Category Archives: Financial Stocks

Top 10 Growth Stocks To Own Right Now

Penny stocks are a great way for investors to chase triple-digit gains without a huge initial investment. That’s why we’re bringing you the three penny stocks to buy in July 2018.

You see, penny stocks can generate significant returns for retail investors. Just last month, we identified a little-known education company that jumped 267% in just one week.

Stocksmoneymorning.com/wp-content/blogs.dir/1/files/2018/05/coins_showing_growth-75×50.jpg 75w, moneymorning.com/wp-content/blogs.dir/1/files/2018/05/coins_showing_growth.jpg 550w” sizes=”(max-width: 300px) 100vw, 300px” title=”Stocks” style=”font-size: 18.0018px; box-sizing: border-box; margin: 0px 0px 24px 24px; padding: 0px; border: 0px; vertical-align: middle; max-width: 100%; height: auto; float: right; text-align: right;” />In order to identify penny stocks with this kind of potential, we use the Money Morning Stock VQScore™ system to find the best stocks under $5 – the SEC’s official definition of a penny stock.

Our favorite penny stocks for July have the potential to generate considerable return. In fact, our top penny stock to buy could jump over 60%.

Here are our top penny stocks for July…

Top 10 Growth Stocks To Own Right Now: Digital Realty Trust Inc.(DLR)

It can be difficult for dividend investors to find an income payer that offers a high yield, the opportunity for growth, and a level of security. One way to narrow the field is by looking among a group of companies that have qualified for special tax treatment known as real estate investment trusts (REITs). These tax-advantaged businesses are required by the IRS to pay out at least 90% of their profits to investors as dividends.

One such REIT with a long runway is Digital Realty Trust, a company focused on the growing field of data centers, which are large, specialized buildings that house the servers and other network equipment used in cloud computing. These locations require highly reliable and secure environments that contain redundant backup systems for mechanical, cooling, electrical, and network connections — all necessary to protect the data stored on the servers. 

Several bar charts showing high growth rates in artificial intelligence, the internet of things, self-driving cars, and virtual and augmented reality over the next several years.

IMAGE SOURCE: DIGITAL REALTY TRUST.

The market is large and growing, with worldwide public cloud revenue expected to grow to $411 billion by 2020, up from just $260 billion last year. Ongoing developments in the areas of artificial intelligence, the Internet of Things, self-driving cars, and virtual and augmented reality are expected to accelerate the need for additional data centers in the coming years. 

Digital Realty provides over 200 data centers in 12 countries and 32 metropolitan areas, totaling 32 million rentable square feet. The company has built in annual rent increases of between 2% and 4%, and its average remaining lease is 4.9 years. 

Even more impressive is the company’s growth. It has increased its FFO (funds from operations — the REIT measure for earnings) by 12.3% annually over the past 12 years. Digital Realty Trust has grown its dividend at about the same rate, and its payout currently yields 3.6%. 

The company’s customer list reads like a Who’s Who of the tech and telecom industries, boasting IBM, Facebook, Verizon, AT&T, and Comcast among its top clients.

With a high yield, a significant runway for growth, and a stable and growing payout, Digital Realty Trust is a top stock to buy now.

Top 10 Growth Stocks To Own Right Now: Match Group, Inc.(MTCH)

Match Group’s stock also easily crushed the market with a 125% gain over the past 12 months. Match owns several well-known dating apps, including Match, Tinder, OKCupid, and Plenty of Fish, and generates revenues from display ads and paid subscriptions. Its total paid subscribers grew 26% annually to 7.4 million last quarter, with Tinder’s premium members accounting for 3.5 million of that total.

Match, which was spun off by internet media company IAC in 2015, is the 800-pound gorilla of online dating. However, Facebook’s recent introduction of a dating feature caused many investors to question the width of Match’s moat. Match subsequently struck back by launching a new "gamified" dating app called Crown, acquiring a stake in NYC-based dating app Hinge, and introducing new interest-based features for Tinder.

