10 Best Stocks to Invest in Now

Marcy Tolkoff, JD

March 28, 2014


10 Best Stocks to Invest in Now
Investments are an important part of any physician's financial picture. Although the stock market has had its ups and downs, many stocks have had some impressive returns. We asked 3 stock experts to identify investments that they feel are poised to do quite well over the next few years.* Their selections run the gamut and include large- and medium-sized companies across a variety of industries that show promise for both increased share price and dividends (profits paid to shareholders).

Buying individual stocks is riskier than owning a mutual fund or ETF (exchange-traded fund), which spreads risk over many companies. Before purchasing a particular stock, research it further or discuss it with your financial advisor or broker.

*All prices quoted are through March 24, 2014.

Image from Thinkstock

Slide 1.

Unilever (UL)
Chief products/services: Household & Personal Products
Current price: $40.15
52-week high/low: $43.88/$37.40
Target price: $45.00

"Recent concern about economic growth and currency stability in emerging markets has created a buying opportunity in a number of high-quality consumer staples stocks," says Matt Coffina, who manages Morningstar's StockInvestor Tortoise and Hare Portfolios. Unilever is a global leader in packaged foods and household and personal care products, with well-known brands like Dove, Vaseline, Lipton, and Hellman's, among many others. Although more than half of the company's sales coming from emerging markets may be a short-term liability, it should be a big advantage in the long run, notes Coffina, thanks to the rapidly growing demand for branded consumer products in these markets.

The Unilever R&D Centre in Bangalore, India / Image courtesy of Wikimedia

Slide 2.

Baidu (BIDU)
Chief products/services: Internet Content & Information
Current price: $157.38
52-week high/low: $189.34/$82.98
Target price: $206.00

Revenue growth continues to accelerate for China's biggest Internet search engine. "The growth runway remains extremely long, thanks to China's increasing Internet penetration and the shift to digital advertising," Coffina notes, adding, "profit growth has been elusive because of Baidu's aggressive investments in mobile." He predicts that expense growth should slow while revenue growth should remain robust once the company has navigated the transition from desktops to smartphones. Morningstar's analyst projects $17 in earnings per share in 2018. If that's in the ballpark, there's a good chance that Baidu's stock could double within the next 5 years, says Coffina. Its risk/reward profile remains favorable in the context of a diversified portfolio.

Image courtesy of AP Photo/Andy Wong, File

Slide 3.

Coca-Cola (KO)
Chief products/services: Beverages & Soft Drinks
Current price: $38.40
52-week high/low: $43.43/$36.83
Target price: $44.00

Investors are worried about declining soda consumption in developed markets and Coca-Cola's exposure to emerging market currencies. However, it doesn't take much for Coke to achieve high-single-digit earnings per share growth. As Morningstar's Coffina points out, "A couple percentage points each from volumes, pricing, operating leverage, and share repurchases should do it." Add that to a generous 3.2% yield, and annual total returns in the neighborhood of 10% are likely over the long run, he thinks. The company's broadly diversified portfolio of industry-leading beverage brands and its unmatched global distribution system create one of the greatest competitive advantages around.

Image courtesy of AP Photo

Slide 4.

Archer Daniels Midland (ADM)
Chief products/services: Farm Products
Current price: $42.30
52-week high/low: $43.99/$31.50
Target price: $48.00

ADM is a top choice of Kelley Wright, editor of the Investment Quality Trends newsletter, which has a top 20-year track record, according to Hulbert Financial Digest rankings. ADM turns grains, oilseeds, and other commodities into products for food, animal feed, and industrial and energy uses. It is advancing efforts to reduce energy, emissions, water use, and waste and runs one of the largest crop origination and transportation networks in the world, connecting crops and markets in over 140 countries on 6 continents. It offers good historical value, having rewarded its shareholders with a share of the profits in the form of dividends for 39 straight years.

Image courtesy of AP Photo/Seth Perlman, file

Slide 5.

CVS Caremark Corp (CVS)
Chief products/services: Pharmaceutical Retailers
Current price: $74.35
52-week high/low: $74.95/$53.94
Target price: $92.00

CVS has a massive footprint: 7660 retail drugstores, 800 MinuteClinic retail healthcare clinics, 792 CVS/pharmacy stores, 25 retail specialty pharmacy stores, 11 specialty mail-order pharmacies, and 4 mail-order pharmacies, as well as online retail pharmacy Websites CVS.com and Onofre.com.br. This is all well and good, but Wright feels that the key to the company's future success is CVS Caremark, its pharmacy benefit management segment. After 3 years of massive dividend increases, he says the company is still undervalued.

