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All Contents © 2018The Kiplinger Washington Editors
By Vince Martin
| January 23, 2018
Broad equity markets are at an all-time high, and many individual stocks are at similar levels. A bull market heading into its tenth year has produced quite a number of all-time high stocks to buy.
But not every stock is at the same historical levels as the market as a whole. Quite a few still have a bit of catching up to do. But if 2018 looks like 2017 — and early indications are good — even more stocks should set records this year.
Each of these eight stocks is set to reach an all-time high this year, and for many of them, shareholders have been waiting for years to return to past peaks. Fortunately for them, they likely won’t have wait too much longer.
Whether it’s revenue growth, margin expansion or simply cheap valuations, each of these all-time high stocks have catalysts to move shares to previously unseen levels. And in all eight cases, there’s enough to believe that the rallies could continue into previously uncharted territory.
Prices and data are from the original InvestorPlace story published on Jan. 12. Click on ticker-symbol links in each slide for current prices and more.
This slide show is from InvestorPlace, not the Kiplinger editorial staff.
All-time high: $79.72, Aug. 1, 2011
It’s been a seven and a half year roller-coaster for SodaStream International (SODA). SODA was a hot IPO back in late 2010; it tripled within less than a year from its first-day of close of $24. After a pullback, it would near all-time highs again two years later. In less than three years, SODA was at an all-time low near $15, having lost almost 80% of its value.
But a turnaround has taken hold. SodaStream has found willing customers in Western Europe, which has driven 61% of revenue so far this year. Operating margins have tripled since 2015, and SODA has risen nearly 400% from those lows.
Another 10% gain will get SODA above $80 for the first time, and that seems like a smart bet at the moment. SodaStream has crushed earnings estimates for eight straight quarters, with fourth-quarter earnings at the end of this month offering another opportunity.
Penetration and revenue in the U.S. remain rather low, but increasing environmental awareness and lower sales of traditional soft drinks from The Coca-Cola Co (KO) and PepsiCo (PEP) should benefit sales going forward.
All told, the impressive turnaround doesn’t seem likely to come an end anytime soon. If that’s the case, the same will be true for the bull run in SODA stock.
All-time high: $39.00, Feb. 22, 2005
Golden Entertainment (GDEN) is a very different company than it was when it traded at $39 back in early 2005. Back then, the company was known as Lakes Entertainment, and its focus was on managing tribal casinos across the country.
But Lakes’ tribal business faded, with the financial crisis one factor, and by 2013 the company had just a single commercial property in Maryland and a lot of cash. In 2015, the company merged with then-private Golden Gaming, an operator of taverns in the Las Vegas area.
And since then, the stock has taken off. Given an already huge run, there’s a case that expecting $39 — another 21% upside — might be too aggressive, at least this year. GDEN already has nearly tripled since the beginning of 2017. Valuations for both GDEN and the gaming sector as a whole are starting to look stretched.
Still, there’s room for more upside. The Las Vegas economy continues to be strong. The company has added slot routes in Montana, and manages similar routes in Nevada.
So-called VGT expansion in Illinois and Pennsylvania offers new opportunities for that business. And further M&A is possible. With the leverage on the balance sheet, another 20% gain isn’t that out of line as long as performance continues to be strong. That seems a good bet to take.
All-time high: $26.21, Feb. 6, 2006
Simply from the name, it’s probably not a surprise that Builders FirstSource (BLDR) hit an all-time high in 2006. The peak of the housing bubble was a boon for the supplier of lumber goods and other building products.
But the ensuing bust took its toll on BLDR — again, unsurprisingly. As housing has recovered, BLDR has as well and it now needs another 17% gain to retrace that 2006 peak.
There’s reason to think BLDR can get there. U.S. housing continues to strengthen. The 2015 merger with ProBuild added scale, and there’s room for further consolidation. Profit growth has improved the balance sheet, which opens up the possibility of refinancing debt, some of which carries a particularly onerous 10.75% interest rate.
At the end of the day, BLDR is a leveraged play on the U.S. housing recovery. And as that housing recovery continues, BLDR should continue to benefit.
