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Top 10 Stocks To Invest In 2019

As earnings season kicked into gear, Netflix stole the show this week, posting surging revenue and smashing its own guidance for subscriber growth. The optimistic report from management on Netflix’s business sent shares 10% higher. 

Next week will feature a range of earnings reports. But the most interesting will be the following stocks. Ahead of their earnings releases, here’s a preview of what to watch.

Top 10 Stocks To Invest In 2019: Gilead Sciences, Inc.(GILD)

Gilead Sciences stock trades at only 11 times expected earnings. Why is the big biotech stock so inexpensive? Gilead’s revenue and earnings have declined over the last couple of years on sinking sales of its hepatitis C virus (HCV) franchise.

But Gilead is a value rather than a value trap, in my view. Those HCV sales have fallen in large part because so many patients have been cured that there aren’t as many left to begin treatment. However, Gilead thinks the HCV market should stabilize relatively soon.

Stabilization in the HCV market should set Gilead up for a return to growth. Market research firm EvaluatePharma expects Gilead’s new HIV drug Biktarvy to be the biggest new drug launch of 2018. Biktarvy could also become Gilead’s biggest and best HIV drug ever, with peak annual sales projections of close to $6 billion.

Gilead could also benefit from several other big winners over the next few years. Cancer drug Yescarta should be on track to reach peak annual sales of $2.7 billion. Gilead hopes to submit for regulatory approval next year for two other potential blockbusters — autoimmune disease drug filgotinib and non-alcoholic steatohepatitis (NASH) drug selonsertib.  

Top 10 Stocks To Invest In 2019: DXC Technology Company(DXC)

DXC Technology is a leading end-to-end IT services and solutions company. It services include analytics, applications, business processes, cloud computing, consulting, enterprise and cloud applications, security, and more.

DXC immediately sticks out because of its strong estimate revision activity. Within the past 90 days, the Zacks Consensus Estimate for its full-year earnings per share has gained 34 cents. DXC is now expected to see its full-year earnings growth hit 153.6% this year and 15.0% next year. This positive revision activity has earned the stock a Zacks Rank #2 (Buy), and impressive growth estimates help pad its “A” grade for Growth.

Investors should also note that DXC is witnessing cash flow growth that outpaces its own historical average, and its net margin of 5.2% and RoE of 18.0% both crush their respective industry averages. Looking further ahead, the firm is projected to improve its bottom line at an annualized rate of 10.5% over the next three to five years.

Top 10 Stocks To Invest In 2019: Watsco, Inc.(WSO)

Watsco Inc (NYSE:WSO,WSO.B) technically shouldn’t be on the list, as it closed its first quarter with a modest amount of net debt. But that’s basically a seasonal issue in terms of use of cash; Watsco should be back to net cash at some point this year.

And such a minor difference isn’t enough to push a quality stock to the sidelines. Watsco is the largest distributor of HVAC (heating, ventilation, and air conditioning equipment) in the country. It’s a fragmented industry that allows for a ‘roll-up’ strategy (Watsco has acquired 59 businesses in the last three decades) and gives Watsco a competitive edge.

WSO stock isn’t cheap – but when it comes to a quality industrial stock, none really are these days. A 3.2% yield takes the edge off valuation a bit, and even in what the market seemed to think was a disappointing first quarter, Watsco still grew EPS 25%.

Even with its P/E multiple above 23x, WSO simply is a long-term buy and hold candidate as a business. Adding in a clean balance sheet and a 3%-plus yield only makes the case stronger.

Top 10 Stocks To Invest In 2019: Tanger Factory Outlet Centers Inc.(SKT)

Retail stocks might seem like a scary place to put your money to work nowadays, especially when the underlying business relies on physical locations to fill its coffers. But as a public mall real estate investment trust (REIT) focusing on upscale outlet centers, Tanger Factory Outlet Centers has found a more difficult-to-disrupt niche to that end.

To be sure, the company renewed 84% of its consolidated portfolio space that was scheduled to expire in 2017. And it ended the year with an enviable portfolio occupancy rate of 97.3%, marking its 37th straight year at above 95% for the metric — an achievement CEO Steven Tanger touted as proof of the resiliency of the outlet center model. 

"Tanger continues to have the lowest cost of occupancy among all public mall REITs," Steven Tanger stated last quarter, "and many of the company’s tenants report that outlet stores remain one of their most profitable and important retail distribution channels."

All the while, Tanger steadily implements remerchandising projects at select centers to enhance its tenant mix and, in turn, increase shopper traffic, drive demand from additional tenants, and boost overall portfolio productivity.

And of course, REITs are required to pay 90% of their income to shareholders in the form of dividends, which means Tanger Factory Outlet Centers offers a juicy 6.4% annual yield as of this writing. 