Match’s revenue rose 19% last year, but its adjusted earnings dipped 19% due to tax reform-related charges. Wall Street expects its revenue to rise 27% this year as its earnings rebound 106% from that temporary dip. That’s a solid growth rate for a stock that trades at just 29 times this year’s earnings, but analysts expect its earnings growth to decelerate to 19% next year.

Top 10 Growth Stocks To Own Right Now: Sage Therapeutics, Inc.(SAGE)

Sage Therapeutics isn’t profitable and has no products on the market. But with the biotech’s market cap standing at more than $7.3 billion, investors are obviously expecting the situation for Sage to change dramatically in the not-too-distant future. I think those expectations will be met.

The U.S. Food and Drug Administration (FDA) is set to make an approval decision for Sage’s lead candidate, an intravenous (IV) version of brexanolone, by Dec. 19, 2018. If all goes well, the drug will become the first therapy approved by the FDA for treating postpartum depression.

I think the chances for FDA approval are quite good based on the phase 3 clinical results for brexanolone. And if the IV formulation of the drug is successful, that bodes well for Sage’s followup — SAGE-217, an oral drug that’s similar to brexanolone. The biotech is moving forward with a pivotal phase 3 study of SAGE-217 as a major depressive disorder treatment and expects to announce results in the fourth quarter of this year.

Sage could be looking at peak annual sales of $775 million for brexanolone and $2.5 billion for SAGE-217. I think the potential for these two drugs makes this biotech an attractive acquisition target.  

Top 10 Growth Stocks To Own Right Now: Tencent Holdings Limited(TCEHY)

Tencent Holdings Ltd (OTCMKTS:TCEHY) is a true stock legend. The tech giant is the first Chinese company to be valued at over $500 billion. This puts it in the same league as major U.S. stocks like Facebook. And according to the Wall Street Journal, TCEHY “isn’t yet a household name in the U.S., but it should be.”

The company has its fingers in many pies from a hugely successful gaming business to music and videos. But Tencent wouldn’t be Tencent without WeChat. This is an extremely popular Chinese messaging app with almost 1 billion users. Think of a juiced-up version of WhatsApp that includes payment systems, smart city offerings such as the ability to schedule appointments, pay traffic fines or make visa applications.

“Tencent dominates consumer engagement and has a variety of tools for businesses to reach consumers,” writes KeyBanc’s Hans Chung. “It has been cautious about monetization, but we believe the opportunity is huge and achievable given the largest scale and engagement in China.” Indeed, Wells Fargo’s Ken Sena is particularly enthusiastic about the potential in video revenue and predicts a surge of video subscribers in the next five years.

From our data we can see that this ‘Strong Buy’ stock scores three recent Buy ratings from the Street. This is with an average price target of $65 (29% upside potential).

Top 5 Value Stocks To Watch For 2019

A recent article by Pomona College finance professor Gary Smith has me thinking about stocks to buy over $200.

Smith’s opinion piece appeared on MarketWatch July 2; using three valuation models to make his case, he argued why Apple (NASDAQ:AAPL) is still a buy at $200.

Admittedly, AAPL is not quite there yet, trading around $187 as a write this, but close enough.

A well-written and mathematically sound valuation of Apple stock, Smith concluded that if you buy at $200 and hold for ten years time, you’ll be happy you did.

I’m not suggesting for a minute that buying stocks trading over $200 are the key to your financial future, but they are often this high because of strong economic underpinnings.

Take Amazon (NASDAQ:AMZN), for example.

It crossed $200 in March 2012. If you’d bought 100 shares back then, today you’d have an annualized total return of 41% in the six-and-a-quarter years since and, more importantly, a profit of $151,257.

Out of all of the S&P 500 stocks, 52 trade at $200 or more. Here are my seven stocks — one from seven different sectors —  to buy over $200.

Top 5 Value Stocks To Watch For 2019: Sherwin-Williams Company (SHW)

Sherwin-Williams (NYSE:SHW) is my pick from the basic materials sector. Down 0.40% year-to-date, it has some work to do if it wants to finish 2018 up double digits, something it has done five times in the past decade.

The global paint business was recently in the news, but not in a good way. Three people, including an analyst with S&P Global were charged with insider trading related to its 2016 purchase of Valspar. It seems the analyst allegedly tipped off two friends of the impending announcement netting them $300,000 on Valspar stock.

