Are you ready for a roller coaster ride in the markets? Goldman Sachs is putting investors on notice that our current break from August’s high volatility is just a short breather – October is likely to be just as unpredictable. In fact, the firm points out that since 1928, October’s stock market volatility has averaged 25% higher. John Marshall, equity derivatives strategist for the firm, says, “We believe high October volatility is more than just a coincidence. We believe it is a critical period for many investors and companies that manage performance to calendar year-end.”
The markets may be unpredictable, but you can still find stocks showing a solid record of strong returns. We’ve searched TipRanks’ database and found three stocks that are bringing in the long-term returns and dividends you need to insulate your portfolio in today’s uncertain climate.
Stanley Black & Decker, Inc.
Business mergers can sometimes bring the best together, Stanley Black & Decker (SWK – Get Report) is the modern incarnation of two storied names in power tools: Stanley, and Black & Decker. They merged in 2010 in a move that brought some of the most respected brands in the industry under one roof.
The power tool company has had a good run in recent years. SWK’s 5-year gain is 77%, and the company is up 18% year-to-date. Shares have risen from $117 on the last day of 2018 to today’s opening price of $140. And as an added attraction for income investors, SWK pays out a 1.96% dividend, in line with the S&P’s average yield of 2.1%. The dividend pays out $2.76 per share annually.
SWK’s gains, and its hefty upside potential, have attracted plenty of love from top analysts recently. Last week, KeyBanc’s Kenneth Zener upgraded his stand on this stock from neutral to buy, saying, “We see upside (tool share gains and wider portfolio outgrow market, favorable price/cost raise margins) … in line with market returns this year.” His price target of $160 suggests an upside of 13% for the stock.
Michael Wood, writing from Nomura, takes an even more optimistic stance on SWK. He kept his buy rating, and raised his price target by 10%, to $180. His new target indicates his confidence in a 27% growth potential.
Stanley Black & Decker keeps a Moderate Buy from the analyst consensus. This is derived from 5 buys and 2 holds given the stock in the past three months. As noted, shares are selling for $140. The $168 average price target suggests a 19% upside potential in the coming year.
No one likes the tax man, and we like having to report and file taxes even less. But we do have to file, every year, and a whole industry of accountants and DIY software has grown up around the requirement. Intuit (INTU – Get Report) is the maker of TurboTax, the popular home-use tax filing software, which has become the industry standard.
The success of TurboTax has pushed Intuit to ever-higher revenues. The company reported $1.99 billion in 2005, which rose to $3.40 billion in 2010, $4.19 billion in 2015, and $5.96 billion in 2018. Shares in INTU have gained also steadily gained; INTU is up an eye-catching 236% in the last five years, and has an impressive 36% year-to-date gain. For income investors, the share appreciation is the main attraction here, but the Intuit does pay out a reliable dividend. The yield is modest, at 0.79%, but the trading price high enough to put the payout at $2.12 per share annually.
The analysts are impressed by Intuit’s performance. 5-star analyst Brad Zelnick, of Credit Suisse, recently boosted his price target by 13%, to $300, and said, “The company reported better than expected Q4 results. We remain constructive on QuickBooks and TurboTax Live opportunities.” His price target suggests an upside potential of 11%.
Zelnick is not the only analyst raising the price target on INTU. Jefferies’ Brent Thill boosted his target 7%, to $320, indicating an 18% upside, and Argus’ Jim Kelleher, ranked #60 out of 5,500 analysts covered by TipRanks, increased his price target from $275 to $327. Kelleher’s new price target implies an upside of 20% to Intuit’s share price.
The analyst consensus on INTU is a Moderate Buy, with 7 buys and 4 holds assigned in the past three months. Shares currently trade for $269, and the average price target of $296 indicates an upside potential of 10%.
Lowe’s Companies, Inc.
The second largest player in the home improvement superstore sector, Lowe’s (LOW – Get Report) is making a credible challenge to Home Depot’s (HD – Get Report) dominance in that space. Lowe’s is benefitting from a new CEO, Marvin Ellison, with a hands-on style and turnaround plan, and LOW shares are up 19% year-to-date. The gain is seen as a show of confidence in Ellison’s ability to streamline retail chain and improve profitability.
Long-term gains for LOW are also strong – shares have appreciated 129% since the end of 2014. A robust 12% gain in the last three months shows that the stock continues to show steady momentum. The 1.99% dividend pays $2.20 per share, or 55 cents quarterly, giving investors a reliable passive income.
Seth Basham, 4-star analyst with Wedbush, sees Ellison’s turnaround program as successful, and writes, “Lowe’s, he notes, has reversed its longstanding pattern of trailing Home Depot’s comparable sales in the past two quarters, thanks to better inventory, more target promotions, and company initiatives to improve productivity... increased labor efficiency could allow the company to keep operating expenses flat over the next three years, while still expanding margins.” Basham’s $135 price target on LOW indicates a potential for a 22% upside.
Writing from RBC Capital, 5-star analyst Scot Ciccarelli agrees, writing, “Management continues to make the necessary improvements to generate sales activity in Lowe's Pro business, which is key to its turnaround efforts. Based on the stable home improvement environment and the company's margin expansion potential, we are positive on Lowe's shares.” Ciccarelli’s $129 price target suggests a 17% upside to the stock.
LOW shares hold a Strong Buy from the analyst consensus, with 13 analysts rating the stock a buy as compared to 4 holds. The average price target of $122 indicates a 10% upside potential from the $110 trading price.
Visit TipRanks’ Analysts’ Top Stocks page, and see which stocks are getting noticed by the Street’s best analysts.