4.2% yields and international growth — what more do you want?

Top 10 Stocks To Invest In 2019: SunPower Corporation(SPWR)

No solar company was more negatively impacted by the Trump Administration’s solar tariffs than high-efficiency solar-panel manufacturer SunPower, which manufactures most of its products in Asia. But the company may turn a huge weakness into a point of strength. 

SunPower recently agreed to buy U.S. solar manufacturer SolarWorld Americas in a deal that would make it the biggest domestic solar-panel producer. SolarWorld makes panels in Hillsboro, Oregon, and filed for bankruptcy protection in 2017 because it couldn’t compete with foreign competition. SunPower’s management says the tariffs of 30% on solar-panel imports will make the plant economical, and SunPower will be able to add its full-service solutions, like racking and inverters, to leverage the added domestic capacity. 

What makes the Oregon plant really intriguing is that SunPower will convert 25% to 50% of its 550 megawatts (MW) in solar-panel capacity to P-Series, a module assembly process that increases the efficiency of solar panels by about 5%. SunPower can use imported solar cells, which would likely avoid tariffs because of an exemption on the first 2,500 MW of solar cell imports, to make solar panels for utility-scale projects, or use SolarWorld’s existing cell capacity to make panels. No matter what it does, SunPower is suddenly the biggest solar manufacturer in the U.S., and that’s a big deal in 2018. 

I think SunPower’s superior technology and newly expanded U.S. manufacturing make this a top energy stock right now. We’re in the early innings of solar energy’s growth, and buying one of the industry’s leaders at a market cap of just $1.3 billion is a steal given the industry’s multitrillion-dollar opportunity. 

Hot Undervalued Stocks To Buy Right Now

Stocks opened slightly higher on Wednesday as investors begin to reap some rewards from the start of first quarter earnings season. Despite this recent market momentum, uncertainty is still present, which means investors need to continue to utilize Q1 earnings season in order to look for stocks set to top earnings estimates.

First quarter earnings season has already helped some stocks kick back into high gear, including streaming giant Netflix (NFLX) . But just because the overall market has performed relatively well over the last week, doesn’t mean that earnings season will be a net positive for every stock. In fact, a slow quarter or a big earnings miss could lead to even further declines.

Luckily, Zacks Premium customers can utilize the Earnings ESP Screener in order to search for stocks that are expected to surprise.

This is done because, generally speaking, when an analyst posts an estimate right before an earnings release, it means that they have fresh information which could potentially be more accurate than what analysts thought about a company two or three months ago.

A positive Earnings ESP paired with a Zacks Rank #3 (Hold) or better ranking helps us feel confident about the potential for an earnings beat. In fact, our 10-year backtest has revealed that this methodology has accurately produced a positive surprise 70% of the time.

Hot Undervalued Stocks To Buy Right Now: Francesca's Holdings Corporation(FRAN)

Artsy retailer Francesca’s Holdings Corp (NASDAQ:FRAN) has gone from retail gem to retail dud in a hurry.

From 2010 to 2016, cumulative comparable sales growth as FRAN was in excess of 50%, a mark untouched in the retail space. The company was making a killing selling artsy and cute clothes and accessories to teenage girls.

But that popularity has taken a major step back recently. And by major, I mean major. Comparable sales were down 15% last quarter, while gross margins fell 250 basis points.

Most investors take this a sign of changing times. After all, you can’t stay hot forever in the retail space.

But with that same idea in mind, I think that this is simply a rough patch for FRAN. You can’t stay hot forever in retail. Therefore, comparable sales growth won’t always be in excess of 50% over a 6 year stretch.

But you can align yourself with positive secular trends, thus guaranteeing healthy operations in a long-term window. FRAN is aligned with a positive secular trend. The company sells the type of cute and artsy stuff that is currently popular on places like Instagram, Snapchat or Pinterest.

As a result, I expect comparable sales growth to come back strongly from this year’s weak lap. That will drive improved results across the entire business, and FRAN stock, which currently trades at under 9-times this year’s earnings, will come roaring back.

Hot Undervalued Stocks To Buy Right Now: Ventas, Inc.(VTR)

Ventas is one of the largest and most diversified healthcare real estate investment trusts (REITs)in the United States. Its portfolio includes senior living facilities, medical offices and research buildings, hospitals, and rehabilitation and acute care facilities. The vast majority of its revenues come from private pay assets that won’t be affected by changes in government healthcare programs.   

