The Best Stocks for 2019 from the Best Analysts on Wall Street
2018 almost killed the decade-long bull market but that doesn’t mean you can’t still produce double-digit returns.
Producing higher investment returns during the bull market just meant staying invested, buying into the market fund and holding on for the ride. As the rest of the market wobbles though, 2019 is the year that stock-picking will come back as the only way to earn those returns.
In this video, I’m revealing the top stock picks for 2019 from some of the highest ranked analysts on Wall Street. These analysts were ranked from a list of over 5,000 and I’ll show you their best three stock trades.
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Picking Stocks in 2019
So 2018 almost ended in a bear market crash and 2019 looks like we’re in for that same volatility in stocks. The market clawed back a lot of its losses but we’ve still got Fed rate hikes, the trade war and a number of hurdles to deal with.
When it gets like this, I like to get back to my equity analyst background for stocks that can produce solid returns regardless of what the market does.
Since I’m not spending 80 hours a week analyzing stocks for fund managers anymore, I decided to take a look at some of the top picks by other analysts. So I reached out to my friends at TipRanks for a partnership, to put together this video for some of the best stock picks of 2019.
The TipRanks platform uses an algorithm to compile and analyze the deepest dataset of analyst recommendations on Wall Street. The program ranks analysts on their success rate, the average return on each stock and the reliability of their ranking.
I’ve used TipRanks through an investing platform and love the analyst research along with other features like hedge fund and insider trading signals so I was excited to see their report.
They put together data from over 5,000 analysts to find the top 10 stock pickers on Wall Street, one that produced an average return of 36% last year. From each of these ten analysts, they drew out the top stock pick for 2019 from which I’m going to share my favorite three picks.
I’ll be posting a link at the bottom of the article to download the entire report for free, that’s all 10 top stocks for 2019, but let’s get to those top three on my list first. Understand that the fundamentals can change quickly on any of these so make sure you keep updated with the analysts’ recommendations.
The Top Stock Pick for 2019
First on our list is Canaccord Genuity’s Richard Davis, the top analyst of the year out of the 5,100 surveyed for the report. Richard has an unheard of 78% success rate in his 2018 stock picks with a 36% average return and he’s recommending cloud identity provider Okta, ticker OKTA in 2019.
Okta is a IT security company that helps businesses secure employee access to applications and has an all-star base of customers including Major League Baseball, jetBlue and credit bureau Experian. Okta helps companies protect themselves from some of the data hacks we hear so much about so you can imagine the potential in this company.
Hedge funds have actually trimmed their position in Okta over the last quarter but that hasn’t stopped the shares from rallying. The company reported its first quarter of positive free cash flow last quarter and a 58% year-over-year improvement in operating income.
Sales have grown at a 59% annualized pace for two and a half years with gross profitability consistent around 73%. That’s important because it shows the company can put on growth and keep costs stable. You know, I see a lot of these growth names put on double-digit sales growth but costs just balloon so it eats up all the profits.
Cloud spending by businesses is expected to be a $500 billion market by 2020 according to IDC Worldwide and Verizon found that 81% of breaches are caused by stolen or weak credentials. Securing those connections is exactly what Okta does best and it’s a leader in the space. Now the stock isn’t cheap but no stock with topline growth of 59% annualized is.
Top Healthcare Stock of 2019
Next on our top stock picks for 2019 is Jeffries’ healthcare analyst David Windley with a 73% success rate and a 19% average return on picks last year.
David has a $345 price target on shares of Anthem, a 30% upside to the current trade. Counting over 40 million members, Anthem is one of the largest managed-care insurers in the country and the largest in the Blue Cross/Blue Shield Association.
The December 14th ruling by a Texas judge on the constitutionality of the Affordable Care Act sent health insurers tumbling but there’s still a lot of reasons to be bullish on the industry. The Supreme Court has already made favorable rulings on the ACA and even those that want to repeal it aren’t talking about the kind of changes that would dramatically weaken insurers.
Demographics are a huge tailwind for healthcare stocks with an aging population and the new Democratic majority in the House of Representatives has set its sights on expanding access. Anthem should benefit from increasing adoption of managed care by state Medicaid programs and the popularity of the Medicare Advantage program.
Shares are trading for 18-times trailing earnings which are expected to grow 17% to $17.22 per share over the next four quarters. Investors are extremely positive on this stock, well above the sector average according to TipRanks, and hedge funds have increased their holdings by over $103,000 over the last quarter.
A Top Tech Stock of 2019
My third favorite stock pick here is from Oppenheimer’s Glenn Greene. Glenn is only ranked eight on the list of analysts but has an excellent success rate of 77% with an 18% average return and I love his call on WorldPay.
WorldPay was created out of the $10 billion merger between Vantiv and WorldPay Group last year to become a leader in payment processing to business and financial institutions. Greene has a $108 price target on the shares, nearly 29% above the current trade.
We’ve seen electronic payment processing explode over the last decade. It’s funny, just before putting this video together, I saw a post from a friend on Facebook asking how many had completely ditched paying by cash. Worldpay processes 42 billion transactions and $1.6 trillion in payments every year as well as 3.5 billion in credit and debit card transactions.
The merger is expected to result in $200 million in cost reductions through 2020 and resulted in a company commanding 23% of the market. That’s a solid advantage in an industry that rewards size with lower costs and stronger reach. WorldPay is generating over $600 million in free cash flow annually and bought back $1.2 billion of its own stock last year. That amounts to about a 4.6% yield that drove earnings per share growth.
Shares trade for 21.7-times earnings which are expected to grow 14% over the next year to $4.40 per share. This is another one with very positive sentiment by investors and buying by big money hedge funds exploded by 1.3 million shares last quarter.
That’s just three of the ten top stock picks in the free report by TipRanks. The platform is really a breakthrough in real-time recommendations, something you don’t see on other sites. You can download the full report here and see all ten top stock picks for 2019. The research is a great start to finding the stocks that will boost your portfolio this year.