Making money in stocks amid an uncertain market (see our 2019 outlook) will require careful choices. It will be difficult to top the revenue and earnings growth rates in 2019, for instance, and economic growth is expected to slow. That kind of environment requires investors to be discerning when it comes to their stock picks.
Investors looking for the best stocks to buy for 2019 should start with these 19 companies. These firms, ranging from a money-center bank to a bargain-basement retailer, have solid prospects in 2019. We've also listed five stocks you should consider parting ways with.
Check them out.
52-week low/high: $130.06/$211.70
Market value: $372.5 billion
P/E ratio: 32
Alibaba (BABA) is best-known for running China's most popular online marketplaces. However, like America's Amazon.com, it has expanded into additional busineses, such as electronic payments, cloud computing and media.
Because of worries about the Chinese economy, shares are down more than 30% since June despite the company's sharply rising revenues, presenting what looks like a good buying opportunity. Since its market is largely domestic, it's also unlikely to be affected by trade troubles.
It's the top holding (10% of assets) of Matthews China (MCHFX), a fund that knows the region well.
52-week low/high: $1,121.63/$2,050.50
Market value: $837.3 billion
P/E ratio: 74
Amazon.com (AMZN) started out as an online bookseller, and now it's America's largest e-commerce company that even sells its own generic-brand products. It also boasts other revenue streams, such as its Amazon Web Services cloud offerings, Echo smart speakers and Amazon Prime streaming content.
Amazon also is the top holding of well-known Fidelity Contrafund (FCNTX), helmed by Will Danoff since 1990.
Third-quarter earnings disappointed investors, who marked the stock down in the fall. But CEO Jeff Bezos doesn't care about short-term profits. He wants to grab market share.
Brookfield Asset Management
52-week low/high: $37.22/$45.04
Market value: $41.5 billion
P/E ratio: N/A
Brookfield Asset Management (BAM) is what you buy when you want to invest in something other than stocks and bonds. Brookfield owns a global portfolio of office, apartment and retail properties; it also owns 840 power plants that run on hydroelectricity, wind and other renewable technologies. Its infrastructure division invests in ports and railroads, and its private equity unit offers limited partnership stakes in real estate and energy. Brookfield benefits from large inflows from institutional investors, says Brian Milligan, of Ave Maria Growth Fund (AVEGX). "It has plenty of money to put to work."
52-week low/high: $70.09/$110.81
Market value: $51.8 billion
P/E ratio: 7
Celgene (CELG) has a variety of drugs that fight cancer and autoimmune diseases. Its biggest seller, Revlimid, treats multiple myeloma; analysts at research firm CFRA believe the blockbuster drug can maintain sales growth rates in the teens through 2021. The firm also has a robust pipeline of new drugs, and Celgene bulls base their positive outlook for the stock on new-product launches expected in 2019 and 2020 that should diversify the company's revenues. CFRA analysts rate the stock a "strong buy" and say the market is underestimating the strength of Celgene's lineup.
52-week low/high: $65.14/$85.10
Market value: $40.7 billion
P/E ratio: 15
This IT consulting and services firm isn't the small, meteoric-growth name it once was, but Cognizant Technology (CTSH) still finds ways to steadily boost earnings and revenues. Cognizant is focusing on its lucrative digital business, which helps clients with analytics, cloud computing and cybersecurity. The firm's digital revenue logged a growth rate of more than 20% in the third quarter of 2018 compared with the same period a year earlier, but it still represents just 30% of Cognizant's overall sales. That implies a "long runway of growth ahead" for Cognizant, according to CFRA, which rates the stock a "strong buy."
SEE ALSO: 10 Tech Stocks That Pay You to Own Them
Computer Programs and Systems
52-week low/high: $24.57/$34.65
Market value: $0.4 billion
P/E ratio: 18
Alabama-based Computer Programs and Systems (CPSI) is a provider of software for community hospitals. For instance, it offers an electronic health records (EHR) product that helps medical providers keep accurate records while also remaining compliant with changing industry regulations.
