It's the most profitable time of the year, and our latest list of best stocks to buy now gives you what you need to make the most of it.
December is historically the best-performing month for stocks. Going back to 1950, the S&P 500 has gained an average of 1.54% in the final month of the year, better than in any other month, and has finished December higher than it started 75% of the time.
What's the reason? Holiday cheer could have something to do with it. Also, we know retailers make their biggest sales during the holiday shopping season. Plus, the end of the calendar year tends to spur on money managers to make a final push to drive up their annual return.
The resulting flurry of activity can push up the market overall.
Whatever the reason, we don't want you to miss some of the best opportunities out there this December. The stocks we like for 2018 are in a good spot to climb this month, so now's the time to buy.
So, we found picks for you in five of the most profitable areas to invest in today.
- One pick combines the two biggest growth trends right now, and its soaring stock has a long way to go.
- A $5,000 investment in a "dividend aristocrat," like our second pick, could make you a millionaire.
- It's the small-cap stocks that really shine in December, and we've got a healthcare pick that won't be a small cap for long.
- Cryptocurrencies are today's fastest moneymakers - and our next pick capitalizes on the trend without requiring you to pick among them.
- Gold is ready to break out. If you're not ready to buy bullion from a dealer, we've got another option.
Plus, for the holidays, we threw in a bonus pick for each trend, to play them from a different angle.
Here are our five latest best stocks to buy now...
Best Stocks to Buy No. 1: This One Company Taps into 2018's Two Biggest Growth Trends
Two big trends have dominated the stock market in 2017: 1) the dominance of e-commerce over brick-and-mortar retail, and 2) the continued growth of China.
All signs point to these trends picking up steam in 2018, and we've got a pick that combines them both.
Here in the United States, the National Retail Federation reported that 108.5 million Americans shopped online over Black Friday weekend, compared to 99.1 million who shopped at brick-and-mortar stores. According to ShopperTrak, online sales were up 16.9% on Black Friday compared to a year ago, while in-store sales dropped 1.6%.
But online sales in the United States didn't compare to China's Singles' Day - an anti-Valentine's Day holiday that happens to be the country's biggest shopping day of the year.
This year, one online retailer alone managed to pull in $25.3 billion in sales in just one day, almost four times the record $6.6 billion among all U.S. retailers on Cyber Monday.
That retailer, which Money Morning Executive Editor Bill Patalon says is becoming the "global e-commerce killer," is Alibaba Group Holding Co. Ltd. (NYSE: BABA).
Bill calls Alibaba a "single-stock wealth machine." He says that a $185 share in the company today will be worth more than $2.1 million in four decades.
As with China itself, what's impressive about Alibaba is not only its size, but the fact that it's still growing at a stunning clip. That eye-popping sales number on Singles' Day was up 42% from the previous year. And while the stock price has doubled in 2017, we think it's still undervalued.
Alibaba controls 51% of a Chinese e-commerce market, which, according to Forbes, will account for 60% of the global market by 2020. Plus, Alibaba has a leg up on India's emerging retail market with its large investment in Paytm, a major Indian e-commerce platform. Morgan Stanley projects India's e-commerce market to grow more than 1,200% in the next decade.
Alibaba stock trades around $180 today. A conservative estimate would put it at $230 by this time next year, but don't be surprised to see it double again in that time.
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BONUS PICK: If you want to capitalize on China's growth but are looking for something with more breakout potential, we've got a promising bonus pick for you.
NetEase Inc. (Nasdaq: NTES) is a major tech pioneer in China. Not only does it provide a slew of popular Internet services, it's also one of the largest gaming companies in the world. Its earnings have grown 400% since 2010 and are showing no signs of slowing down.
"NTES is one of my longtime favorite Asian Internet technology plays," Money Morning Chief Investment Strategist Keith Fitz-Gerald wrote in October. Look for it in the coming years to expand its footprint well beyond China - into Japan, Southeast Asia, and other markets. Get it now before the rest of the investment world catches on.
Best Stocks to Buy No. 2: This Dividend Aristocrat Has a 131-Year Track Record and 10 Blockbusters on the Way
Dividend stocks offer not one but two ways to boost your returns. You get the dividend itself, of course, but many of the better dividend stocks offer DRIPs - or dividend reinvestment programs. As Bill Patalon explains, compounded dividends can turn a $5,000-a-year investment in a company into $5 million over 30 years.
Best of all, DRIP programs offer investors the opportunity to make small, commission-free investments. This offers the added benefit of dollar-cost averaging, buying more shares when prices are low and less when they're high. That smooths out the volatility that makes investors bite their nails.
For those looking for reliable, long-term growth, but who can't afford big capital investments, DRIPs are ideal vehicles.
The key is finding dividend stocks you can depend on for the long term. So it certainly doesn't hurt to find one that has weathered a slew of banking crises, including the Great Depression.
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Johnson & Johnson (NYSE: JNJ) has not only been in business since 1886; it's also a "dividend aristocrat," meaning it has increased its dividend for at least 25 consecutive years. In fact, 2017 was the 55th straight year of higher dividends for JNJ.
