Spring isn’t just about cleaning out closets or shopping for your dream home. It’s also a good time to freshen up your stock portfolio.
How? By jettisoning stocks you no longer like and buying ones with potential to bloom.
And with the U.S. stock market back on stronger footing after a rocky period early in February and the start of spring coming Tuesday, now’s a good time to re-energize your investments.
If picking winning stocks isn’t your strong suit, consider these nine from Wall Street fund managers and stock strategists. They say these picks have good upside potential as the 9-year-old bull market, which many pundits say is entering its final stage, chugs on.
The stock gurus named the following:
The Pick: J.P. Morgan Chase
The Pro: Thorne Perkin, president, Papamarkou Wellner, New York.
The bank, the nation’s biggest by market value and headed by well-respected CEO Jamie Dimon, should fare well in an aging bull, Perkin says, because at this stage of the rally the economy is gaining strength and interest rates tend to rise. Both trends are good for J.P. Morgan’s (JPM) profits. “The bank is well-managed, growing, diversified, disciplined, and future impacts of tax cuts bolster the buy case,” says Perkin, adding that its annual dividend of about 2% is a bonus.
The Pick: Apple
The Pro: Brian Belski, chief investment strategist, BMO Capital Markets, New York.
Belski says the bull market could run 10 more years. And what better way to play it than to buy shares of Apple (AAPL). The world’s most-valuable company, which is currently valued at roughly $906 billion, is within striking distance of becoming the first stock with a market value of $1 trillion. “Apple is the premier consumer staples company,” says Belski, highlighting a crucial reason why the gadget maker will keep prospering as Americans’ pay and job prospects improve with the economy. The key investment math related to Apple, he says, is simple: “Cash plus innovation.”
The Pick: U.S. Bancorp
The Pro: Paul Schatz, president, Heritage Capital, Woodbridge, Conn.
The Minneapolis-based bank should also benefit from stronger growth and rising borrowing costs for people taking out loans. Another plus, according to Schatz, is that the bank regularly sets aside bigger reserves than they need for bad loans. The upshot to that conservative strategy is U.S. Bancorp’s (USB) quarterly earnings turn out to be better than promised, Schatz says. “It’s a good bank for the buck,” he says.
The Pick: Lockheed Martin
The Pro: Ray Hare, director of equity research, Huntington Private Bank, Cincinnati.
The defense contractor, which posted sales of $51.05 billion last year, should generate high-single-digit revenue growth over the next three years, according to Hare. Bolstering Lockheed Martin’s (LMT) sales is the increased spending on defense to “rebuild and modernize the military” laid out in President Trump’s 2019 fiscal year budget. Lockheed’s business will get a lift, Hare says, as its F-35 fighter jet program ramps up and its missile sales remain healthy.
The Pick: Western Digital
The Pro: Barry James, manager, James Balanced Golden Rainbow Fund, Alpha, Ohio.
The digital world is awash in data. And Western Digital (WDC) is an American computer data storage provider with an array of products that allow customers ranging from gadget lovers to data-intensive businesses to store all that information, whether its in hard drives or the cloud. In the fiscal year ending June 2017, its sales jumped 47% to $19.1 billion according to FactSet. “The innovation in technology continues to create exponential storage growth needs,” James says.
The Pick: Cognizant Technology Solutions
The Pro: Robert Stimpson, portfolio manager, Oak Associates, Akron Ohio.
Cognizant, which helps companies save money through efficient and cost-effective information technology, is a perfect stock to own late in a bull run, when the economy could eventually slow and companies become more cost conscious. The IT company has a diverse group of customers, from tech firms to financial companies. That sets them up to “do well in most market environments,” Stimpson says.
The Pick: AptivV
Aptiv is a Gillingham, EThe Pro: Adam Abelson, chief investment officer, Stralem & Co., New York.ngland-based auto supplier that specializes in the fast-growing electric-car segment. In short, it’s a bet on transportation’s future. “It is a play on the powerful long-term trend of electrification and autonomous (driving) that will continue regardless of any short-term economic or market downturn,” Abelson says.
The Pick: Westrock
The Pro: Bob Doll, chief equity strategist, Nuveen Asset Management, New York.
The paper and packaging solutions company isn’t a sexy stock. But with demand high thanks to the solid economy and strong pricing power, WestRock (WRK) is well-positioned to “expand profit margins, grow sales and cash flow,” Doll says. The stock is selling at a price-to-earnings ratio below 10, compared with the broad stock market’s P-E of more than 17 times earnings, according to Thomson Reuters. “It’s trading at very attractive valuation levels,” Doll adds.
The Pick: Donaldson Co.
The Pro: Michael Farr, president, Farr, Miller & Washington, Washington, D.C.
Donaldson Co. (DCI), the global maker of filtration systems and products that go into heavy-duty engine and industrial applications, is another stock lacking the buzz of more popular names. But the company has “dominant market share” in many of the areas where it does business, and it has “attractive” long-term growth potential, Farr says. The company also has broad global reach, with nearly two-thirds of its profits coming from outside the U.S., which will allow it to benefit from the ongoing global economic upturn.
