25 Best Stocks for 2015
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25 Best Stocks for 2015

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The bull market may have more room to run in 2015, but it will do so erratically. So while we still see gains for stocks, they won't be as across-the-board as they were in 2014.

Returns in 2015 will depend on selecting the right companies in the right markets. Take a look at our 25 picks, culled from Kiplinger's investing editors and columnists James K. Glassman and Andrew Feinberg.

SEE OUR NEW STOCK PICKS FOR 2017: 27 Best Stocks for 2017

52-week high/low prices, projected earnings and annual revenues as of Nov. 24. Other data as of Oct. 31. Analyst estimates are provided by Thomson Reuters. James K. Glassman, who writes the Opening Shot column, is a visiting fellow at the American Enterprise Institute. Andrew Feinberg, author of our Promised Land column, manages New York-based hedge fund CJA Partners.

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25 Best Stocks for 2015 | Slide 2 of 26

Conrad Industries

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52-week high: $42.90

52-week low: $31.95

Annual revenues: $235 million

Projected 2015 earnings growth: no estimates available

Conrad Industries (CNRD), a 66-year-old Louisiana firm that builds and repairs tugs, barges and offshore supply vessels, is a favorite of Daniel Abramowitz, of Hillson Financial Management, in Rockville, Md. Sales have more than doubled since 2010, and earnings per share have tripled. “The balance sheet is rock solid,” says Abramowitz. Conrad’s market capitalization (price times shares outstanding) is $233 million, and the company has $64 million in cash. Conrad is “a ridiculously cheap stock,” says Abramowitz.

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25 Best Stocks for 2015 | Slide 3 of 26

Salesforce.com

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52-week high: $67.00

52-week low: $48.18

Annual revenues: $5.07 billion

Projected 2015 earnings growth: 35%

Terry Tillman, an analyst with Raymond James Associates who specializes in business-software companies, selected Salesforce.com (CRM) as a pick last year, and he's sticking with it for 2015. The company, which makes software aimed at enhancing the relationship between businesses and their customers, is unprofitable. But Tillman predicts that revenues will rise at a 30% annual clip for the next few years as the firm uses cloud-computing products to expand its lead over the competition.

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25 Best Stocks for 2015 | Slide 4 of 26

Google

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52-week high: $615.05

52-week low: $511.00

Annual revenues: $67.91 billion

Projected 2015 earnings growth: 18%

A pick from Fidelity Contrafund (FCNTX) is Google (GOOGL), the fund’s leading holding at 7% of assets. It now trades at a price-earnings ratio of 19, based on projected 2015 profits. That’s an attractive valuation for a great company whose earnings have been growing more than 20% a year.

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25 Best Stocks for 2015 | Slide 5 of 26

Cabela’s

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52-week high: $72.53

52-week low: $46.24

Annual revenues: $3.56 billion

Projected 2015 earnings growth: 12%

Through the third quarter of 2014, the diversified U.S. stock mutual fund with the best five-year record was Matthew 25 (MXXVX). The fund’s number-two holding, after Apple (AAPL), is Cabela’s (CAB), a retailer of fishing, hunting and camping gear. The stock’s P/E, based on projected 2015 earnings, is a reasonable 14, and a 33% decline in the stock price from its March peak makes Cabela’s especially attractive.

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25 Best Stocks for 2015 | Slide 6 of 26

Rosetta Stone

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52-week high: $12.50

52-week low: $7.42

Annual revenues: $260 million

Projected 2015 earnings growth: Not meaningful*

Rosetta Stone (RST), the leader in software-based language instruction, is the pick of Jim Roumell, a value-loving money manager with a sterling long-term record. Rosetta has acquired Lexia Learning, which teaches reading to schoolkids, and Fit Brains, which sells brain-training exercises. Its stock has fallen by two-thirds since 2010. But the firm has hired smart new managers, and on a price-to-cash-flow basis the stock is downright cheap, says Roumell.

*Company is expected to lose money in 2014 and 2015.

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25 Best Stocks for 2015 | Slide 7 of 26

Novo Nordisk

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52-week high: $49.11

52-week low: $34.30

Annual revenues: $14.48 billion

Projected 2015 earnings growth: 14%

Novo Nordisk (NVO), a Danish firm that specializes in diabetes care and hormone replacement therapy, is among the holdings of mutual fund Wasatch World Innovators (WAGTX) and a favorite of columnist James Glassman. It’s a big firm, with a market cap of $119 billion (more than one-third the gross domestic product of the country where it’s based) and an impressive growth record that should continue.