You probably know Johnson & Johnson for its consumer products such as Band-Aids, Tylenol, and baby products. But its real growth business is its pharmaceuticals division, which rakes in $32 billion a year. Last May, the company announced plans to launch 10 new blockbuster drugs over the next four years, adding to a lineup that already includes multibillion-dollar powerhouses Remicade and Xarelto.
Between its rock-solid consumer products and medical equipment divisions, as well as its robust pharma pipeline, Johnson & Johnson is a great foundational investment. Keep putting a little into it over time, reinvest that 2.4% dividend yield, and watch your wealth soar.
Go directly to the company's website to find out about its DRIP offering.
BONUS PICK: For a dividend stock that also offers share-price appreciation from tech industry growth, look no further than Microsoft Corp. (Nasdaq: MSFT).
You're probably familiar with the tech giant's many software products, but increasingly, its focus has been on the Azure cloud service. That investment is paying off, as Azure sales have grown by at least 90% in four straight quarters.
Microsoft also taps into one of our other favorite growth trends: legal marijuana.
No, Bill Gates does not have employees growing strains of cannabis under heat lamps. But with marijuana producers and distributors operating in sensitive legal territory, Microsoft has established Azure as the leading platform for the industry to keep itself in compliance.
Couple that with a 2.03% yield and a DRIP offering, and you've got a tech dividend winner.
Best Stocks to Buy No. 3: This Small-Cap Stock Is Already Well on Its Way to the Big League - Catch It While It's Still Undervalued
Small-cap stocks offer the chance for truly explosive gains - when you pick them right.
Take Neurocrine Biosciences Inc. (Nasdaq: NBIX), for example. When Money Morning Small-Cap Specialist Sid Riggs picked NBIX four years ago, it was trading around $9. Today, it's at $70 - a 675% gain!
And the time to buy small caps is now. As Money Morning Technical Trading Specialist D.R. Barton, Jr., explains, small-cap stocks routinely outperform the bigger companies at the end of the year.
So this small-cap pick in the medical field is in prime position...
OraSure Technologies Inc. (Nasdaq: OSUR) is the company behind OraQuick, the first at-home HIV testing kit in the United States. That gives the company a major advantage in a market that Global Market Insights projected to double between 2015 and 2023.
The company also produces detection kits for hepatitis C and influenza, as well as products that screen for alcohol and narcotics, and over-the-counter cryosurgical products to remove warts and lesions.
OraSure is already up 55% since Sid first recommended it in February - boosting its market cap to just over $1 billion - but there's still plenty of room for growth. The Pennsylvania-based company has beat earnings estimates by an average of 40.5% since Q4 2016. And its track record of smooth and quick FDA approvals - including its blood test kit in 2010, its heptatitis C test kit in 2011, and OraQuick in 2012 - gives us confidence that it can quickly move new products from the development stage to profitability in the years to come.
"Analysts have almost perennially underestimated the company's potential - something they won't do for long," Sid said. "Which is why you don't want to delay for a New York minute if you're as interested as I am."
BONUS PICK: We again offer a bonus pick for the more tech-minded investors out there. Specifically, this small-cap stock is for those looking to get a piece of the booming digital banking market.
According to Juniper Research, by 2021, 3 billion users will access banking services digitally. That's half of all adults in the world. Sid expects the market value of mobile banking alone to hit $865 billion by that time.
The best way to profit from that shifting landscape is VASCO Data Security International Inc. (Nasdaq: VDSI). VASCO specializes in encryption for digital banking services, offering services such as electronic signatures and mobile app security. Its client list - already over 10,000 organizations - includes some of the biggest banks in the world, in addition to government agencies and healthcare companies.
This year, Info Security Products Guide awarded its Global Excellence Award to VASCO for its DIGIPASS app, which includes behavior, facial, and fingerprint recognition.
With a market cap of about $535 million, VASCO is set to take off as mobile banking increasingly becomes a facet of all of our lives. Security is going to be an indispensable piece of that puzzle, and VASCO is at the forefront of the field.
Best Stocks to Buy No. 4: This Pick Lets You Cash In on the Cryptocurrency Boom Without Taking a Chance on an Unproven Commodity
It's no secret that cryptocurrencies are hot right now. In November, The Financial Times called them the "biggest speculative boom since the dot-com fever."
To demonstrate how far the cryptocurrency craze has come, if you bought $50 worth of bitcoins in the spring of 2011, when they were trading at $1, they would be worth $800,000 today.
Of course, a week ago, that calculation would have been closer to $450,000. That's still a mind-boggling long-term return, but the point is that, even today, Bitcoin can be wildly volatile.
In addition to Bitcoin, there are now over 1,300 cryptocurrencies to choose from. But some investors are understandably wary of investing significant amounts in commodities that will make their hearts race on a daily basis.
Enter Nvidia Corp. (Nasdaq: NVDA). This Silicon Valley tech company doesn't offer a cryptocurrency, but its GPU graphics cards can be used to mine many of them. Demand for cryptocurrencies such as Ethereum, Litecoin, and Monero is one reason why Nvidia has jumped over 80% in 2017.
