Can you guess the number of stocks hitting all-time highs?
Not many, according to Michael Brush, a New York-based financial writer, whose Aug. 3 article in MarketWatch suggests a correction might be just around the quarter.
“Even as the Nasdaq hit new highs in late July, only around half of Nasdaq stocks traded above their 200-day moving averages,” Brush wrote August 3. “As the S&P 500 approached new highs, the number of advancing stocks compared to those declining was flat. In short, market breadth has been too narrow to support the headline index strength. That’s not a good sign.”
Taking this information to heart, MarketWatch contributor Philip Van Doorn compiled a list of 40 stocks hitting all-time highs during the first week of August.
Some of the stocks have since receded slightly. However, for this article, if they’re still trading above their 200-day average as of August 7, they’ll still qualify for inclusion.
Here then are my seven stocks hitting all-time highs I believe are worth owning.
Stocks Hitting All-Time Highs: Amazon (AMZN)
While it wasn’t the first stock to hit a trillion-dollar market cap, Amazon (NASDAQ:AMZN) is having a pretty darn good year, up 62% year to date.
I’ve been an unabashed fan of AMZN stock in 2018.
We’re less than $120 away from my newest target for the e-commerce giant, but it hasn’t done much since announcing killer second-quarter earnings — earnings that were so good I called it a near-perfect stock and declared it will be the first stock to a $2 trillion market cap.
If there’s a stock that is likely to stay on a roll despite the dire prediction of Michael Brush, Amazon would be my best bet to do so.
Stocks Hitting All-Time Highs: Apple (AAPL)
Apple (NASDAQ:AAPL) might not have as sexy a growth story as Amazon, but it got to a $1 trillion market cap before Jeff Bezos could, one of the few times the world’s richest person has failed to meet a target.
How significant a contribution does AAPL stock make to the S&P 500? The index had a total market cap of $23.9 trillion at the end of July; Apple’s market cap accounted for 4.2% of the total.
A $1,000 investment in Apple stock a decade ago is worth approximately nine times as much today. AIt’s debatable whether it will be nine times as big in another 10 years, given it’s a much larger company growing at a slower pace, but I don’t think there’s any doubt it will be worth substantially more.
InvestorPlace’s Vince Martin had some good things to say about Apple recently, suggesting its services business will continue to provide a big headwind for its stock.
“CEO Tim Cook reiterated a goal of $50 billion in category sales by 2020 — and those revenues come at huge margins, with sticky customers,” Martin wrote Aug. 7. “Investors need only look at Netflix (NASDAQ:NFLX), Spotify Technology (NYSE:SPOT), or even Amazon to see what revenue multiples the market assigns to those businesses.”
I’ve been saying for a long time that its services business would carry its stock to new heights and that’s what’s transpired.
Not to downplay the iPhone, which accounts for 60% of its revenue, but it’s the recurring revenue that’s attracted investors like Warren Buffett.
Stocks Hitting All-Time Highs: Church & Dwight (CHD)
Source: slgckgc via Flickr (Modified)
It’s sad that I’ve never owned this stock except within an exchange-traded fund, because it has been hands-down one of the most consistent performers over the past decade.
Church & Dwight (NYSE:CHD) hit an all-time closing high of $57.46 on Aug. 6, and although it has given back $2 in subsequent trading, I have no reason to doubt it will continue to perform whether the markets correct or the economy falters.
Up 10.8% year to date, CHD hasn’t had a losing year over the past decade with seven out of ten producing double-digit returns outperforming the S&P 500 by 406 basis points on an annualized basis.
Church & Dwight delivered solid second-quarter results Aug. 3, its seventh consecutive quarter beating analyst earnings estimates.
Despite a heavy promotional environment amongst consumer goods companies, the company continues to grow its main brands without overspending on promotional coupons, ensuring steady cash flow.
In the second quarter, it converted 15.7% and 130% of its revenue and net income to free cash flow respectively, both outstanding, illustrating why the company’s stock continues to move higher.
