The 10 best stocks to buy for 2019.
With the market on the verge of a 10-year bull run entering the New Year, investors saw the return of volatility in late 2018 as tariffs, rising interest rates and China took center stage. The best stocks to buy for 2019 will need to be strong companies with solid underlying fundamentals, poised to grow regardless of what the future brings. A diverse array of growth and value stocks, ranging from small- to mega-cap names, all 10 of the best stocks to buy for 2019 look like attractive opportunities for the long-term investor. Here's a rundown of the top selections for the coming year, and what makes each of them special.
Starbucks Corporation (ticker: SBUX)
While the running gag with Starbucks is there's "one on every corner," that punchline still rings hollow in some parts of the globe. The company's biggest growth opportunity is in the China/Asia Pacific region, where it opened 278 new stores between July and September alone. Hedge fund titan Bill Ackman certainly believes SBUX is one of the best stocks to buy for 2019, having bet over $900 million on shares mere months ago. Even after a 10 percent rally on impressive results, shares trade for 20 times earnings. China sales grew 41 percent last quarter; even if overall growth is modest, Starbucks is a great company at a fair price.
NXP Semiconductors (NXPI)
For years, NXPI was more or less dead money. No longer. After the Chinese government failed to approve Qualcomm's (QCOM) purchase of the large-cap chipmaker, known for its leadership in the automotive and internet of things markets, shareholders got clobbered. NXPI stock plunged from $125 to lows around $69 in late October. So what makes NXP Semiconductors one of the best stocks to buy for 2019? Well, it appears to have found its bottom, with shares surging after better-than-expected third-quarter earnings. Still miles away from prices Qualcomm would've paid, NXPI trades for 10 times forward earnings and is aggressively buying back stock with the $2 billion breakup penalty QCOM paid.
Bold long-term investors should consider Facebook's 2018 data/PR crisis a great entry opportunity: the time to buy, after all, is when there's proverbial blood in the streets. With 2.2 billion monthly active users, FB's network is impossible for competitors to replicate without Facebook seeing the threat a mile away. Look no further than Facebook-owned Instagram's ruthless handling of Snapchat (SNAP), whose popular ephemeral messaging service was swiftly mimicked, destroying the young company's momentum. Facebook's plans to enter online dating and the potential to charge for Facebook Marketplace transactions are just two of many potential bullish catalysts that underline why FB is one of the best stocks to buy for 2019.
Stitch Fix (SFIX)
This innovative young company is a brilliant hybrid of megatrends in e-commerce, bespoke services, subscriptions, big data and the stay-at-home economy. An online service for those too busy or apathetic to routinely shop for clothes, Stitch Fix offers personal, virtual stylists to send you regular clothing installments based on your preferences. Whatever you don't want you send back. Be forewarned that SFIX shares have been volatile since its 2017 IPO, but analysts foresee 20 percent growth for the next few years, and its September expansion into big-and-tall clothing boosts its potential. Like Netflix (NFLX), Stitch Fix harnesses user data to roll out new products under its own brand.
Johnson & Johnson (JNJ)
One of the best blue-chip stocks of the last century, Johnson & Johnson is built to last through whatever economic situation you can throw at it. Three multibillion-dollar divisions -- pharmaceuticals, consumer goods and medical devices -- give JNJ broad diversification and, combined, make the stock an absolute cash cow. A major reason JNJ remains one of the best stocks to buy for 2019 (and beyond) is its ability to weather the business cycle. Consumers don't stop skinning their knees (Band-Aid), getting headaches (Tylenol), upsetting their stomachs (Imodium) or wanting to look their best (Neutrogena) when the economy slumps, and patents protect much of its roughly $40 billion pharma business.
CEO Warren Buffett and vice chairman Charlie Munger have toiled for decades to create a remarkable, steady business like few others in existence. BRK recently bought back nearly $1 billion in stock, signaling Buffett believes shares trade below intrinsic value. The owner of timeless, entrenched companies in insurance, railroads, utilities and aerospace, these two old sages have built Berkshire into a company that can practically run on cruise control for the next century. While it's regrettable Buffett and Munger can't run the company forever, Berkshire's famous liquidity, steady hand and impeccable reputation should allow it to take advantage of panics and acquisition opportunities for years to come.
Centene Corporation (CNC)
A beneficiary of the 2018 midterm elections, Centene is one of just a handful of publicly traded health insurers. The $29 billion St. Louis, Missouri-based CNC has savvily focused its business on a niche area: Medicaid. Because of the Affordable Care Act's Medicaid expansion requirements, CNC is enjoying steadily growing membership -- up 17 percent last quarter -- as well as revenue (36 percent) and earnings per share (33 percent). With a split Congress almost certainly unable to repeal the ACA, and Obamacare plans on sale in four more states in 2019, CNC may be the fastest-growing public health insurer, a valuable superlative in a consolidating industry.
Apple remains one of the best stocks to buy for 2019 and beyond, even after September earnings sent shares plunging. Apple's earnings themselves weren't bad at all in fact, beating both top- and bottom-line expectations. Still, a jittery market reading too much into guidance and flattening iPhone sales ultimately overreacted. AAPL may not be the growth dynamo it once was, but its ability to push higher prices on consumers shows no sign of slowing down. At just 17 times earnings, with a modest dividend, growing services revenue (from App Store, iTunes, iCloud, etc.) helping boost margins and Buffett as a shareholder, AAPL is about as safe as stocks get.
Sprouts Farmers Market (SFM)
A lovely combination of value, growth, and predictability, Sprouts Farmers Market is a grocery chain focused on healthy, fresh and organic food. This $3.5 billion company is on the right side of a secular trend toward more conscious consumption, with 315 stores (and growing) in 19 states through late 2018. In an industry of typically unimpressive growth, SFM practically doubled revenues from $2.44 billion to $4.67 billion between 2013 and 2017. Private label sales, a great source of margin expansion for grocers, grew from 7 percent to 13 percent of total sales between 2013 and 2018. Lastly, home delivery in over 200 stores shows it's hip to tech's incessant disruption.
"Money is made by discounting the obvious and betting on the unexpected." This phrase may best encapsulate the logic behind DWDP's inclusion among 2019's best stocks to buy. One of the "dogs of the Dow" through late 2018, DWDP is a somewhat contrarian pick, premised mainly on the fact that when the company spins into three separate businesses (by mid-2019, according to management), it should unlock value for shareholders of the original DWDP. The resultant standalone companies will be: Dow (materials science), DuPont (specialty products) and Corveta (agricultural seeds, weed killers). DWDP is targeting synergies of $3.6 billion and is repurchasing $3 billion of stock before the first company spins.
John Divine is a senior investing reporter for U.S. News & World Report, where he covers financial markets and the economy, with a focus on individual stock analysis. He has been an investor himself for over 10 years, and has been writing professionally about stocks and investing for the last five years. He previously wrote about the stock market for The Motley Fool and InvestorPlace, and his work has appeared on Yahoo! Finance, MSN Money, and AOL DailyFinance. He graduated from Appalachian State University in 2011 with a bachelor's degree in finance and banking. At Appalachian, he was a member of the Bowden Investment Group, a team of students that ran a real-money portfolio worth over $100,000. You can follow him on Twitter or give him the Tip of the Century at firstname.lastname@example.org.