As the new year rolls out, I decided that it would be a fun experiment to run and collect top investment picks for 2017. I reached out to the community of bloggers that I regularly interact with and asked them to participate in this collection. I performed the same exercise and the post garnered a lot of attention from the dividend investing community and readers in general. I recently posted the results on how the overall picks did over the course of the year in 2016. There are still some great picks from the 2016 top picks, and I invite you to check them for ideas. Anyway, back to the 2017 list...
The rules were simple: Pick one investment (either a stock or a fund or a commodity or any other form of investment), and present a short and quick investment reason behind the pick. Most bloggers I reached out to were happy to comply and shared their pick.
Top Investment Picks for 2017
Before I present the picks, I would like to remind the readers that these are simply picks based on current outlook and each investor should perform due diligence before investing in any of the companies mentioned. Also, the investors I reached out to are long term investors, so I discourage readers to trade in and out of these investments based on the data presented here simply because it is their top pick at the moment. It is very hard to predict what the stock/market will do over the course of one year, let alone a quarter or two.
Without further ado, here are the top picks from the blogging community for 2017. Some of the investors are not necessarily bloggers, and some are folks I regularly interact with via social media and other forums -- in which case, I have linked to their public profile. The 'DGF' referred to next to some of the names refers to Dividend Growth Forum.
"Earnings will receive a big boost with the upcoming Spectra Energy purchase. That will also increases dividends for investors."
"I don't know if it's my love for Guinness talking, but I'm eyeing DEO as my next stock pick. Not my top stock for 2017, but just my next pick. They are trading at a much better value than they have for awhile at the time of this write (forward P/E of 17) and have a number of world famous liquor brands under their belt. Good or bad economy, Hillary or Trump presidency, it does not matter; people throughout the world love to get their drink on. Sin stocks are essentially consumer staples and those have been down lately. Though I'm thinking of holding my dividend payments as cash in the hopes that we will get a nice market crash soon."
Dependable Dividends: UEX Corp (UEX.TO)
"As the great investment strategist Ricky Bobby once said, "If you're not first, you're last."
I'm not investing Grandma Thora's retirement savings here. This is just play money. So when it comes to winning a stock picking competition, I go for the riskiest stuff out there. The ideas so nutty, some kids are allergic to them.
My pick for 2017: uranium miner UEX Corp. Uranium miners have been in the doghouse since the Fukushima Daiichi disaster in Japan. Spot prices have sagged below $18.00 per pound, bringing down the share prices of miners with it. The industry has fallen completely out of favor with investors.
That could change in 2017. Low prices have forced producers to dial back output. Dozens of new nuclear power plants will come online in emerging countries this year. That supply/demand picture could put a bid under uranium, sending the share prices of the most marginal producers like UEX soaring.
UEX is a glorified lotto ticket. This is definitely not something I'd stick in my own portfolio. The company in essence, which owns a bunch of interesting uranium fields in northern Alberta, is an out-of-the-money call option on uranium prices.
But come next Christmas, I expect to be No. 1 in the competition rankings... or at the very bottom."
"Ridiculously cheap by just about any metric you can use, I have to think at some point this year it either releases a new drug or makes an acquisition that gets the stock price moving again. I realize that the HCV business is seeing declining sales, but you could completely remove that portion of its business and it would still be reasonably priced based off of its other drugs."
"I really like GILD or CAH. Even CVS. These companies are really beaten down. Would they bounce back in 2017? I don't know. However, my choice is Unilever. I usually buy the UL version. I don't think you can go wrong with this pick with a solid 3.5 yield with a forward PE of 19. Payout ratio is around 70%. FCF easily covers the dividend. I have been and will be adding more to UL."
DivHut: Care Capital Properties (CCP)
"After a tough end to 2016 for the health REITs I think they'll rebound nicely in the coming year. It's a sector that has no love currently which is why I'm making my pick in the space."
"With Apple's roughly $220 billion overseas and talk of a repatriation tax holiday, this cash could finally be put to good use. AAPL could use it to acquire almost any company or combination of companies they desired to expand their business. In addition to this, I believe they would use a good portion for share buybacks and dividend growth; possibly a special dividend as well. Shares of AAPL trade at a low PE of 14, around it's 5-year average while this tax scenario could be a powerful catalyst to send the stock soaring. With Samsung's exploding phone, Apple has a good opportunity to further penetrate the market with it's coming iPhone 8."
"Yes, a telecomm. One that has severely been beaten up. I see mid to low 30s in its future. I do own this stock too which makes it even more interesting for me to follow ;) Not a rocket ship but think it has more chances for price appreciation while collecting divi along the way."
"They are good old reliable, strong consistent dividend growth year after year. Additionally, they are a brand that all homes have. Lastly, their P/E ratio has been favorable for quite some time, even with the increase of share price, which is associated with EPS growth. Love me some JNJ!!"
Dividend Dragon @ DGF: Next plc (LON:NXT)
"Superior margins (20%) over competitors. Very lean in a tough trading environment. Currently trading at 11 p/e and $ investors are getting a great deal due to the crash in the £ following Brexit."