For those who like dividends, Church & Dwight has grown its dividend by 25% annually over the past decade, well above the single-digit average for S&P 500 companies.
If you want to sleep well at night, CHD is the stock to own.
Stocks Hitting All-Time Highs: Global Payments (GPN)
Of all seven stocks I’ve included in this article, Global Payments (NYSE:GPN) is the stock I’m least familiar with.
Essentially, the company provides merchants around the world with payment technology services and software so they can get paid for customer transactions. That makes GPN vitally important to retailers and others using point-of-sale systems to do business.
In 2017, Global Payments generated 74% of its business in North America, 19% in Europe and 7% in Asia. In the three months ended June 30, Global Payments grew its revenues by 18% to $983 million while adjusted earnings grew 37% to $1.29 per share.
At the same time, it announced earnings, it also announced a $700 million acquisition buying AdvancedMD, a provider of cloud-based SaaS (software as a service) solutions to small- and medium-sized medical practices.
The acquisition gets it into the lucrative healthcare market for the first time.
Up 16% year to date, Global Payments is a company I’ll be paying closer attention to in the future.
Stocks Hitting All-Time Highs: Ross Stores (ROST)
How has the discount retailer’s stock performed since Rentier took the reins in June 2014? It’s up 183% compared to 95% for its biggest competitor, TJX Companies (NYSE:TJX).
Sure, Ross Stores and TJX are operating in a retail sweet spot, but you don’t outperform a company like TJX without doing a lot of things right.
The company’s growth over the past decade’s been phenomenal — at the end of fiscal 2008, it had 904 Ross Dress for Less stores and 52 dd’s Discount; today, it has 1,432 Ross Dress for Less locations and 219 dd’s Discount stores — leaving many to wonder how long it can keep it going.
Well, it’s opening approximately 25 stores a quarter, and expects to make at least $3.92 in fiscal 2018, 10% higher than a year earlier.
If it ain’t broke, why fix it?
ROST stock has done so well over the past decade that this year’s year to date return of 13% YTD is its second-worst in the past decade.
Most investors would kill for this kind of off-year.
Stocks Hitting All-Time Highs: Sherwin-Williams (SHW)
A coat of paint is one of the easiest and cheapest ways to add value to your home, and SHW stockholders have ridden that reality to the bank, up 7.5% year to date and 23% on an annualized basis over the past decade.
If you’ve been proactive enough to benefit from the rising housing market using SHW as your proxy for growth, pat yourself on the back; you’ve done exceptionally well.
Can this growth continue?
Macroeconomically, rising interest rates should start cooling the housing market in 2019, while micro-economically, online startups such as Clare should eat into the paint companies’ profits — but not as much as you might think because Clare still has to get someone to provide the paint.
Independent hardware stores are likely to see the biggest drop in business.
As long as the housing market is healthy, I don’t see investors losing much sleep by owning SHW stock.
Stocks Hitting All-Time Highs: SVB Financial (SVB)
Although I’ve got an excellent rating at TipRanks.com — I’m ranked 68th out of 11,437 experts over a one-year period — what gets me excited is when I deliver potential longer-term gains for readers.
Back in December 2013, I recommended two small-cap stocks, two mid-cap stocks, and one large-cap stock to own for the next 20 years.
If you do your due diligence on SIVB, a bank that started by lending money to Silicon Valley tech entrepreneurs then provided their families with personal banking and asset management services and then broadened its scope to other entrepreneurs in both the U.S. and elsewhere, you’ll see that it puts most other banks to shame.
Right now the company is delivering for shareholders with exploding earnings, and while I can’t guarantee that this will continue unabated for years to come, I believe that it will weather any bumps in the road better than most that are bound to happen in the future..
If you can only own one bank stock, SIVB is the one you should buy.
As of this writing Will Ashworth did not hold a position in any of the aforementioned securities.
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