Don’t give up on this bull market yet — it still has room to run, thanks to stronger economic and corporate underpinnings. Also key: improving sentiment among investors.
Here are 24 stock picks poised to ride that growth in 2014. We’ve culled them.from Kiplinger's investing editors and columnists James K. Glassman and Andrew Feinberg.
Coca-Cola
52-week high: $43.43
52-week low: $35.58
Annual revenues: $47.3 billion
Projected 2014 earnings growth: 6.7%
52-week low: $35.58
Annual revenues: $47.3 billion
Projected 2014 earnings growth: 6.7%
Coca-Cola (KO) has trailed the market significantly for the past two years, under fire from competitors as well as from policymakers who want citizens to slim down.
But columnist Andrew Feinberg calls it a classic “faith-based” stock—a great company that, by means that can’t be predicted, always seems to bounce back. And the 2.8% yield will quench your thirst while you wait for the price to rise.
52-week low: $9.38
Annual revenues: $80.7 billion
Projected 2014 earnings growth: 50.6%
Many investors have shunned Bank of America (BAC) because of problems related to Countrywide, which it bought in 2008. But those troubles now seem to be winding down. BofA’s deposits are growing, and the quality of its loans is improving. Columnist Andrew Feinberg says the stock could easily rise 50% over the coming year.
Honeywell International
Salesforce.com
52-week high: $58.3752-week low: $36.09
Annual revenues: $3.8 billion
Projected 2014 earnings growth: 47.1%
Salesforce.com (CRM), which helps its clients use remote computing—the “cloud”—to conduct business, has seen a tenfold increase since 2008. Terry Tillman, who analyzes software stocks for Raymond James, predicts that revenues will rise 32% in the fiscal year that ends in January 2014 and 31% in the year that ends in January 2015.
Air Lease
52-week high: $33.57
52-week low: $21.08
Annual revenues: $796 million
Projected 2014 earnings growth: 29.1%
52-week low: $21.08
Annual revenues: $796 million
Projected 2014 earnings growth: 29.1%
The dynamic duo who turned International Lease Finance Corp. into an airplane-leasing giant in the 1980s, Steven Udvar-Házy and John Plueger, came out of semi-retirement to launch Air Lease (AL) in 2010. Since then, the company has built a fleet of 174 jets, which are leased to more than 75 airlines.
Air Lease also helps manage air fleets, so when customers lease its new planes, it also brokers the sale of their old ones. Analysts expect profits to increase 30% in 2014, but the stock sells for only 16 times estimated earnings.
Baker Hughes
52-week high: $58.83
52-week low: $39.56
Annual revenues: $21.8 billion
Projected 2014 earnings growth: 37.5%
52-week low: $39.56
Annual revenues: $21.8 billion
Projected 2014 earnings growth: 37.5%
Baker Hughes (BHI) is the third-largest energy-services company in the world, but relatively few people know it. Though it has earned its neglect through poor management, Baker Hughes’s leaders are now determined to improve the firm’s profit margins, which are half those of rival Halliburton. Columnist Andrew Feinberg says the stock could rise by 33% over the next year.
Eaton Corp.
52-week low: $50.50
Annual revenues: $20.9 billion
Projected 2014 earnings growth: 18.7%
An improving global economy is bullish for Eaton (ETN), which specializes in power management—from the manufacture of hydraulic systems for trucks and planes to the circuit breakers used in commercial construction. Eaton moved its headquarters from Ohio to Ireland in 2012 as part of its purchase of electronics giant Cooper Industries. The deal helped boost sales and profits in 2013. But the sluggish commercial-construction market is weighing on results.
Morningstar analyst Daniel Holland thinks that business will rebound in 2014, allowing Eaton to fire on all cylinders.
Qualcomm
52-week high: $73.09
52-week low: $59.02
Annual revenues: $23.30
Projected 2014 earnings growth: 9.4%
52-week low: $59.02
Annual revenues: $23.30
Projected 2014 earnings growth: 9.4%
Qualcomm (QCOM), the maker of popular chips that serve as the modems and brains of wireless phones, is attractively priced. The stock sells for 14 times estimated year-ahead earnings, a figure that compares favorably with analysts’ estimates of 17% yearly earnings gains over the next three to five years. It’s the only stock that the Value Line Investment Service gives a top rating for both timeliness and safety.
52-week high: $60.18
52-week low: $33.14
Annual revenues: $1.7 billion
Projected 2014 earnings growth: 137.3%
52-week low: $33.14
Annual revenues: $1.7 billion
Projected 2014 earnings growth: 137.3%
Ocwen (OCN) is a tech-savvy mortgage servicer (essentially a highly paid bill processor and collector) that specializes in dicey loans. Ocwen’s efficient systems give it a 70% cost advantage over competitors with regard to subprime loans, which leads to more business and better profit margins. Columnist Andrew Feinberg says the stock could easily rise 50% over the coming year.
Tower Group International
52-week high: $22.30
52-week low: $3.53
Annual revenues: $401 million
Projected 2014 earnings growth: 114.3%
52-week low: $3.53
Annual revenues: $401 million
Projected 2014 earnings growth: 114.3%
Tower Group International (TWGP) is a potentially rewarding stock, albeit a risky one.
Its 18% dividend yield attests to that. Growing doubts about the adequacy of the property-and-casualty insurer’s loss reserves caused the stock to fall from more than $22 in August to less than $4 in October.
This stock is favored by James Roumell, a super-contrarian money manager who launched Roumell Opportunistic Value Fund (RAMVX) three years ago. He thinks investors have overreacted.
Cree Inc.
52-week high: $76.00
52-week low: $31.05
Annual revenues: $1.5 billion
Projected 2014 earnings growth: 34.5%
52-week low: $31.05
Annual revenues: $1.5 billion
Projected 2014 earnings growth: 34.5%
Cree Inc. (CREE) is a leader in the manufacture of light-emitting diodes, or LEDs. These energy-sipping bulbs, which require up to 85% less power than traditional bulbs and can last up to 25 times longer than traditional bulbs, are gaining popularity. Only about 3% of the U.S. population currently uses them, but government price subsidies are making them more popular and affordable.
Cree is also stepping into the solar-power industry. That should help light up sales and profits for years to come and justifies the stock’s rich price, which amounts to 34 times estimated earnings.
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