results helped relieve some tension in the memory space, with many investors assuming cyclical trends had likely run their course and predicating a pullback soon. Still, the stock has struggled to generate much momentum since its report, indicating that volatility is still lingering.
Nevertheless, an improving earnings outlook has earned the stock a Zacks Rank #1 (Strong Buy).