Nvidia drew $150 million in revenue from cryptocurrency miners in this year's second quarter alone. Now there's a reason for that revenue to climb even higher.
A "hard fork" on Oct. 25 created a new alternate version of Bitcoin. And unlike its parent commodity, the new "Bitcoin Gold" can be mined via Nvidia's graphics cards. That's a new, high-profile cryptocurrency offering miners a reason to turn to this company.
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Better yet, this company is also tapped into one of the biggest tech trends of our time: self-driving vehicles. Nvidia has partnered with automakers including Toyota Motor Corp. Ltd. (NYSE: TM), Mercedes-Benz, and Tesla Inc. (Nasdaq: TSLA) to deliver artificial intelligence platforms in their upcoming models.
Owning this stock is like buying a whole portfolio of in-demand cryptocurrencies, plus a lucrative stake in advanced artificial intelligence. It gives you all the excitement of today's hottest investing trends, without the associated risk.
BONUS PICK: For the more adventurous investors who want to invest directly in a cryptocurrency, we think Neo is one of the most exciting options out there.
Neo was developed in 2014 under the name "Antshares." The price really took off this summer after it was rebranded with the new name, a reference to the Greek word meaning "new," as well as to Keanu Reeves' character in "The Matrix" film series.
Neo's current $35 price tag is an incredible jump from its year-opening price of $0.14. But we don't think this cryptocurrency is finished rising yet.
We've already talked about growth in China as one of the major trends of the coming year. And that's what makes Neo so attractive.
In a country that restricts the use of many cryptocurrencies, including Bitcoin, Neo has the notable distinction of being the first open-source blockchain developed in China. And it enjoys the tacit endorsement of the Chinese government, thanks not only to its homegrown status but also to its government-friendly practices.
In short, as Alibaba is to Amazon, Neo is to Bitcoin. So if you're looking to get in on the cryptocurrency boom and want the added benefit of China's unstoppable growth, Neo is your answer.
Best Stocks to Buy No. 5: Here's a Quick and Easy Way to Profit from Gold's Breakout
While stocks and cryptocurrencies are flying high, gold has been falling. The yellow metal is down about 8% in the last three months.
But this short-term fall is just a blip in a much larger bull run for gold.
Money Morning Resource Specialist Peter Krauth says that, in spite of bearish movements over the last few months, gold's gains will continue after the Federal Reserve's Dec. 12-13 meeting.
"We could still see gold prices reach $1,350 before New Year's," says Peter. As of this writing, gold sits around $1,250.
Even for those who aren't bullish on gold, it's advisable to hold at least a small amount - around 5% of your portfolio - as protection against inflation and market downturns.
But holding a gold bullion is fraught with difficulties. You have to make sure you're buying from a trusted dealer, and if you aren't an expert, there's no way to be certain what you're getting is 100% pure. Then you have to decide where to store it, and every available option comes with drawbacks. And when it's time to sell, it's not nearly as easy as selling stock.
If you're not up for all that, an easier way to get exposure to gold is through an exchange-traded fund (ETF). Gold ETFs track the price of gold, so you get the benefit of owning physical gold without the headache.
The most widely traded - and most liquid - gold ETF is SPDR Gold Trust ETF (NYSE Arca: GLD). Of all the gold ETFs, this one will track the price movements of spot gold most closely. Management fees will affect your total return, but it will likely be less than you'd lose when buying and selling coins from a dealer.
For investors who have never bought gold before and want an investment that's easy to buy and sell, GLD is the best option.
BONUS PICK: While GLD is backed by physical gold, it's not quite the same thing as owning that gold. If you want a more direct ownership in the gold managed by an ETF, your best bet is Sprott Physical Gold Trust (NYSE Arca: PHYS).
A share of PHYS is directly linked to the gold in Sprott's vaults. If you want, you can trade in your shares for the bullion.
A couple caveats here: PHYS trades at a premium, and its price movements won't correspond to gold's movements as well as GLD's. You can go to the fund's website to see what the current premium is and how it has fluctuated over time. If you choose to sell your shares, you'll get the current premium back.
If you choose to redeem your shares for gold one day, it's not immediate. The option is available once a month, and takes a couple weeks to process. There also might be a fee if the amount isn't large enough.
The advantage of PHYS is that, in a true "black swan event," shares in PHYS are more likely to hold up than those in GLD. In other words, this is the option for those who want an easy way to own physical gold in order to guard against a worst-case scenario.
Another advantage is that, ironically, shares in PHYS are not taxed as collectibles, as shares in GLD are. So if you sell your shares in PHYS, long-term gains will be taxed at your capital gains rate, which no matter who you are will be lower than the 28% hit on GLD gains.
If you're on the fence, of course, you can always buy a little bit of both. That way you get the liquidity of GLD and the rock-solid protection of PHYS, and when you want to sell a little bit, you can make the choice that works better for you at the time.
Either way, don't wait to get some gold in your portfolio. We expect 2018 to be a great year for the yellow metal.
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About the Author
Stephen Mack has been writing about economics and finance since 2011. He contributed material for the best-selling books Aftershock and The Aftershock Investor. He lives in Baltimore, Maryland.