But you still can find promising investments. To identify some of the top stocks right now, I interviewed
More to the point, Dodson's fund has a first-class record. Endeavor returned an annualized 16.3% over the past 10 years - an average of 3.1 percentage points per year better than the
Given the selloff, this is precisely Dodson's kind of market. Read on for his seven top stocks for 2019.
52-week low/high: $142.00/$233.47
Market value: $715.4 billion
Trailing P/E ratio: 13
Dividend yield: 1.9%
"I'm assuming the trade spat will be settled," Dodson says. "If Trump raises tariffs, that'd be really scary."
Assuming common sense prevails, Dodson believes growth in
52-week low/high: $124.46/$292.76
Market value: $85.3 billion
P/E ratio: 22
Dividend yield: 0.5%
Did I mention that Dodson likes to pick up the pieces after a stock crashes? Consider Nvidia (NVDA, $139.83), a leading designer of cutting-edge graphics processing units, which are used in a variety of high-end computer applications, especially for complex gaming software.
Nvidia became a cult stock because its chips were also widely used in computer mining of cryptocurrencies, such as Bitcoin. When the cryptocurrencies cratered, demand for some of Nvidia's chips fell too, and failed to recover quickly. CEO
Nvidia's future, thankfully, isn't in cryptocurrency mining. Demand for its chips comes not just from gaming applications, but also from data centers and automotive infotainment centers. Nvidia's chips also are increasingly being used in artificial intelligence and self-driving applications.
Dodson likes Nvidia's P/E of 22. On an absolute basis, that's fairly high, but Dodson likes to compare a forward P/E to a stock's five-year history. Nvidia's five-year average P/E is 33; looked at that way, NVDA is dirt-cheap.
52-week low/high: $124.40/$194.18
Market value: $22.0 billion
P/E ratio: 9
Dividend yield: 3.3%
Cummins (CMI, $137.20) is down 29% from its high; thus, it's in Dodson's sweet spot. Unlike Dodson's tech stocks, Cummins is based in
In recent years, Cummins has benefited from rising fuel efficiency standards and tighter emissions regulations. However, CMI shares could be hurt by the Trump administration's rollback of those standards and its embrace of coal and other comparatively dirty fossil fuels. And because its engines are used primarily in trucks, the company's sales are closely tied to the economy. Any slowing in the economy globally, which we're already seeing, could hurt its sales and earnings.
Still, Cummins, which is 100 years old, has developed a reputation for producing superior and innovative engines and related products. And with a forward P/E of 9, compared to a five-year average P/E of 13, CMI looks like a winner.
International Business Machines
52-week low/high: $105.54/$171.13
Market value: $108.9 billion
P/E ratio: 9
Dividend yield: 5.2%
Becoming a big player in the cloud business could revive enthusiasm around the stock, Dodson says.
52-week low/high: $28.79/$62.40
Market value: $31.5 billion
P/E ratio: 9
Dividend yield: 2.4%
Since peaking in price last March, AMAT has been on a bumpy road down. As we all discovered in the tech bubble and burst of 2000-02, the tech industry is subject to vicious boom-and-bust cycles. The question for investors: Are we near the bottom of the cycle? Applied's price has fallen from its $62.40 high to a low of about half that. It currently trades at nearly $33 per share and has a P/E of 9. Its five-year average P/E is 16.
"At this price it's a bargain," Dodson says. "You have to buy it when things look bad. If you're making semiconductors, you almost have to use
Like most cyclicals, AMAT is a stock you may be better off "renting" for a year or two rather than holding for the long term.
52-week low/high: $249.17/$388.67
Market value: $65.4 billion
P/E ratio: 12
Dividend yield: N/A
Biogen (BIIB, $324.44) has several blockbuster medications on the market for multiple sclerosis and cancer, as well as as a robust pipeline of drugs in clinical trials for neurological and neurodegenerative diseases, including Alzheimer's.
A cure for Alzheimer's, which afflicts millions of people worldwide, has long been the Holy Grail for biotechnology researchers. So far, all the drugs developed have fallen far short of becoming effective treatments. But, if and when breakthroughs come,
Much as pharmaceutical companies are forced to lower their prices when their exclusive-use patents expire and cheaper generics come to market, biosimilars offer price competition to biotechnology medications from Biogen and other biotech companies. But biosimilars are more complicated to develop and bring to market than generic drugs. How that process unfolds will depend partly on science, but also on legislation and regulation.
Biogen's stock peaked last July, but it has bounced much farther and faster than the market since the
"We think it's a terrific company," Dodson says. "It's highly profitable, and the floor for its P/E has been 17 in recent history."
52-week low/high: $60.32/$89.54
Market value: $88.0 billion
P/E ratio: 10
Dividend yield: 3.3%
Gilead is working on new and better drugs for HIV and Hepatitis C, as well as other infectious diseases. Through acquisitions, Gilead has broadened its focus to include cancer and pulmonary and cardiovascular diseases. "The company has a history of discovering new drugs and of acquiring drugs developed by other firms," Dodson says.
Gilead peaked in price more than a year ago. Like Biogen, it took off the day after Christmas with the rest of the market, then kept on climbing. Both companies drew buyers on word of
The stock currently trades near $68. Its P/E is 10, compared to a five-year P/E of 9.
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