Ventas has an investment-grade credit rating of BBB+ and has increased its dividend for eight consecutive years. It held the dividend steady during the deep 2007 to 2009 recession, otherwise the streak would be longer. The yield is a robust 6.3%, three times the broader market. The dividend has historically grown in the mid-single-digits. The REIT’s beta, meanwhile, comes in at around 0.10, suggesting it’s roughly 90% less volatile than the broader market.

The entire REIT sector has been suffering lately, but Ventas is focused on a niche that will see huge growth in the years ahead — regardless of what happens in the stock market. Its properties generally serve customers that are 65 and older, an age group that is currently swelling as baby boomers join its ranks. That trend will only accelerate, with another 20 years before it peaks. You can rest easy collecting Ventas’ dividend while you wait for the demographics to play out.  

Hot Undervalued Stocks To Buy Right Now: AK Steel Holding Corporation(AKS)

One would think the steel business to be a steady and predictable one, with these stocks (and steel prices) ebbing and flowing more or less with the bigger economic cycle. One would be wrong in thinking this, however. The steel industry is a volatile mess, with ever-changing supply and demand making it impossible for the likes of AK Steel Holding Corporation (NYSE:AKS) to commit to a plan for the future.

The end result? An already-cheap AKS stock has basically gone nowhere for the past 15 years, with everything that could go wrong during that time going wrong at an inopportune time.

That may finally be on the verge of changing, however. With President Trump at least willing to try to level the playing field between the United States’ steel companies and overseas rivals at the same time the global economy appears to be picking up some steam, AK Steel is in a proverbial sweet spot. Analysts think so anyway, with earnings and revenue projected to grow this year and next.

Hot Undervalued Stocks To Buy Right Now: Hawaiian Holdings, Inc.(HA)

Shares of Hawaiian Holdings had climbed over 7% in the last month, prior to Wednesday’s 2.7% surge. However, Hawaiian’s stock price is still down more than 19% over the last year. Looking ahead, the company is projected to see its quarterly revenues climb by 6.2% to hit $652.42 million, based on our current Zacks Consensus Estimates. Meanwhile, Hawaiian’s Q1 earnings are expected to fall 21.2% to hit $0.82 per share. 

This projected year over year decline does not necessarily mean that investors will be disappointed, as earnings beats are often more important, especially in the near-term. Hawaiian is currently a Zacks Rank #3 (Hold) and sports an Earnings ESP of 1.27%. The company’s Most Accurate Estimate—the representation of the most recent analyst sentiment—calls for earnings of $0.83 per share, which comes in 1 cent above our current consensus estimate. Therefore, investors can reasonably expect Hawaiian to post a Q1 earnings beat when it reports its first quarter financial results.

Hot Undervalued Stocks To Buy Right Now: Gilead Sciences, Inc.(GILD)

Though high-yield stocks with virtual monopolies don’t grow on trees, you can probably find one in plain sight in the biotech industry with Gilead Sciences. For years, Gilead Sciences has been the dominant market share leader in hepatitis C virus (HCV) therapies, and currently maintains just over half of all market share in HIV treatments, which places it in the neighborhood of 30-percentage points ahead of next-closest competitor, GlaxoSmithKline. 

Nowadays, the bulk of the excitement surrounding Gilead revolves around its HIV therapeutics, which grew to $3.33 billion in first-quarter sales, up modestly from the $3.27 billion reported in the year-ago period. Gilead’s research and development into new HIV antiviral products regularly cycles out its older HIV products in favor of next-generation therapies. Currently, its TAF-based drugs like Genvoya, Descovy, and Odefsey, are doing the heavy lifting, so to speak. Since there is no cure for HIV/AIDS, Gilead’s HIV line of therapies, which is designed to dramatically slow the rate of virus reproduction, are often used for long periods of time, providing reliable and consistent cash flow. 

Meanwhile, Gilead’s HCV portfolio had once been its crown jewel. However, with competition finally hitting pharmacy shelves, and the low-hanging fruit having been reached — i.e., the sickest patients have been treated — HCV sales have struggled mightily. The thing to remember with hepatitis C is that the market extends well beyond the United States. After all, the World Health Organization estimated in March 2018 that 71 million people worldwide carry the hepatitis C virus. While margins won’t be nearly as robust in overseas markets as they’ve been in the U.S., a market does still exist for Gilead’s core HCV products.

Understandably, Gilead is something of a work in progress at the moment. Quarterly HCV sales have proven erratic, and it’ll likely be years before the company’s recent acquisitions pay dividends. Then again, Gilead ended its most recent quarter with $32.1 billion in cash, which is quite the war chest for a growth-seeking biotech, and it’s paying investors a healthy 3.5% yield while they hunker down for a turnaround. Though Gilead Sciences is far from the sure thing it once seemed to be, it’s a value and income stock with clear market share advantages that may still be worth a closer look.