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25 Best Stocks for 2015 | Slide 8 of 26

Lockheed Martin

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52-week high: $192.94

52-week low: $135.39

Annual revenues: $44.6 billion

Projected 2015 earnings growth: 3%

Lockheed Martin (LMT), the giant aerospace and defense company, is the kind of regular yield-provider favored by iShares Select Dividend ETF (DVY) — it’s the exchange-traded fund’s top holding. The stock yields 3.1%, which is more than a 30-year Treasury bond pays. Unlike bond interest payments, dividends aren’t guaranteed. But Lockheed’s disbursements have a history of growing; in fact, the company has boosted its dividend for 12 straight years.

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25 Best Stocks for 2015 | Slide 9 of 26

Fujifilm Holdings

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52-week high: $35.42

52-week low: $26.40

Annual revenues: $20.71 billion

Projected 2015 earnings growth: 10%

Kodak may have cratered, but Japan’s Fujifilm Holdings (FUJIY) is doing very well. The stock has doubled in the past two years, but Feinberg sees it as still well priced, with a top rating from the Value Line Investment Survey for timeliness and a solid balance sheet. The company still makes camera and photographic supplies, but it has built a big business in copiers and flat-panel displays and sells special products to the pharmaceutical and optical industries.

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25 Best Stocks for 2015 | Slide 10 of 26

Restoration Hardware

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52-week high: $94.50

52-week low: $54.61

Annual revenues: $1.67 billion

Projected 2015 earnings growth: 27%

Restoration Hardware (RH), an upscale home-furnishings chain with 87 stores and a strong catalog and Internet business, is the top holding of T. Rowe Price New Horizons (PRNHX), which has been picking hot growth stocks since 1960. In the quarter that ended August 2, sales rose 14% over the same period the year before. More important, as the housing market recovers, Restoration Hardware should benefit from strong pent-up demand for new couches, dining room tables and the like.

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25 Best Stocks for 2015 | Slide 11 of 26

Twitter

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52-week high: $74.73

52-week low: $29.51

Annual revenues: $1.17 billion

Projected 2015 earnings growth: 240%

Twitter (TWTR) is a favorite of our columnist James K. Glassman, despite what he considers its current mismanagement. With “a fabulously simple idea for communicating,” 284 million active users per month and revenues that are doubling every year, it will eventually find a way to turn the idea into a lot of money, he says.

SEE OUR STOCK PICKS FOR 2016: 26 Best Stocks for 2016

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25 Best Stocks for 2015 | Slide 12 of 26

Abbott Laboratories

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52-week high: $44.77

52-week low: $35.65

Annual revenues: $22.16 billion

Projected 2015 earnings growth: 0.4%

Drug and medical-device maker Abbott Laboratories (ABT) is focusing on high-growth areas. Last July, the firm said it would sell part of its overseas generic-drug business to Mylan for $5.3 billion. The deal, slated to close in 2015, will allow Abbott to focus on emerging markets, where sales in the third quarter of 2014 rose by double-digit percentages from the same period in 2013 and helped boost overall profits by 13%. “Abbott will have a higher growth profile,” says Mark Freeman, comanager of the Westwood Income Opportunity Fund (WWIAX).

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25 Best Stocks for 2015 | Slide 13 of 26

Gilead Sciences

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52-week high: $116.83

52-week low: $63.50

Annual revenues: $20.70 billion

Projected 2015 earnings growth: 25%

The case for large biotech companies has never been so compelling, says Matt Peron, head of global stock investing at Northern Trust. Although the industry is churning out many new drugs with long patent lives, some of the stocks remain attractively priced. Gilead Sciences (GILD) is a leading example. Gilead won approval from U.S. regulators in October to sell Harvoni, which could become a blockbuster hepatitis C drug. Gilead also has treatments for HIV. Analysts say profits could increase by 25% in 2015, yet the stock trades for just 11 times estimated earnings.

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25 Best Stocks for 2015 | Slide 14 of 26

American Express

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52-week high: $96.24

52-week low: $78.41

Annual revenues: $31.51 billion

Projected 2015 earnings growth: 9%

Unlike Visa and MasterCard, which pride themselves on wide acceptance of their credit cards (Visa’s slogan is “Everywhere you want to be”), American Express (AXP) is known for a more limited reach. But the company is trying to change that. In 2014, Amex launched OptBlue, which allows third-party processors to manage card transactions for small retailers. Execs believe the number of mom-and-pop stores newly accepting Amex could rise by 50% annually for several years. That, plus an improving U.S. economy, could get more consumers reaching for their Amex cards.