While that’s not Sherwin-Williams’ fault, it’s never good to have your company associated with this kind of profiteering.

The company’s Q1 2018 results paint a picture of a very strong global paint and coatings business that saw revenues grow 6.9% during the quarter to $4.0 billion generating $2.89-per-share in profits with expectations in fiscal 2018 of a minimum $16.05-per-share in earnings.

In the case of Sherwin-Williams combining with Valspar, one plus one equals three.

Top 5 Value Stocks To Watch For 2019: Diageo plc(DEO)

Do you like booze? Enjoy knocking back a few from time to time? Then hop on board Diageo (NYSE:DEO). We know for a fact there will always be some baseline demand for alcohol. No matter how healthy people claim they want to be, they will always give in to alcohol.

You know many of Diageo’s brands, including Johnnie Walker, Crown Royal, J&B, Buchanan’s and Windsor whiskies, Smirnoff, Cîroc and Ketel One vodkas, Captain Morgan, Baileys, Don Julio, Tanqueray and Guinness.

Why is alcohol a smart investment? Because it is a social product. When people get together, if one person buys, others tend to buy also. Marketing for alcohol centers around creating an experience, and creating and perpetuating social circles. In general, it is a good play because human social behavior is often centered around the consumption of alcohol.

DEO stock is being pushed higher thanks to increased efforts in flavored alcohols. The company is consistent and reliable, and pumps out more than $3 billion annually in free cash flow, returning about half of that to shareholders in the form of its 2.4% yield.

Top 5 Value Stocks To Watch For 2019: United Natural Foods, Inc.(UNFI)

United Natural Foods sells organic, natural and specialty foods to groceries in the U.S. Of course, the company, which sells a significant amount of products to Whole Foods, will benefit if that chain becomes much more popular.

Like Sprouts, United Natural Foods should be boosted by food inflation and by increased demand for healthier food. It’s looking to further exploit the latter trend by increasing its exposure to fresh food and growing its e-commerce business, the company said on its fiscal third quarter results conference call on June 6.

Importantly, United Natural Foods also reported that it’s outpacing the growth of the organic foods sector. Indeed, the company’s net sales jumped 12% year-over-year in the third quarter, while its net operating income soared 42% versus the same period a year earlier.

Despite the impressive growth, United Natural Foods stock has an anemic valuation. United Natural Foods stock is trading at a forward price-to-earnings ratio of just 12, and its price-to-sales ratio is a tiny 0.22.

After the company reported its third-quarter results, multiple analysts complained about its margins. Last quarter, its gross margin came in at 15.4%.

I believe that, going forward, a combination of higher food inflation, supply chain improvements, and greater scale will meaningfully boost United Natural’s margins. Meanwhile, as Wall Street becomes much more enthusiastic about the organic food category, the multiples of UNFI stock should rise significantly.

Top 5 Value Stocks To Watch For 2019: Boeing Company (BA)

Boeing (NYSE:BA) is my pick from the Industrial Goods sector. Up 15% YTD compared to 4% for its aerospace and defense peers, it has managed to deliver an annualized total return of 17% over the past 15 years, 210 basis points greater than its peers.

On July 2, the Brazilian news media reported that Boeing and Embraer (NYSE:ERJ) would submit the contracts bringing Embraer’s commercial aviation division together with Boeing’s commercial aviation business to the Brazilian government for its blessing.

Upon approval and completion, Boeing would control the operation, one that should compete more effectively against the Airbus (OTCMKTS:EADSY), Bombardier (OTCMKTS:BDRBF) tie-up with the C-Series jet.

The year is going well for Boeing despite the China tariff headwinds threatening its most significant growth market — Boeing will sell $1 trillion of its planes to China over the next 20 years — and bringing Embraer under its fold puts a cherry on top of the sundae.

There might be some turbulence for Boeing stock over the next 12 months; I would take any retreat of its stock price as an opportunity to buy at a better price.

Boeing’s currently operating at maximum efficiency and should be able to keep it up despite the storm clouds in China.