It's hard to pick winners in such a long-running bull market, but we think investors who bet on an improving economy and venture overseas will prosper.
We see more gains ahead for these five stocks, in 2017 and beyond.
Data is as of April 30, 2017. Click on symbol links in each slide for current share prices and more.
Bank of America
It took most of a decade for Bank of America (symbol BAC, $23) to put the financial crisis behind it. Now, streamlined operations and implementation of more-conservative lending standards are paying off. In 2016, BofA borrowers had an average FICO credit score of 750, some 50 points higher than the average American’s. Revenues from trading, investment banking and credit cards are strong. Federal Reserve interest-rate hikes should boost interest income by 7% this year, says research firm CFRA. Brokerage firm Credit Suisse sees profits rising by 20% this year and 17% in 2018.
Media conglomerate CBS (CBS, $67) has spun off its radio and outdoor ad businesses to focus on faster-growing and more-profitable lines, including global TV syndication, licensing fees from pay-TV operators and fees from stations for the rights to CBS programming. The company has made digital inroads with subscription access to NFL games and content—including The Good Fight and the upcoming Star Trek: Discovery—that is available only online. Midterm elections will boost ad sales in 2018. Brokerage UBS sees earnings growth of 9% this year and 15% in 2018.
- Cummins (CMI, $151) makes diesel and natural gas engines, power-generation systems, and engine-related components. The company is benefiting from increasing demand in China, a recovery in the energy sector, and favorable prospects for infrastructure spending and emissions controls here and abroad. CFRA sees Cummins’s earnings rising by 18% this year and 13% in 2018 and calls the stock a “strong buy.” The shares yield 2.7%.
Over in Europe
European bargains include Germany’s Bayer (BAYRY, $124), a drug and crop-science company, and French pharmaceutical firm Sanofi (SNY, $47). Worries about the prospects for Sanofi’s diabetes franchise are pressuring the stock, but the company’s reach in emerging markets is promising, says Vincent Montemaggiore, manager of Fidelity Overseas Fund. He also says that Bayer’s pending $66 billion acquisition of Monsanto should lead to steadier earnings, helping to offset the perennial problem of patent expirations in Bayer’s drug business.
Anne Kates Smith brings Wall Street to Main Street, with decades of experience covering investments and personal finance for real people trying to navigate fast-changing markets, preserve financial security or plan for the future. She oversees the magazine's investing coverage, authors Kiplinger’s biannual stock-market outlooks and writes the "Your Mind and Your Money" column, a take on behavioral finance and how investors can get out of their own way. Smith began her journalism career as a writer and columnist for USA Today. Prior to joining Kiplinger, she was a senior editor at U.S. News & World Report and a contributing columnist for TheStreet. Smith is a graduate of St. John's College in Annapolis, Md., the third-oldest college in America.
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