A micro cap with a market value of just $373 million, the stock is in a niche with considerable potential. The firm is a top holding of Seven Canyons Advisors (WAGTX), whose lead portfolio manager, Josh Stewart, searches for mid- and small-cap technology stocks.
52-week low/high: $30.65/$84.53
Market value: $3.7 billion
P/E ratio: N/A
Coupa Software (COUP) - which connects businesses with suppliers and manages procurement, billing and budgeting - is a choice for adventurous investors, and profits are only on the verge of showing up. The company says revenues for the 12 months ending Jan. 31, 2019, will be up about one-third over 2018.
But the firm is a "buy" recommendation from Terry Tillman, a software analyst at SunTrust Robinson Humphrey. The stock also received a price-target hike, from $72 to $80 per share, from Loop Capital analyst Joseph Vafi, who has COUP at "buy." He likes the company's "modest acceleration to subscription revenue growth, combined with solid leverage in sales and marketing spend."
52-week low/high: $51.32/$77.08
Market value: $134.4 billion
P/E ratio: 12
DowDuPont (DWDP) will split into three in 2019. The agricultural group will break off as Corteva Agriscience, the materials division will be called Dow, and the specialty products businesses will be DuPont. Buy DowDuPont now, and you'll receive shares in all three new firms. That's a good thing: Spin-off shares tend to beat the market over the first two years, with the sum of the parts often adding up to more than the value of the whole.
Even pre-split, the firm has good prospects. Analysts expect 16% profit growth in 2019 for the consolidated firm. The shares trade at just 12 times expected 2019 earnings.
52-week low/high: $162.93/$215.43
Market value: $192.5 billion
P/E ratio: 19
Only a handful of stocks gain the top ratings for timeliness and safety as well as for financial strength from the Value Line Investment Survey. One is Home Depot (HD), the powerhouse home-improvement retailer, whose earnings per share have risen each year since 2009.
Over the next three to five years, Value Line projects that Home Depot's profits will rise 12.5% annualized and the dividend, now $4.12, will roughly double. Wall Street in general is bullish on the stock's prospects, with 24 of the 33 analysts covering it considering it a "buy" or "strong buy."
52-week low/high: $42.55/$55.80
Market value: $20.9 billion
P/E ratio: 26
London-based IHS Markit (INFO), which provides data and analytics to financial, transportation and energy firms, is one of the most respected companies in a burgeoning 21st-century sector. The company boasts 80% of Fortune 500 companies among its more than 50,000 clients.
INFO is a top holding of Artisan Thematic (ARTTX), which seeks to identify multiyear trends based on things such as technology, laws and societal behavior.
SEE ALSO: 6 Ways to Improve Your Yield on Cash
52-week low/high: $42.04/$57.60
Market value: $219.4 billion
P/E ratio: 11
Shares in Intel (INTC), one of the world's largest semiconductor firms, sell for 11 times the average of analysts' estimates for year-ahead earnings, compared with 17 times earnings for the average tech-sector stock. Intel is little changed over the past year, despite posting record earnings in the third quarter - up 47% from the same period 12 months ago.
Although growth in PC chips is sluggish, Intel's other chips are picking up the slack. For instance, the firm's chips and associated hardware help power the fast-growing Internet of Things, and Intel's IoT sales reached record levels in the third quarter.
Johnson & Johnson
52-week low/high: $118.62/$148.75
Market value: $389.5 billion
P/E ratio: 18.3
Johnson & Johnson (JNJ) is the company behind Band-Aid brand bandages, Tylenol, Neutrogena, Listerine and more. They're not part of a high-growth market, but they're perennially marketable.
Most investors may not realize just how big of a pharmaceutical company J&J is, too. Johnson & Johnson sold $1.4 billion worth of multi-purpose intestinal drug Remicade last year, while its psoriasis therapy Stelara added $1.3 billion to the top line. The company has built-in diversity.