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25 Best Stocks for 2015 | Slide 15 of 26

Macy’s

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52-week high: $64.94

52-week low: $50.05

Annual revenues: $27.94 billion

Projected 2015 earnings growth: 12%

Fewer people may be going to malls, but Macy’s (M) has taken key steps to customize merchandise and attract shoppers. For example, consumers can check online to see if an item is in a nearby store. “Macy’s understands who its customer is,” says Eric Heyman, comanager of Olstein Strategic Opportunities Fund (OFSCX). If an improving economy boosts consumer spending, Macy’s will be ready. Among other things, Macy’s, which also owns the Bloomingdale’s chain, has started testing same-day delivery from stores. Analysts see earnings rising 13% in the January 2016 fiscal year.

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25 Best Stocks for 2015 | Slide 16 of 26

Apple

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52-week high: $118.77

52-week low: $70.51

Annual revenues: $182.80 billion

Projected 2015 earnings growth: 20%

In 2014, Apple (AAPL) proved it could continue to roll out coveted products. Michael Walkley, an analyst at Canaccord Genuity, says he expects a "record upgrade cycle" for the new iPhone 6 and iPhone 6 Plus. In the quarter that ended in September, during which the latest iPhone models were released, Apple saw its strongest revenue growth rate in seven quarters. Its new mobile-payment system, Apple Pay, faces competition, but adoption by retailers is growing. And a high-tech wristwatch, Apple Watch, should start shipping in early 2015.

SEE ALSO: 5 Stocks to Sell in 2016

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25 Best Stocks for 2015 | Slide 17 of 26

Precision Castparts

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52-week high: $275.09

52-week low: $215.09

Annual revenues: $9.98 billion

Projected 2015 earnings growth: 15%

A boom in the aerospace industry is boosting Precision Castparts (PCP). The firm makes complex molds and other components used to build jet engines. For three of the past four quarters (most recently the July–September period), the company has fallen short of earnings forecasts as clients used up inventory. As a result, the stock has dropped 13% over the past year. But Stephen Levenson, an analyst at investment bank Stifel, says the de-stocking should end in early 2015. Meanwhile, production of the high-tech Airbus A350 XWB and Boeing 787 Dreamliner will boost profits.

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25 Best Stocks for 2015 | Slide 18 of 26

Charles Schwab

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52-week high: $31.00

52-week low: $23.35

Annual revenues: $5.90 billion

Projected 2015 earnings growth: 20%

Low interest rates have pressured profits at Charles Schwab (SCHW), which is waiving fees to prevent clients from suffering losses in money market funds. But the broker is making up for it with volume. According to a report by the William Blair firm, Schwab was on track to pull in more than $100 billion in net new assets for the third straight year in 2014. “Schwab is an asset-gathering machine,” says Pin Oak Equity Fund (POGSX) manager Mark Oelschlager. Schwab plans to jump on the “robo adviser” bandwagon in 2015, offering automated portfolios to clients with low balances.

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25 Best Stocks for 2015 | Slide 19 of 26

Stanley Black & Decker

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52-week high: $96.55

52-week low: $75.00

Annual revenues: $11.34 billion

Projected 2015 earnings growth: 11%

Power-tool maker Stanley Black & Decker (SWK) is benefiting from a housing rebound. In the third quarter, sales in Stanley’s do-it-yourself segment rose 9%. Weak performance at a European subsidiary has hurt overall results, but Ron Sloan, senior manager of the Invesco Charter Fund (CHTRX), says Stanley is taking steps to right the business. That will help the company’s profit margins, which Sloan says could climb by as much as three percentage points in 2015. “Companies already operating at high margins won’t have that opportunity,” he says.

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25 Best Stocks for 2015 | Slide 20 of 26

Bank of America

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52-week high: $18.03

52-week low: $14.37

Annual revenues: $84.62 billion

Projected 2015 earnings growth: 224%

Bank of America (BAC), with a 23% return over the past year, is one of two stocks columnist Andrew Feinberg is recommending for a second year. BofA has made great progress in cutting costs, and after paying $17 billion to settle legal claims for shoddy mortgage securities, litigation risk is minimal. Although the stench from the 2008 acquisition of Countrywide lingers, many investors ignore the bank’s strength. BofA needs interest rates to rise to realize its full potential (when rates rise, banks typically boost lending charges faster than rates on deposits). By 2016, Feinberg sees it trading at $25 to $30.

