Consider these highly rated stocks.
The S&P 500 has taken a hard hit so far in 2020, but certain industries have weathered the COVID-19 storm better than others. CFRA manages the Industry Momentum Model Portfolio, a collection of the single top stock picks from the best-performing industries in the market. An industry representative is added to the portfolio once that industry passes CFRA's 12-month relative strength screen. At that point, the firm selects its highest-rated stock with the largest market capitalization from that industry. Even if industry momentum shifts during the market downturn, these seven stocks are best-in-class in their respective industries.
Cboe Global Markets (CBOE)
Cboe Global Markets is a public U.S. exchange focused primarily on listed options contracts and exchange-traded funds. Analyst Chris Kuiper says 2020 has ushered in a new era of market volatility that investors may not fully appreciate. Kuiper says Cboe is well-positioned for long-term growth given a potential surge in demand for risk management and speculation products. Kuiper says Cboe also has an opportunity to regain lost equity trading market share following the launch of its closing exchange in early March. CFRA has a "strong buy" rating and $137 price target for CBOE stock.
Dollar General Corp. (DG)
Dollar General is the largest U.S. dollar store chain. While many brick-and-mortar retailers have closed up stores due to the outbreak, Dollar General is still running strong. In fact, the company could even gain market share from its higher-priced competitors and benefit from consumers wishing to avoid large supermarkets and superstores and stick to smaller stores. Analyst Camilla Yanushevsky says general merchandisers will likely continue to outperform in a weak economy, and Dollar General is one of the strongest growth stories in retail. CFRA has a "strong buy" rating and $185 price target for DG stock.
Prologis is a real estate investment trust, or REIT, that manages industrial real estate in major port markets utilized for global trade. Kuiper says Prologis' logistics centers are insulated from competition due to their prime locations and the difficult-to-obtain zoning entitlements needed to build them. Given warehouse rent expense is only about 5% of total supply chain cost, Kuiper says Prologis should have plenty of opportunity to raise rents in the long term. Finally, Kuiper estimates online retail sales will continue to grow between 15% and 20% annually, driving Prologis demand. CFRA has a "strong buy" rating and $100 price target for PLD stock.
Visa is a global credit card company and operates the world's largest electronic payments network. Kuiper says investors don't fully appreciate the outlook for electronic and mobile payment growth over the next several years. The rise of mobile banking and smartphone penetration around the world will help drive surging e-commerce spending, benefiting digital payments leaders like Visa. Kuiper says Visa's massive scale and its operating leverage set it apart from its competitors, and its acquisition of financial account connection specialist Plaid could help Visa expand into new networks. CFRA has a "buy" rating and $225 price target for V stock.
Newmont Corp. (NEM)
Even during the worst of the market sell-off, gold has been working as an investment in 2020 due to its defensive nature. Gold prices are up 6.5% in 2020. Shares of Newmont, the world's largest gold producer, are up 26.4%. Analyst Matthew Miller says Newmont's Nevada joint venture with Barrick Gold Corp. (GOLD) announced last year will generate $500 million in annual synergies. In addition, Miller says gold prices will likely continue to drift higher over the next 18 months, boosting Newmont's margins. CFRA has a "buy" rating and $58 price target for NEM stock.
Take-Two Interactive Software (TTWO)
Take-Two Interactive Software is a leading video game publisher and distributor and the owner of key franchises such as Grand Theft Auto and Red Dead. Americans stuck in their homes indefinitely have limited sources of entertainment, but video games are a popular way to pass the time. Analyst John Freeman says the new generation of Xbox2 and PlayStation 5 gaming consoles expected to ship by holiday season 2020 should create a major tailwind for the entire industry, including top pick Take-Two. CFRA has a "buy" rating and $130 price target for TTWO stock.
Analyst Angelo Zino says the negative COVID-19 sales impact for Apple in the first half of 2020 is transitory in nature and comes during the time of year in which iPhone cycles tend to hit their low point anyway. Zino says the launch of 5G networks in the second half of 2020 will likely be a catalyst for a massive smartphone upgrade cycle. Finally, at a time when liquidity and balance sheets have become increasingly important, Apple may have the strongest balance sheet of any public company. CFRA has a "buy" rating and $320 price target for AAPL stock.
Top stocks to buy in the strongest industries:
-- Cboe Global Markets (CBOE)
-- Dollar General Corp. (DG)
-- Prologis (PLD)
-- Visa (V)
-- Newmont Corp. (NEM)
-- Take-Two Interactive Software (TTWO)
-- Apple (AAPL)
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