Drug sales are a double-edged sword. Trouble can begin once patents expire on key pharmaceuticals, such as J&J's oncology drug Zytiga. The door has been opened to a wave of generic competition that has been in the works for a while. The therapy generated $960 million worth of sales for J&J last quarter alone.
RBC Capital Markets analyst Glenn Novarro is still bullish, however. He wrote after the ruling, "While this is a negative outcome, it removes a key overhang and improves visibility on J&J's 2019 outlook ... Our analysis indicates that J&J's pharmaceutical segment can achieve mid single-digit sales growth next year."
Jones Lang Lasalle
52-week low/high: $127.02/$178.75
Market value: $6.4 billion
P/E ratio: 13
Jones Lang Lasalle (JLL), a global property management company, has suffered due to worries that the commercial real estate market may be weakening. Shares plunged from $172 in July to $127 in October, before rebounding some, making them attractive to value mavens.
52-week low/high: $96.85/$119.33
Market value: $369.5 billion
P/E ratio: 11
Higher interest rates, lower tax rates, friendlier banking regulations and a strong U.S. economy have JPMorgan Chase (JPM) "firing on all cylinders," says Morningstar's Eric Compton.
Nearly half of all U.S. households do business with Chase. It's the country's biggest credit card issuer, top-ranked in global investment-banking fees and a leader in stock and bond trading. JPMorgan is "setting the pace and raising the bar," says Credit Suisse's Susan Roth Katzke.
Expect more of the same in 2019, given a robust investment-banking pipeline and decent loan growth. JPM shares yield 2.88%.
SEE ALSO: Don't Give Up on Financial Stocks
The New York Times Co.
52-week low/high: $19.85/$28.72
Market value: $4.5 billion
P/E ratio: 30
According to President Trump, the New York Times is "failing," and the industry is said to be dead. But the The New York Times Co. (NYT) is figuring out how to make money, mainly by raising prices for digital and paper subscriptions and by creating advertising opportunities with products such as a daily podcast. The Value Line Investment Survey notes that earnings have fallen at an annualized rate of 20% for the past five years but are estimated to rise by an average of 42% annually for the next three to five years. The company has almost no debt.
The market value (share price times shares outstanding) is just $4.5 billion - for what's probably the best newspaper brand in the world. The only drawback is that the stock has doubled since Donald Trump's election, but shares still trade at about half of what they did in 2002.
Ollie's Bargain Outlet
52-week low/high: $43.05/$97.61
Market value: $5.7 billion
P/E ratio: 44
When e-commerce giants put brick-and-mortar retailers out of business, Ollie's Bargain Outlet (OLLI) stands to gain. The retailer, with 285 stores in 22 states, sells closeout and overstocked merchandise at discounted prices. Store closings present Ollie's with prospective retail space to move into and low-cost inventory to sell, says Hodges Small Cap fund manager Eric Marshall. The chain can expand its locations by 10% per year over the next few years, he says.
Ollie's is richly priced, trading at 44 times estimated earnings for the fiscal year that ends in January 2020. But analysts at Credit Suisse say the "near Amazon-proof" stock is worth it.
52-week low/high: $47.37/$68.98
Market value: $89.8 billion
P/E ratio: 26
Shares of Starbucks (SBUX), the global coffee-shop chain, have languished for three years, and the company is facing strong domestic competition. But the market in China is perking up, and the company in May unveiled a plan to open up a new store in the country at a rate of roughly one every 15 hours through the year 2022. The company previously targeted 5,000 stores in China by 2021; now, it expects to have 6,000 stores by 2022.
Parnassus Endeavor (PARWX), the ground-breaking socially conscious investment fund, made a major investment in SBUX in June.
52-week low/high: $181.51/$249.95
Market value: $98.0 billion
P/E ratio: 20
Record spending on biotech drug research is fueling demand for Thermo Fisher's (TMO) lab products and services, gene-sequencing instruments, analytical tools, and diagnostic kits.