Image courtesy of AP Photo/Lisa Poole

Slide 6.

Reliance Steel & Aluminum Company (RS)
Chief products/services: Metals Fabrication
Current price: $71.15
52-week high/low: $76.78/$59.44
Target price: $127.00

Wright sees tremendous potential demand for steel and other metals as the United States begins to rebuild its infrastructure. Reliance is North America's largest metals service company, operating in almost 300 locations in 39 states and overseas. The company processes and distributes steel, aluminum, brass, copper, and titanium for manufacturing, commercial and industrial construction, transportation, aerospace, energy, electronics, semiconductor fabrication, and mining. Wright points out that Reliance has made significant increases to its dividend payout but it is still undervalued.

Image from Thinkstock

Slide 7.

Michael Kors Holdings (KORS)
Chief products/services: Luxury Goods
Current price: $94.11
52-week high/low: $101.04/$51.63
Target price: $112.00

This luxury brand boasts some of the more impressive growth profiles in the consumer discretionary sector. "Management has produced enviable results in the retail and wholesale space, with the store base to nearly double over the next 3 to 4 years," says Christian Greiner, CFA®, Senior Portfolio Manager of the Azzad Ethical Fund at Ziegler Capital Management. Grenier says that so far they've managed to avoid the pitfalls of the outlet strategy that has hurt some of their competitors. The next challenge for management will be the overseas markets, as North American sales still make up 89% of revenue. Greiner notes, "Early sales trends out of Europe are very promising, and the company should also benefit from an increased footprint in Japan."

Image courtesy of REUTERS/Brendan McDermid

Slide 8.

F5 Networks (FFIV)
Chief products/services: Software Infrastructure
Current price: $107.87
52-week high/low: $116.71/$67.53
Target price: $125.00

F5 is one of the leading makers of application delivery controllers (ADCs), which regulate traffic across the servers used by most large companies. "In light of the well-documented threat to this business from cloud computing and software solutions," explains Greiner, "the company proactively shifted focus to being more of a security vendor, offering application security and next-generation firewalls and building them into its ADCs." Management has also rolled out a revamped pricing program that should serve them well, Greiner adds, noting, "The company's efforts to improve its market share in the telecom industry are just starting to take effect, while government orders have been surprisingly resilient and international orders have been improving."

Image courtesy of F5 Networks

Slide 9.

United Natural Foods, Inc. (UNFI)
Chief products/services: Food Distribution
Current price: $71.59
52-week high/low: $79.64/$47.20
Target price: $81.00

The natural organic industry is set to almost double by 2020 and presents unique distribution issues stemming from the type of product and small size of vendors. "United Natural Foods has developed an enviable network that addresses these problems," says Greiner. The company has diversified away from being dependent on one large customer and has been offering its services to supermarkets and independent stores. "This shift, as well as a build-out of warehouse capacity, has hurt margins but will leave the company competitive for years to come," Greiner predicts. He feels that management has shown discipline in product lines, divesting the nonfood business to focus on specialty foods distribution. He expects earnings per share growth to be in the mid-teens for the next few years.

Image from Thinkstock

Slide 10.

Oceaneering International, Inc. (OII)
Chief products/services: Oil & Gas
Current price: $71.50
52-week high/low: $87.62/$58.08
Target price: $90.00

The search for oil in unconventional areas continues, and Oceaneering International is one of the premier names in the deepwater drilling space. The company offers the remotely operated vehicles, hardware, and expertise that facilitate some of the engineering work being done in the new deep sea growth prospects, like Brazil and Angola, and also gets the most out of older oilfields in Norway and the United Kingdom. A report by consulting group Douglas-Westwood predicts a 130% increase in deepwater spending over the next 5 years. Recent concerns over deepwater rig oversupply may serve as an entry point for long-term-oriented investors, says Greiner, who believes that earnings per share growth of 15% over the next few years is achievable.

Image from Oceaneering.com

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Contributor Information

Marcy Tolkoff, JD
Freelance financial writer
Fort Lee, New Jersey

Disclosure: Marcy Tolkoff, JD, has disclosed no relevant financial relationships.