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25 Best Stocks for 2015 | Slide 21 of 26

Howard Hughes

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52-week high: $160.62

52-week low: $107.82

Annual revenues: $567 million

Projected 2015 earnings growth: Not meaningful*

Also back for an encore is Howard Hughes Corp. (HHC), which gained 26% over the past year. The company owns valuable land in Honolulu, Houston, Las Vegas and New York City. Its business? It creates value by contributing the land to a joint venture in which the partner builds homes, condos, offices and shopping centers, or by developing land on its own. Feinberg thinks the shares could be worth $250 by the end of 2015.

*Company is expected to lose money in 2014.

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25 Best Stocks for 2015 | Slide 22 of 26

Citigroup

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52-week high: $55.28

52-week low: $45.18

Annual revenues: $69.94 billion

Projected 2015 earnings growth: 60%

Citigroup (C) is the only major U.S. bank that trades at a discount to tangible book value (assets, excluding intangible assets, minus liabilities), says SNL Financial, and the reason seems clear. Investors are terrified of Citi Holdings, the entity set up in 2009 to hold toxic loans the bank couldn’t unload. But now that most of the loans are gone, the unit accounts for only 5% of the bank’s assets. But that still amounts to $100 billion and remains a legitimate concern, given that Citi has a market value of $162 billion. Citi Holdings will be gone someday, and when it is, the stock is likely to be much higher. Analyst Mike Mayo, of CLSA, a Hong Kong–based brokerage, thinks Citi will reach $107 in four years.

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25 Best Stocks for 2015 | Slide 23 of 26

MeadWestvaco

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52-week high: $45.12

52-week low: $33.59

Annual revenues: $5.57 billion

Projected 2015 earnings growth: 20%

MeadWestvaco (MWV) owns raw land and packaging and specialty chemical assets that are worth 50% more than the stock’s market value of $8 billion. Spinning off the specialty-chemicals business alone could fetch $3.5 billion, says Jeff Smith, head of Starboard Value, a hedge fund that owns 5.6% of MeadWestvaco. To Smith, this is a classic case of entrenched management not doing enough for shareholders. MeadWestvaco is already a good business, but jettisoning one or two of its units would make it a much more valuable one.

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25 Best Stocks for 2015 | Slide 24 of 26

SunEdison

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52-week high: $24.35

52-week low: $11.11

Annual revenues: $2.43 billion

Projected 2015 earnings growth: Not meaningful*

Solar power is now competitive, without subsidies, with other forms of energy in much of the world. Moreover, technological advances should drive down solar costs by another 20% by 2017. SunEdison (SUNE), which designs and installs solar systems, sells its solar-power systems to its 64%-owned subsidiary TerraForm Power. This arrangement confuses some investors and has held down the stock. Hedge fund manager David Einhorn believes the company is worth $32 per share today.

*Company is expected to lose money in 2014 and 2015.

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25 Best Stocks for 2015 | Slide 25 of 26

Horsehead Holding

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52-week high: $21.02

52-week low: $13.88

Annual revenues: $451 million

Projected 2015 earnings growth: Not meaningful*

Shares of zinc producer Horsehead Holding (ZINC) fell after news broke about problems at its new mine in Mooresboro, N.C. The stock, a favorite of Andrew Feinberg, has also been pressured by fears about slowing global growth. But zinc prices will get a boost in 2015 and 2016 because of the planned closure of two big mines. Once Horsehead works out the kinks at its new facility, it should generate additional cash flow of some $90 million a year, a huge amount for a company with a market value of $797 million.

*Company is expected to lose money in 2014 and 2015.

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25 Best Stocks for 2015 | Slide 26 of 26

Boeing

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52-week high: $144.57

52-week low: $116.32

Annual revenues: $90.08 billion

Projected 2015 earnings growth: 3%

Orders for advanced commercial aircraft from Boeing (BA), such as the Dreamliner 787, continue to soar. As of the third quarter, the giant aircraft maker had a backlog of 5,500 orders valued at a record $430 billion. The stock has suffered lately, though, because investors have been disappointed with Boeing’s free cash flow (cash profits that are left after capital expenditures). Higher-than-expected costs to build the 787 are partly to blame, says investment bank Credit Suisse. Still, earnings at Boeing jumped 19% in the third quarter compared with the same period a year ago, and over the past 12 months the company used just about one-third of its profits to fund its dividends. That leaves plenty of room to raise the distribution in 2015. Analysts at Argus Research project a 10% hike next year.

SEE OUR NEW STOCK PICKS FOR 2017: 27 Best Stocks for 2017

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