As part of their annual investment roundtable discussion with leading analysts, strategists and fund managers, Barron's asks the participants to name their top stock picks for the new year. The bull market's stratospheric rise, partly the result of a massive increase in valuations, makes finding bargains increasingly difficult for investors. Nonetheless, Barron's panelists found a number of stocks to recommend right now. (For more, see also: 5 Reasons the Bull Market Will Thrive in 2018.)
Among the stocks suggested by the panelists are: Equifax Inc. (EFX), Vail Resorts Inc. (MTN), Madison Square Garden Co. (MSG), MGM Resorts International (MGM), AbbVie Inc. (ABBV), Occidental Petroleum Corp. (OXY), Lam Research Corp. (LRCX), Hi-Crush Partners LP (HCLP), CarMax Inc. (KMX) and Orion Engineered Carbons SA (OEC).
The Gurus
The market gurus making these picks are: , portfolio manager and chief investment officer for U.S. equity growth with T. Rowe Price Group Inc. (TROW); , founder, chair, and CEO of Gamco Investors; , founder and president of Delphi Management; , general partner with Eagle Capital Partners; and , senior investment strategist, Goldman Sachs Group Inc. (GS). T🐎he stock picks from these market veterans were summarized in a series of special re♋ports published by Barron's on Jan. 20. Each panelist's name above is linked to one of these reports.
Henry Ellenbogen: 'Duress Test'
Equifax has taken a lot of heat for a major security breach, but Ellenbogen says "you never know how good a company is until its business model is tested under the greatest duress." He notes that, despite its missteps, the company has lost only a marginal amount of business, and only "a negligible number" of Americans responded by locking their credit reports. He has a price target of $160 to $172, between 28% and 38% above the Jan. 31 close.
Vail Resorts has a "world-class database-marketing business" and has won market share by lowering prices and offering an innovative "subscription business" that smooths out revenues across the year. The company owns several ski resorts in the western U.S. and Canada, has low leverage and high 澳洲幸运5官方开奖结果体彩网:free cash flow, and Ellenbogen tells Barron's that he sees "a big advantage from the newဣ tax law."
Mario Gabelli: Game On
Besides "The World's Most Famous Arena," the Madison Square Garden Co. owns the Rangers hockey team, the Knicks basketball team, Radio City Music Hall, the Beacon Theater in New York City, and the Forum in suburban Los Angeles, among other properties. "Millennials and the Gen Z population love live entertainment," Gabelli tells Barron's. Partly due to its valuable real estate holdings in Manhattan, Gabelli values MSG at $280 to $300, or 30% to 39% above the Jan. 31 close.
MGM Resorts International is a major casino operator in Las Vegas and Macau, China, and is opening a new property in Springfield, Massachusetts. Per his analysis of its piece parts, Gabelli places values MGM stock at more than $42 a share, more than 15% above the Jan. 31 close. (For more, see also: 3 Gambling Stocks Th♍at Wil🍌l Beat The House: Morgan Stanley.)
Scott Black: 'Powerhouse' in Chips
Lam Research "is a powerhouse in semiconductor capital equipment," as Black tells Barron's, with large and growing market shares ranging from 40% to 57% in key categories of chipmaking equipment. Black estimates 2018 EPS at $15, and net cash per share of $22. Back out the cash, and Lam sells at a mere 11.3 times 澳洲幸运5官方开奖结果体彩网:forward earnings (based on the Jan. ꦅ31 close), which he calls a "giveaway."
Hi-Crush is the market leader in mining the sand used in the fast-growing business of oil and gas fracking, per Black. It pays a 4.6% dividend, market share and revenue are growing briskly, and the 澳洲幸运5官方开奖结果体彩网:forward P/E on the stock is very cheap, a🎀t 5.6 tim🐷es consensus estimates.
Meryl Witmer: No Haggling
CarMax buys and sells used cars, offers financing and extended warranties, and its "no haggling" policy has resulted in high customer satisfaction, Witmer tells Barron's. In fact, both Ellenbogen and Witmer say that they are satisfied repeat customers. The company is expanding its store base, and Witmer has a target price of $93, or 30% above the Jan. 31 close.
Orion produces carbon black for use as a pigment in inks and paints, and as a key ingredient in a variety of products, such as adhesives, pipes, batteries, tires and other rubber products. Competitors are exiting the business, but "the trend toward hybrid and electric vehicles is great for carbon black since tires require more carbon black to withstand the heavier weight," Witmer tells Barron's. Her target price is $40, almost 36% above the Jan. 31 close.
Abby Joseph Cohen: 'Superior Growth'
Occidental Petroleum has high tax rates and thus should benefit from tax reform, Cohen says. She indicates that the company is mainly attractive for its dividend yield, currently 4.1%, "which is supported by strong cash flow."
Biotech company AbbVie "has a strong pipeline" and Goldman projects that it will generate about $180 in 澳洲幸运5官方开奖结果体彩网:free cash flow during the next 10 years, of which "$110 billion is currently unallocated either to dividends or announced 澳洲幸运5官方开奖结果体彩网:share buybacks," as Cohen tells Barron's. "Al🍒though it has a superior growth profile, the stock sells at a discount to its🅠 peers," she adds. It also pays a 2.5% dividend.
Cohen recommended AbbVie to Barron's in mid January when it was at $101. The shares gained 22.8% over the next two weeks before the Jan. 29 announcement of a partnership to decrease employee health care costs by CEOs Warren Buffett of Berkshire Hathaway inc. (BRK.A), Jeff Bezos of Amazon.com Inc. (AMZN) and Jamie Dimon of JPMorgan Chase & Co. (JPM). The stock fell 8.9% thr๊ough the end of the month on that news.