A new year, offering new possibilities – but also risks! How do you choose the right stocks in this jungle of offerings? We will guide you through this year and help you pick the best stocks best suited to your needs.
PREDICTING STOCKS FOR 2017?
2017 will be an interesting stock trading year, no doubt about it. A new US president with an agenda focused on trade restrictions and expansionary budget, election time in several important European countries such as France and Germany, increasing unemployment rates in the PIGS countries such as Spain and Italy. And let’s not forget about the issue of fake news, and managing your way around these when trading. Which news and world changing issues you should follow can be a bit overwhelming, so let us start by iterating the obvious: even if you are the most informed individual or corporation in the world, there will still be news and issues occurring that you cannot predict; focus on stocks you like and keep them until it is time to sell.
Can we make certain predictions about 2017 though? Well yes, or a careful “possibly”. Many are hoping for tax reforms with a republican US president; should these reforms come through, that could lead to a further rally. A rally on the one we have already seen; the S&P 500 has risen from roughly 1,900 at the beginning of 2016 to 2,275 today – a 19% increase in one year. Should the tax reforms not materialize, well – the market will not be too happy. And when the federal budget discussions start in March, we will get an answer to whether we will get these tax reforms priced into the market or not.
The fed interest issue and whether there will be a hike or not is a constant bother. As wage growth points ever higher, and core inflation increases the probability of more rate hikes then those priced into the market already becomes a possibility.
The Brexit issue is also still looming on our stock trading lives; will it a be soft or hard exit? We will see, the UK has yet to lay out all its cards in the discussions with the EU. After a recent announcement on whether the UK will still be a part of the EU single market or not, the UK prime minister May said no – pointing towards a hard separation and the FTSE 100 slipping, dragging UK stocks with it.
THIS YEAR’S DIAMONDS
What do we see in terms of companies with solid earnings that should perform well this year?
AmerisourceBergen Corp. (NYSE: ABC) is a medical distributor that has a reasonable P/E at 13.35, stable dividends (that was increased by 7% last year) and an average target price from analysts of $87.22, and is now trading at $84.62. This company has gained a whopping 8% this year, and is worth looking into.
Delta Air Lines Inc. (NYSE: DAL) might seem like a boring choice, but boring does not mean unprofitable. With a P/E of 8.88 (where the industry average P/E is 4.45), an average target price of $60.31 and current price of $51.23 the ratios are looking good so far. The company has recently released the news that its revenue measure will rise for the first time in two years, and will not be affected much by the increase in labor costs that are also expected.
The giant General Motors Co (NYSE: GM) shows promises this year. The company has been quick to adapt to Trump’s promises (should they actually be put into effect) to take strong measures to secure jobs stay in the US; GM has recently said it will create 1,000 jobs in the country. The stock will probably not be the big star of your 2017 portfolio, but a secure low-return option. The current price is $37.25, with a target price of $38.00 and a P/E of 4.27 (with an industry average P/E of 21.20).
The unsexiest stock in our list of possible stocks to go for in 2017 has to be Tyson Foods Inc. (NYSE: TSN). No really, the company offers chicken, beef and pork – food companies these days aren’t really at par with tech companies in terms of the fun factor trading such stocks. But we can’t miss out on a stock that has increased its price by a factor of three and has shown stable earnings.
For 2017, the stock price is targeted by analyst to increase by 12%.
We save the best caramel, or diamond if you will, to last. Amazon.com Inc (NYSE: AMZN) is not a cheap stock, and it shouldn’t be. This is the leader among e-commerce oriented tech firms, and deserves being traded at a price of $816.02 and an average target price of $941.34. The stock has been consistently profitable, and will continue to be so, in 2017 as well.
2017’s BEST STOCK TIPS
2017 will be a year of surprising news, twist and turns in the stock market. Fasten your seatbelts, as it can become rocky depending on how certain political and macro issues develop. The president elect Trump’s decisions regarding trade restrictions and a possibly expansionary budget in the US, the Fed, important European elections will be issues to observe quite closely, aside from all other news we need to keep track of on a day to day basis during a normal trading year.
Of course, which sectors and type of stock you want to focus on will depend on your specific needs and trading strategy. The list of interesting stocks to focus on that we have offered to you are varied in terms of sectors and risk level, from secure good ol’ giants to less known firms that can offer a good return. What unites these firms is stable earnings, dividends and good P/Es compared to pears and what is financially viable.
Interesting stocks to check out and research more about in 2017 are:
- AmerisourceBergen Corp. (NYSE: ABC) – medical sector
- Delta Air Lines Inc. (NYSE: DAL) – airlines sector
- General Motors Co (NYSE: GM) – consumer goods sector
- Tyson Foods Inc. (NYSE: TSN) – food sector
- Amazon.com Inc (NYSE: AMZN) – tech sector