This summer, the stock markets are all about tech and pharmaceuticals, while the banking sector has just won a nice reprieve from stress resulting in some attractive shareholder payouts.
The Internet of Things and two all-out wars on this playing field make for a more explosive market than ever before. One war is between mobile telephone and data providers, vying for capabilities and customers. Another war is between cyber thieves, hackers and extortionists and those racing to the market with weaponry to keep our data safe.
We’re also looking at a windfall for banking sector shareholders. Why? Because the 34 biggest banks in the U.S. just cleared the Fed’s stress tests last week, and their response: dividend hikes and repurchase programs. This is a nice place to be right now.
But nothing will be as explosive as the Canadian marijuana scene. The Canadian government’s intention to legalize the recreational use of marijuana by this time next year has already been a bonanza for pot growers. The cream of the crop was hitting new highs on medical marijuana gains, but they’ve been positioning themselves in advance to take advantage of the real break-out here—legalization for recreational use. Stocks soared more than 1000% when this legislation hit the table, and by July 1st, 2018, it’s going to be too late to get in on this game for a good price. This is the summer when new pot billionaires will be minted.
Here are our 5 top picks for the best gains in these sectors:
#1 Apple (NASDAQ:APPL)
There probably hasn’t been a better time to get in on this tech darling in a while. Apple may have seen its shares fall from highs this year, but the big picture here is a stunning one. Keep in mind that the iPhone 8 will likely be released in the fourth quarter. We might see investors start withdrawing a bit in the run-up under pressure to sell, but this is just near-term stuff that ignores the stellar fundamentals.
More savvy analysts see another 10% rally for Apple. Earnings are on the increase and we’re looking at major expansion here. When the iPhone 8 comes out, expect much more. Even speculation on the details of this phone sent Apple to major all-time highs in May. Don’t be fooled by the fall back. This stock is still up 24% year-to-date, and come Q4, it is likely to be riding even higher.
This isn’t a huge divided-yielder right now, but there’s a very nice rise in payout—and again, the 10th anniversary iPhone is coming, so timing is important here.
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We turn to marijuana now—and specifically to Canada because this is the biggest multi-decade opportunity for investors right now. The Canadian government’s legislation to legalize recreational marijuana by this time next year creates a multi-billion-dollar market overnight, and the first to get approval to grow and sell new recreational strains will be the major winners. More interestingly, a supply shortage is already looming, with the industry scrambling to add growing capacity in time for July 1st, 2018—when recreational use is finally legalized.
How big is this market? It’s huge. Deloitte estimates this industry could be worth a whopping $22.6 billion annually. That’s more than the combined sales of beer, wine and spirits.
So, we’re looking at small-cap Invictus because it has 2 of 50 licenses in Canada to cultivate cannabis.. And there’s another important first here: Invictus is the first licensed medical marijuana company to pay a dividend to shareholders. In December, they paid their shareholders $1 million in dividends. That’s something no cannabis company has done yet.
Its strains cover every corner of this market, reaching into everything from pain management, cancer, epilepsy, anxiety and – most lucratively of all—recreation.
We’re watching Invictus closely because it’s been smartly targeting small- and mid-size companies with significant growth potential, and its strategy is all about profitability. It’s also not afraid to get down and dirty. Its owners were quietly scooping up ‘pick and shovel’ assets to lower the costs of its marijuana production, and just waiting for a big reason to draw everyone’s attention: Legalization of recreational use will do it.
#3 JPMorgan Chase & Co. (NYSE:JPM)
The banking sector looks great again—thanks to some major stress relief. Shareholders are loving it right now. Nowhere are they loving it more than at JPM.
America’s largest banks have now definitively proved their financial robustness. Last week, they cleared the first round of stress tests, and the Fed gave them all a clean bill of health for their capital plans. This is the first time this has happened since 2008. This is a great time to add some banking stocks to your portfolio—but JPM has made shareholders exceedingly happy.
JPM increased its quarterly dividend to 56 cents a share, and announced a buyback program of $19.4 billion. Others have done the same, but JPM’s was far more attractive (Bank of America increased its dividend to 12 cents a share, for instance).
#4 Cisco Systems (NYSE:CSCO)
If you like Apple, you should like Cisco. Not only is it the Internet of Things, but it’s a key warrior in the fight against cybercrime. Perhaps nothing is more vital right now. This is a time when corporations are in a sheer panic over stolen, kidnapped and leaked data that can—as we have seen—stop global shipping in its tracks, among other things.
Earlier this week, Apple and Cisco Systems announced plan to help businesses that primarily use gear from both companies to get a discount on cyber-security insurance premiums. Cisco has in the past created security apps for iPhones to protect against phishing attacks, among other things.
The share of Cisco Systems currently has a value of $31.3 while the company’s 52-week low is at $28. This $156-plus-billion market-cap company has stable shares, and with cyber security the most urgent issue of our time, it’s got nowhere to go but up.
#5 Verizon (NYSE:VZ)
It hasn’t been easy for Verizon. The competition in this field is vicious—and it’s an all-out battle for customers, every day. The stock has dropped more than 16% year-to-date, but the long-term picture looks good and this may be the perfect buying opportunity.
Verizon has been one of the worst performers on the Dow this year. But … it’s still attractive when you compare it to its peers, especially in terms of return on assets, equity and capital, but also in terms of revenue, earnings and dividend growth.
That’s near-term, and stocks are at a discount right now. But long-term, keep in mind that the Verizon network is still the gold standard.
Alibaba (NYSE:BABA): This is one of the top 2 tech companies in China, and it’s sent out a challenge to Amazon and Google with its new digital speaker assistant that will launch formal sales in the first week of August—and is targeting China’s 450 million e-commerce shoppers.
Facebook Inc.(NASDAQ:FB): Shares are trading at a discount to anticipated growth rates over the next five years, so this is a good time to get in.
By Charles Kennedy
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