"Second biggest vet group in Australia, it's a defensive business yet growing quickly."
"If I had to select just one investment, I would have to pick an ETF or mutual fund. I am big on diversification, which explains why. This ETF is a diversified portfolio consisting of 100 quality dividend payers such as ExxonMobil, Procter & Gamble, Johnson & Johnson etc.. Many of these equities have a track record of consistent dividend growth. This ETF yields 3%, is commission free at Charles Schwab and has a low expense ratio of 0.07%."
"The combination of current pipelines, as well as current cash plus enormous retained future profits, means that you are being compensated very well for this risk at less than 7x earnings. I'm waiting a double digit growth for the next year."
"Unilever or CVS Health. OK, Unilever is already picked, so CVS it is. Retail pharmacies, in-store medical clinics, pharmacy benefits manager (PBM). If this business isn't well positioned to service aging population, I don't know what is. CVS just raised dividend by 17,6%. Forward P/E below 14. Of course it's impossible to say how the stock will perform in 1 year time frame, but I feel good about long-term and will be buying more shares when the stock market opens in 2017."
"Cheap dividend aristocrat, with "everything" negative in prices. Also (AAPL) might be a good play if cash held overseas will come back to US"
"As a deep value investor I like to buy stocks that are out of favor so I can buy with a margin of safety. There is no Dividend Aristocrat more out of favor than Wal-Mart! A strong balance sheet and good profitability make it worth holding while waiting for a growth turnaround."
"Not big on 1 year time frame picks but ...Echoing the GILD picks. Not expecting a big gain in 2017 but 5 years from now, I'll either be crying or trimming like crazy. Alternatively, I still like Amgen (NASDAQ:AMGN)."
Dividends in Hand: Diversified Royalty Corp (DIV.TO)
"Instead of providing a well known, out of favour dividend growth stock (i.e. my TransCanada Pipelines pick for 2016), my 2017 selection will be a hit or a miss. After selling their stake in a chain or restaurants to Cara Operations Ltd last quarter, Diversified Royalty (a misnomer given they only receive royalties from two investments) has a pile of cash on hand that they are likely to re-deploy in the near-term. Catalysts include their excellent investment in Mr. Lube, their ~9% dividend yield, and the fact they recently settled a lawsuit/insurance claim against a former executive that will result in a $1.1M accounting gain in Q416."
"Lithium boom 2.0 sometime in 2017... Birimian will get taken out, or joint-venture to develop high-grade Goulamina deposit."
"Strong earnings growth and well positioned to take advantage of the "internet of things"
"VDSI is my top pick for 2017, because of a combination of factors. Data and transaction security will be front and center in 2017, following a 2016 that was rife with hacking and data theft issues. Vasco has been a huge player in the European financial industry, and has been growing the customer base in the US. The company has been growing, but not as quickly as it should have been in 2016. A big part of the problem has been that banks, particularly in Europe, have been slow to invest in data/transaction security because they haven't had the cash flow.....and European laws have allowed them to keep from disclosing data/transaction theft incidents. Those circumstances will change in 2017, especially as teh European banks are already begining to benefit from better net interest margins. I view Vasco as a solid Dhando Investment. Low risk given the lack of debt and cash on the books, while solidly growing in a very important industry. Eventually I think Vasco will be bought out by a large bank or data processor, but for now I am happy to be an owner in this growing business."
"It was my pick for 2016. Well that didn't work out well. I guess it depends on how you look at it. A depressed stock price allowed me to buy more share through DRIP investing. Competition in Gilead's space has gotten tougher, but I beleive this company will come out on top in 2017. Additionally, Express Scripts just moved the Gilead drug Harvoni to their preferred tier. This should help bolster sales. Gilead also filed a new drug application with the FDA for a single-tablet Hepatitis C drug. If the drug is approved, it will be the first once-a-day pill for cronic HCV. Also, Gilead is sitting on a mountain of cash. I suspect that Gilead will us some of this cash to acquire a few companies in 2017. This will help to spread out revenues, away from HCV and into other areas."
Jay Delaworth @ Intelligent Trend Follower: Canopy Growth Corp (CGC.TO)
"Admittedly, it's very hard to value this company. And by most measures it's incredibly stretched. But as a speculative pick, I think CGC warrants some attention and has a lot of upside potential.
After all, this is a brand new international market that is opening up and CGC is one of the most established and largest players in the space. There are still a lot of unknowns with regards to marijuana legalization in Canada. However it seems that the wheels are in motion and if so CGC shareholders could continue to benefit. I view this like buying a call option with no expiry date. The shares are pretty cheap and a small perentage of your portfolio in this company could end up going a long way."
Hello Suckers: Energy Transfer Equity LP (ETE)
"This company is involved in energy transportation (similar to KMI) and their infrastructure is worth $60 per share. They also pay nice dividend. I believe the price appreciation along with dividneds will continue in 2017."
My Own Advisor: Algonquin Power & Utilities Corp (AQN.TO)
"I read their objective is to increase their dividend by 10% or so going forward. With a good mix of solar, wind and hydro energy, I like the diversification that comes with the dividend."
