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Our new list of best stocks to buy highlights several companies that stand to benefit from (or in spite of) recent developments in Washington, from new tariffs to Twitter wars. Plus, we take a look at two veteran tech companies that often get overlooked but are emerging as leaders in two of the most important technologies in the 21st century.
There are five new stocks to buy that we’re sharing with you today:
- The world’s third-largest social media company is a strong buy, even as some investors flee.
- This Wisconsin robotics company is being recruited by U.S. steel factories to make them competitive in the wake of tariffs.
- This tech giant could surprise you by being the first to reach a trillion-dollar valuation.
- Another tech pick is implementing blockchain technology in a way that could be a global game changer.
- One of Amazon’s key transportation partners is a bargain right now.
Best Stocks to Buy Now, No. 1: Tariffs on Chinese Imports Won’t Slow Down This Social Media Giant
Over the last few months, U.S. President Donald Trump has made a series of moves in an attempt to cut the $375 billion annual U.S. trade deficit with China. That includes orders to institute tariffs on imported steel – most of which comes from China – as well as on specific Chinese imports.
As Trump demonstrates that he intends to deliver on his campaign rhetoric against the People’s Republic, some investors have grown wary of investing in Chinese stocks altogether.
But anyone who thinks that China is going to crumble under the weight of punitive measures by the United States hasn’t been paying attention.
Thirty years ago, Asia – minus Japan – accounted for just 18% of global GDP. Today, that figure is two-thirds, and China has led the way.
China’s dominance on the global economic stage has come with a shift from external growth to internal growth. That is, it no longer needs the United States to buy its wares in order to keep growing.
The e-commerce sector in China, for example, is already twice as big as that of the United States, and research firm eMarketer projects that it will grow from $1 trillion in yearly sales to $2.66 trillion by 2021.
That’s why top Chinese tech firms, such as Momo Inc. (Nasdaq ADR: MOMO), are still among the most profitable stocks to own right now, no matter what the president does.
Momo is the third-largest social media platform in the world by monthly active users. What was once primarily a dating service is now a leading player in China’s wildly popular live video-streaming industry.
Driven in large part by monetary “gifts” sent from users to content producers (and shared by the company), Momo increased sales almost tenfold, from $134 million in 2015 to over $1.3 billion last year. That figure is expected to grow to $2.4 billion in 2018.
Momo hasn’t given up on dating services, either. Last month, it acquired Tantan, a leading Chinese dating app. Savvy moves like this one bring user bases that Momo can incorporate into its broader range of services.
And because the average user on Tantan is just 22 years old, defense and tech specialist Michael Robinson says, “Momo can grow with them as they evolve through the social media life cycles.”
There isn’t a tariff in the world that can bring that, or the rest of Momo’s business, to a halt.
Best Stocks to Buy Now, No. 2: The U.S. Steel Industry Needs This Robotics Firm to Bring Its Factories Up to Date – and It’s Not the Only One
Trump’s steel tariffs may help the U.S. steel industry – whose production peak came in 1973 – compete with the rest of the globe. But there’s another development that’s critical to the industry’s success: upgrading its factories.
That means automation. Machines will perform repetitive tasks and free up human workers to use their dexterity and creativity to boost productivity.
China, Japan, and South Korea are outpacing the rest of the world in automating their factories. Now, it’s time for U.S. manufacturers to catch up.
And the company they’re turning to is Milwaukee-based Rockwell Automation Inc. (NYSE: ROK).
Rockwell has developed a manufacturing execution system (MES) specifically for metals production that gives steelmakers the ability to control and monitor every aspect of production through a centralized, intelligent interface.
The system can then produce sophisticated analytics on the spot, enabling fine-tuning of the process that won’t vanish when an experienced foreman retires.
The steel industry needs a company like Rockwell, especially since volatility in steel prices has led many factories to delay upgrades for more than a decade.
But Rockwell is not dependent on any one industry. It has a thoroughly diversified portfolio. No single industry accounts for more than 10% of sales.