A string of smart, well-executed acquisitions by the company has boosted sales and earnings at a 10% annualized rate since 2013. The firm's long-term debt has risen, too, but in the past, "TMO has done a good job paying down debt," says Bryn Mawr Trust's Ernie Cecilia.
Analysts expect 11% profit growth in 2019. The stock trades at 20 times estimated earnings, compared with an average multiple of 25 for its peers.
52-week low/high: $48.49/$58.50
Market value: $85.9 billion
P/E ratio: 12
We get a glimpse every quarter, in federal filings of Berkshire Hathaway, of what chairman Warren Buffett is buying. The latest report shows that the best investor of our time increased his stake in U.S. Bancorp (USB), the country's largest regional bank. Buffett now owns 7.7% of the company.
Morningstar notes that, unlike money-center banks, U.S. Bancorp is "primarily funded by low-cost core deposits from the communities it serves." The bank has been lagging its peers in share-price gains but boosting its dividend aggressively.
SEE ALSO: The 7 Best Bank ETFs for American Bulls
In a bull market closer to its end than its beginning, investors need to be choosy, trimming winners and tossing losers. Here are some candidates to cull.
52-week low/high: $57.41/$77.91
Market value: $54.4 billion
P/E ratio: 21
Executives at Colgate-Palmolive (CL) have chalked up recent struggles to challenges in foreign markets, from which the maker of dental, hygiene and household products derives about three-fourths of its revenues. Weakening currencies are partly to blame. But even accounting for currency swings, the firm faces challenges from local competitors in foreign markets and from other multinationals, say JPMorgan analysts. They see the firm boosting earnings by only 2% in 2019 and say the shares could fall by 15%.
Sell: Seagate Technology
52-week low/high: $36.69/$62.70
Market value: $12.3 billion
P/E ratio: 8
Seagate Technology (STX) makes great computer hard drives. Unfortunately, the industry is moving toward faster, solid-state drives. Seagate is moving into that business, too, but it's got stiff competition. And though Seagate has some big customers - HP Inc. and Dell each account for 10% of sales - they could easily jump to firms with better solid-state offerings. Trading at eight times estimated earnings for 2019, Seagate's stock is cheap, but it's no bargain, especially considering that the dividend has been flat since 2015.
Sell: Shake Shack
52-week low/high: $36.58/$70.12
Market value: $1.5 billion
P/E ratio: 70
Shares in quick-serve burger shop Shake Shack (SHAK) were sizzling until an August earnings report with mixed results sent them tumbling. But the stock still trades at a whopping 70 times expected earnings in 2019, or more than three times the average restaurant stock multiple. Meanwhile, diner traffic is down at stores open at least 12 months, higher labor costs are squeezing profit margins, and new store openings - the main driver of growth - are delayed, in part because of labor shortages. Investors should take a healthy serving of profits off the table.
52-week low/high: $10.00/$15.60
Market value: $2.7 billion
P/E ratio: 8
Tegna (TGNA) operates 47 television stations and two radio stations in 39 markets, and it offers marketing services through Tegna Marketing Solutions. Tegna does much better in election years than in nonelection years; the red-hot 2018 elections generated a 51% increase in political ad revenues from the previous midterms, for a record $60 million in the third quarter. But 2019 isn't an election year, and the rest of Tegna's business isn't going like gangbusters. Earnings comparisons with 2018 won't be pretty in 2019, and the shares are likely to suffer.
SEE ALSO: The Bear Market Quiz
Sell: Under Armour
52-week low/high: $10.70/$22.68
Market value: $9.5 billion
P/E ratio: 83
Even after a spike in late 2018, shares of Under Armour (UA) are far from their 2015 high. Investors hoping for a turnaround were impressed by the sportswear and apparel firm's third-quarter earnings. But competition remains steep, with Nike, Adidas and Lululemon vying for the same American customers. Analysts at Canaccord Genuity say they've yet to see product-line innovations that would propel the company back to consistent growth in North America. They believe the stock is overpriced at 83 times estimated 2019 earnings and recommend selling it.
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Copyright 2018 The Kiplinger Washington Editors