"It's always a tough call to pick the best performer for just a one year time frame, but I think Nike has a good chance to have some good capital appreciation in 2017. It's not often that you can buy shares in a growth company at fair value which is where I feel Nike is right now. In order for Nike to have a chance to win this you'll need to see continued growth which should come but valuation expansion to get the win. Time will tell, but Nike as a company is still firing on all cylinders and if the strength of the USD finally changes course you could be looking at 20%+ growth numbers."
"The company has tanked in 2016. On the basis the of the latest info I think this great company will rebound in 2017."
"My vote goes for GILD, insanely low valuation, lots of cash in hand, almost -28% YTD returns in 2016... it "has" to go up. I predict +35/40% in 2017. At +40% it would still trade at a P/E around 9ish at 2016 earnings. Same as CVX last year, I'm putting my money where my mouth is and I already am heavy on GILD and I keep buying more."
Rocco Matteo: Magna International Inc (MG.TO)
"Great balance sheet and trading at 8X earnings , cheap valuation with good upside in next 12 months"
"After choosing a high-risk/bad-performing stock in 2016, Lending Club (NYSE:LC), I'm going with a more traditional dividend growth pick this year. My choice is Nike . The stock was down around 20% for 2016. The company has a dividend growth streak of 15 years, with an average increase of 15% over the past 10 years. It's forward PE ratio is just under 20 and the dividend payout ratio stands around 29%. Strong balance sheet. Powerful brand."
"Instead of picking one stock, I have decided to go with an ETF instead. I am bullish on the precious metals space as I believe both gold and silver are undervalued and have plenty of room to run. What better way to gain exposure than a mining company which provides leverage to the underlying metal price. Instead of picking one company, whose performance can swing wildly, I choose GDXJ as it provides exposure to 52 great junior/midcap mining companies in the gold and silver space. Headwinds include continued strength in US$, but if the rest of the market falters, gold and silver should see a nice leg up."
"I really like NKE. I wouldn't say it is cheap but is fair value from its historical range and earnings are still growing 10% annually. I am looking forward to adding to my position"
"Novo Nordisk saw a bit of headwind in 2016 and I feel the tide has turned for NVO. NVO is the lead producer of the diabetes insulant medicine which should help them increaes the profits moving forward"
Blog reader Al: Novo Nordisk A/S (NVO)
"I was perusing the Denmark EDEN etf for an eventual investment after it's recent price collapse, when I saw that they had NOVO NORDISK as biggest holding at 30%. Went to Yahoo Financials, and on the Novo Nordisk website to dig a bit further down on this specific stock.
I think I found an interesting one...
Novo Nordisk is a pharma sector corp with 42 600 workers, and market leader in diabetes care, which is a global pandemic. They are a Denmark-based corp that does over 50% of business in the USA alone, and the rest in Europe and Asia.
What you need to know from the 20-F document page 3 year 2015 with link hereunder:
From 2011 to 2015, evolution:
- # shares outstanding from 2900 to 2600 million (share buyback program in place)
- net sales from 66 to 107 Billion
- net profit from 17 to 34 Billion (30% plus NET profit margins...)
- earning per share from 6 to 13,5
- dividend per share from 2,8 to 6,4
- Cash holding much more than 10Billion and debt 1Billion.
- ROE above 70%
- Share buyback program of 4,5 Billion started in October 2016
Now, that's what I call a proper profit machine…
Now the "bad" news:
- their very long term CEO is going into retirement end this month, and is replaced by a younger man who has been at novo nordisk since 1991
- their intended yearly sales growth rate has been decreased from 10% to 5% at Feb 2016, given the health care billing issues in the USA, where their products are under FDA pricing pressure, to reduce costs.
- result: stock chart from $57 at peak 2015 to now $35 (-40%) but turning back up on the OTC market.
- They are firing 1000 people to increase profits, since salaries are their main expense
- many new products in the pipeline, but most are being reviewed by the FDA, who is now stalling things, given Trump's Billionaire Club arrival and change of guard at the FDA.
- The basic evaluation metrics are expensive, but acceptable for such a fast grower. Even if stock price does not move much for a few years, given their ROE, they will then be dirt cheap in 4 years max. Gurufocus shows that it is a financially very strong company active in a solid still growing market where it occupies a market leader position with few competitors, thus it has a long term moat.
So, there you have it - the top investment picks for 2017. In order to track them centrally, I have created this spreadsheet that is publicly available for viewing. The sheet tracks the picks and how the investments perform over the year.
Those are some very interesting picks, and just a few stocks that overlap with each other. With 4 investors picking Gilead Sciences, the company appears to garner the most bullish sentiment in the community. Close second is Nike Inc, picked by 3 investors. Other duplicates are Unilever and Novo Nordisk picked by 2 investors. What are your thoughts on the stocks/funds picked by the blogging community? Do you own any of them and/or have a more bearish outlook or have a better pick than the ones mentioned? Share your thoughts below.
Full Disclosure: My full list of holdings is available here.
Disclosure: I am/we are long JNJ, AQN. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Editor's Note: This article covers one or more microcap stocks. Please be aware of the risks associated with these stocks.