Given its high-tech profile, you probably wouldn’t expect that this company is 115 years old. But Rockwell started with a motorized controller for industrial cranes, which debuted at the World’s Fair held in St. Louis in 1904.
Now it’s leading the way toward the Internet of Things, a technology that will connect tens of billions of devices and have a global economic impact, according to research firm McKinsey, of $6.2 trillion by 2025.
In the meantime, Rockwell has not only been boosting efficiency for its clients, but for its own operations. A new MES currently being phased into the company’s own production sites has lowered inventory days by over 30% where implemented. Overall, Rockwell has been improving productivity by 4% to 5% every year.
ROK has slipped in price since January, when investors anticipated a lackluster earnings report. In fact, earnings per share (EPS) for the quarter came in 12% higher than the year before, and Rockwell raised guidance to an expected 16% growth in 2018.
On top of that, Rockwell is now beginning a $1 billion stock buyback program, which should lead to immediate gains for shareholders.
The stock is already starting to tick up again after bottoming out in early April. So it probably won’t be available at a discount much longer.
Rockwell Automation “will play a critical role in the coming rebirth of American steel,” says Robinson. “We can count on the stock to rally from here.”
Best Stocks to Buy Now, No. 3: The First Trillion-Dollar Tech Company Might Not Be the One You Expect
Since Robinson recommended a certain tech giant in 2012, the stock price has risen 205%. That’s 93% better than the S&P 500, and it doesn’t include dividends.
He’s not our only expert who likes this stock. In fact, Keith Fitz-Gerald says this could be the first tech company to hit a trillion-dollar valuation.
You probably wouldn’t guess that we’re talking about Microsoft Corp. (Nasdaq: MSFT).
It will take a rise of just over 40% – up to a share price of $129.50 – for the company’s valuation to hit $1 trillion. As it happens, Morgan Stanley (NYSE: MS) analyst Keith Weiss just set a price target of $130 within a year.
Fitz-Gerald’s own target is slightly lower, at $125 within the next two years. That’s still a 31.5% gain. And gains like that could set Microsoft apart from some other big tech darlings.
When Fitz-Gerald joined Neil Cavuto on FOX Business Network in March, he said that tech stocks based on personal trust, like Facebook Inc. (Nasdaq: FB) and Twitter Inc. (NYSE: TWTR), are going to face an increasingly turbulent environment. Meanwhile, those based on corporate data, security, and operations will be where the profit opportunities are.
Microsoft is a leader of the pack in the latter categories. That’s because of its strong emphasis on cloud computing.
According to Morgan Stanley, “public cloud adoption is expected to grow from 21% of workloads today to 44% in the next three years.” And the firm projects Microsoft’s Azure revenue to jump from $3.9 billion last year to $21.6 billion in 2020.
Azure sales grew 98% in the most recent quarter, compared to 45% for Amazon Web Services, formerly the undisputed champion of cloud computing. At this rate, Microsoft may emerge as the dominant player in this field before the dust settles.
But there are other reasons to be excited about MSFT’s profit potential, too.
Office 365 is bringing in over $10 billion in annual revenue, and that’s expected to jump 140% over the next three years.
Then there are the benefits of the recent tax cuts that haven’t been fully realized yet. Fitz-Gerald says, “there is no way of knowing how Microsoft’s stock buyback programs will develop, which, in turn, means there could be additional and very aggressive support for its stock lurking unseen to current investors.”
Given the immediate prospects of this stock, you can buy the stock outright and keep it as a foundational holding. But Fitz-Gerald’s favorite choice is buying a long-term call option that pays out between now and January 2020.
Best Stocks to Buy Now, No. 4: This Company Is on the Verge of a Renaissance as It Becomes a Blockchain Leader
If Microsoft is an unexpected technology leader next to the more recognizable Silicon Valley juggernauts, our next pick is even more so.
In fact, Robinson admits that, until recently, he hated this company.
Now he says that this 107-year-old enterprise has transformed from a “dog” into a “scorching, ground-floor opportunity.”
The company is IBM Corp. (NYSE: IBM), and the reason for its transformation is blockchain technology.
“Big Blue currently has 400 blockchain projects underway and about 1,500 employees dedicated to them,” says Robinson.