All-time high: $58.67, July 20, 2005
Toll Brothers (TOL) hit its peak a little earlier than did BLDR — but the broad outlines of the story are similar. Toll Brothers is a homebuilder, and it, too, faced a steep drop during the housing crisis.
Toll Brothers’ recovery has been a bit slower, but the company has hit its stride, and so has its stock. TOL has doubled in the past two years. Another 13% will get the company to a long-awaited all-time high back at, or above, those 2005 levels.
That type of gain seems achievable in 2018. TOL trades at just over 13x FY18 analyst EPS estimates, an extremely reasonable valuation even for a cyclical stock. Tax reform should benefit the company directly, as it previously expected its FY18 tax rate to be 37%, and may provide a catalyst for housing demand as well. The company has aggressively repurchased stock and debt, which should help earnings growth as well.
Obviously, housing needs to cooperate, and rising interest rates (which in turn drive up mortgage rates) are a concern. But even if the current setup continues, TOL should join BLDR in reaching a new all-time high this year.
All-time high: $109.00, Dec. 29, 2014
Tiffany & Co. (TIF) seems likely to reach its all-time high this month, let alone this year. The stock has risen over 11% so far in January, and needs just 1.4% more to top its late 2014 peak.
How high TIF can go from here is somewhat in question, however. The stock trades at almost 27x FY18 analyst estimates, a premium multiple. Yet Tiffany’s business actually has been rather choppy of late.
Revenue growth has decelerated for the better part of a decade, with results in Europe particularly uneven. There are broader concerns about the company’s ability to reach millennial consumers as they age into the company’s typical demographic range.
Still, Tiffany at least has shown enough this year — and enough promise going forward — to ignite the recent rally. It’s a timeless, high-end brand – which usually merits a premium from the market. That should be enough to get the stock a new all-time high.
After that, the road might get a little bumpier unless earnings and revenue growth accelerates.
All-time high: $85.00, Nov. 29, 1996 (split-adjusted)
Talk about a long wait. Aspen Technology (AZPN) is at a 21-year high, but still hasn’t quite recaptured its 1996 peak.
But the maker of software for manufacturing facilities should get there at some point this year. AZPN already has gained nearly 12% YTD, with Q4 earnings two weeks from now another potential catalyst.
Valuation isn’t perfect, with AZPN trading at a rich 33x forward EPS. But cash flow numbers are a bit better. Meanwhile, both the energy and chemical end markets look to be strengthening, which means growth could accelerate as 2018 moves on.
It looks like AZPN’s rally probably has one more leg in it — and that should be enough.
All-time high: $77.83, Feb. 25, 2015
VF Corp (VFC) might be a bit of a stretch here since the stock trades just 1% off its all-time high reached nearly three years ago. The stock very well may have set a new high by the time you read this article.
But it’s worth putting on the list since that all-time high is coming this year, and possibly next year as well. The maker of Wrangler jeans, North Face outdoor clothing, and Timberland boots, among many other brands, is one of the more attractive plays in the market.
I called it one of 10 stocks to buy for the next decade back in October, and just this week Lawrence Meyers highlighted VFC as one of the 3 best Dividend Aristocrats for retirement.
With retail sales strengthening, VFC should be a solid short-term play as well. The acquisition of Dickies workwear will contribute to 2018 sales and earnings, adding to potential organic growth.
Whenever VFC does hit that all-time high, it seems likely that shareholders won’t have to wait another three years for the next one.
All-time high: $20.60, Oct. 15, 2015
The highest level Pure Storage (PSTG) hit came barely a week after its October 2015 IPO. That offering came amidst falling storage prices and concerns about the shift to ‘cloud’ offering.
Former rival Violin Memory was plunging at the same time, and would file for bankruptcy in late 2016; PSTG itself would lose half its value over the next 16 months.
But the stock recovered before year-end weakness, and there’s room to see more gains in 2018. The company has a chance to turn profitable this year as torrid revenue growth continues. Pure Storage’s FlashBlade product is an industry leader, and the Street is behind the stock.
Indeed, the average analyst target price is $20.67 — seven cents above those October 2015 highs. If those analysts are right, PSTG will reach a new peak in 2018.
This article is from Vince Martin of InvestorPlace. As of this writing, Martin did not personally hold a position in any of the aforementioned securities.
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