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. 

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