These projects have put IBM on the path to become the “network of moving money.”
Through blockchain technology, IBM is working on eliminating the hassle and expense of moving money across international borders. So you’ll be able to send $1,000 to the UK and have it picked up in the local currency without the hefty price tag (around $81 right now) that Western Union would charge.
Instead, you’d send that money over the Internet. The transaction would happen in seconds, at the lowest possible exchange rate. Blockchain makes it secure by encrypting and copying the transaction across a whole network of nodes. Even if someone had the resources to hack a majority of those nodes – which is unlikely – they wouldn’t be able to even attempt it without drawing a lot attention to themselves.
Michael says IBM’s global payments system has the potential to be a “major disruptor.”
The market for global payments stood at $1.8 trillion as of 2015, and research firm McKinsey expects it to hit $2.2 trillion by 2020.
But IBM’s system stands to broaden that market by enabling access for up to a billion people who don’t have banks but do have smartphones. Those people account for about $8 trillion in transactions around the world every year.
So if you’ve been ignoring IBM up until now, we don’t blame you. But it’s time to take a new look at Big Blue, which is on the verge of a whole new identity in the 21st century.
“Buying IBM at these levels right now is going to look like a very smart move when its blockchain solutions begin to impact the market,” says Michael.
Best Stocks to Buy Now, No. 5: As Amazon Builds Its Delivery Fleet, This Company Is Reaping the Rewards
Despite showing signs of life, Amazon.com Inc. (Nasdaq: AMZN) has yet to fully bounce back from the hit its shares took in March. That drop came in part with a broader market pullback, but it also coincided with a series of Twitter attacks from President Trump.
Among the charges hurled by the president are that Amazon doesn’t pay its fair share in taxes, takes advantage of the U.S. Postal Service, and drives American retailers out of business.
The legitimacy of these claims has been widely questioned. Amazon pays the taxes that are required of it, contributes to the Postal Service’s biggest growth segment, and only undercuts its competition in the same way that other disrupters like Wal-Mart Stores Inc. (NYSE: WMT) and Target Corp. (NYSE: TGT) have done in the past.
For all his venting, there is nothing Trump can do to stop Amazon’s rapid growth.
So you might take the hit to AMZN shares as a discount. But at more than $1,550 per share, it’s still a stock not everyone can easily afford.
That’s why we’ve got another pick-and-shovel play for you, this time capitalizing on one of Amazon’s biggest preoccupations right now: transportation.
Over the last several years, the company has been building out its in-house delivery fleet. It has been purchasing thousands of long-haul truck trailers, building delivery drones, and even managing its own ocean freight between the United States and China.
Amazon has also been assembling its own air force, and that is our prime entry point.
In 2017, Amazon announced it was building a $1.5 billion hub for a fleet of 40 Amazon Air cargo planes in Kentucky, which will be capable of handling up to 200 flights per day.
Amazon has already leased most of the planes and will almost certainly be leasing more as it expands its transportation footprint.
That’s going to directly benefit Atlas Air Worldwide Holdings Inc. (Nasdaq: AAWW), which already expects to have 20 Boeing 767-300f jets up and running for Amazon by the end of 2018.
And it’s available for about $63 per share right now.
Atlas Air provides aircrafts and associated services to customers ranging from airlines and shipping companies to sports teams and private charters. It operates primarily out of seven air hubs in the United States – including one right where Amazon is building its Kentucky hub – as well as one in Hong Kong.
The stock has nearly doubled since early 2016, as Atlas has boosted EPS by 53% over the last two years.
The current lease with Amazon runs through 2022, and some are speculating that Amazon may purchase a 30% share of the company by then.
Whether that deal happens or not, it’s a signal of how important Atlas is in Amazon’s long-term plans. That makes it a great opportunity for investors who are paying attention.
“I believe Amazon’s need for cargo aircraft will grow faster than many people think,” Fitz-Gerald says, “Forty aircraft are just the tip of the iceberg, which means the leasing companies providing ’em will make out like proverbial bandits as Amazon expands.”