As the new year rolls out, its time to share the annual investment pick contest that I run. This is the 3rd year in the running. This is merely meant to be a fun experiment to run and collect top investment picks for 2018 from a community of investors I regularly interact with. There are still some great picks from the 2016 & 2017 top picks, and I invite you to check them for ideas. Remember that investing is a long game -- so, focusing on short intervals like a year is not prudent -- even though this contest focuses on one year return. Plenty of older picks may still present long term value.
The rules were simple: Pick one investment (stock, bond, fund, commodity, cryptocurrency or any other form of investment security), and present a short & quick investment reason behind the pick. I will track this progress over the year and provide quarterly updates on this blog.
Top Investment Picks for 2018
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 not take this as investment advice. If you decide to pursue these investments, please do your due diligence before investing in any of the securities mentioned.
Without further ado, here are the top picks from the investing community for 2018.
"The bank's financials continue to recover after the financial crisis, with rising interest rates forecasted next year I think investors will see more stock buybacks and dividend increases."
"I'll go a bit more conservative than everyone here and say $T. Last I checked, the dividend for AT&T was pushing 6%. People are overreacting to the pushback on the Time Warner deal. It's still a great business with a strong legacy and steady cash flow. The only real problem is its debt, but either the deal goes through and that extra cash flow pays down the debt, or it doesn't go through and they don't take on that extra debt. Either way, AT&T is an amazing and safe company that's yielding in the high 5%'s, and it's one of the rare exceptions to the time tested rule of avoiding high yielding stocks due to their danger."
"As a deep value investor I like to buy companies that are completely out of favor. Investors believe GME is Blockbuster Video, but I believe they are wrong. This stock is priced as if GME will eventually go bankrupt. However, management has been preparing for declining revenues by diversifying and preparing for future growth. In the meantime they are generating tons of cash flow and sell at a bargain basement price of 3.3 EV/EBITDA, a 14% Free Cash Flow Yield, and a dividend yield in excess of 8.4% at the current price of $18.07."
David Brady: Silver
(no reason provided)
"I'm repeating my pick from last year. Obviously, UEX doesn't represent the safe, dividend growth type stocks I usually write about. But seeing as this is a stock picking competition, I always like to swing for the fenses. Last year, UEX performed good enough to earn me a 7th place finish. This year, I think it could get me to the top of the pack... or dead last.
Mr. Market has still priced uranium irrationally low. Spot rates still sit below the industry's cost of production. That means miners lose money on every pound of uranium they haul out of the ground and make it up in volume. This situation is clearly not sustainable. As we saw last year from Cameco, miners will cut production, supplies will tighten, and uranium prices will slowly rise. That could send beaten down names like UEX soaring."
"I'm bullish on crude in 2018, as I think this run to $60 is just the beginning. XOM shares haven't really participated in the run-up yet like CVX has, so I think there is some catching up to do. XOM isn't as levered to the price of oil as some other smaller E&P's, but the risk/reward at a 3.7% is compelling."
DivHut: Bitcoin (BTC)
"The crypto tide will continue to rise through 2018. While other currencies like LTC, ETH, XRP and others might move much more I'll stick with BTC which will more than double from today's price. We'll see..."
"They had a big 2017 and with cannabis being more accepted and them using it for research, their price shoud only increase if new products are created and the industry becomes more legalized."
"Just a flyer on a high yield small cap telecom"
"Fed is supposed to increase interest rates 4 times next year. It will definitely improve the profits of financial institutions. Tax reform might bring in more economic activity which might in turn spur lending."
"Emerging markets are turning around, after a decade of going nowhere. Valuations are lower, sentiment is negative, and they are close to breaking out to all-time highs."
Dividend Investor: Imagin Medical Inc (IME)
"Human trials are just now beginning. Potential expected results in 2018. They have what it takes to be very successful and potential acquired by a larger player. Extremely vast market for bladder cancer follow up technologies."
"1) CVS is currently undervalued when you look at EBIT/EV ratio, cash flow from operations or any other parameters. AET deal is surely looming and Fear of Amazon penetration into this sector are the main reason CVS isn't doing very well currently but on my blog I have mentioned how AET could be helpful and will add positive cash flow, while I agree it's over payment to AET but it will still be alright looking at all ratios. 2) CVS pays about 39% corporate tax and with today's President signature on Tax reform, the new law is 21% that will add significant amount of cash back in business which will give nice boost to valuation on the basis on cash flow calculations per these newby MBAs :). I have been wrong so many times in past and I could be proven wrong here as well so let's see how accurate I am on my pick by end of the next year."
"I did well last year with an unpopular out of favor retailer (Wal-Mart) so I'll pick a different one this year. At the current price of $22.44 Bed Bath & Beyond (BBBY) has an Operating Earnings Yield of 26.8%, a Free Cash Flow Yield of 13.5% and sells at a EV/EBITDA ratio of 3.7. "
Divmenow: Owens Corning (OC)
"With all the huricane and wild fire in damage this company will benfit greatly going forward. They also the market-leading innovator of glass-fiber technology "
FI Fighter: Wanchain (WAN)
"Lower transaction fees than Bitcoin. Cryptocurrencies will likely continue to gain popularity in 2018. "
"Tax rate being lowered from above 33% closer to 20%. Recent modernization strategies such as kiosks and mobile ordering seem to be going well."
Income Surfer: Silver
"I think 2018 will be a good year for commodities in general, and I am especially bullish on silver. Between it's value as a store of wealth and it's industrial applications, I think it's value will increase in 2018."
"Admittedly this is a highly speculative pick, but for those equity investors looking for exposure to the growing blockchain space, BTL could be worth a closer look"
(no reason provided)
"Going for broke. Here's to betting that Trump's EPA chooses mineral deposits over salmon. He's more of a steak guy anyway."
"This stock (which owns many insurance companies such as Great West) will benefit from the rise of interest rates. Go PWF!"
"Why not? With the legalization of marijuana coming in 2018, let's see how this speculative pot-sector pick plays out!"
"Content is King and soon enough they'll own it all!"
"Reason why you think the pick is the best asset to invest in. Crypto world is just getting started and QIWI will benefit in this blockchain segment."
"Here's my picks for the 2018 top picks contest. I'd love to say long volatility/VIX if I could trade it for this contest, but I'm going with 2 picks one is a purely speculative one that might have a shot at winning the contest the other is a more traditional dividend growth pick. (1) GBLX - GB Sciences: Yolo! Actually, I think it's a decent play as they are a marijuana company that is allowed to do research on marijuana for medicinal purposes. They are actually growing marijuana right now and I think it's just a matter of time before marijuana is legal across the US. It's a true go big or go home pick. (2) LOW - Lowe's Companies: Dividend Champion and surprisingly enough a decent valuation which is more than I can say about a lot of the investment possibilities out there."
"I think the Escobal mine will come back online next year. Which would be a hige catalyst for a higher price. Also if the cryptos really pull back the market might follow suit. Rushing people back into precious metals."
"They have been beaten down in 2017. The new management Will start the turnaround"
rayray: Gilead Sciences Inc (GILD)
"This year I'm looking at putting more money in GILD, not because I think it's going to skyrocket but rather it's a nice long term investment to help build wealth."
"I'm going to go with a cryptocurrency this year. ETH is the second largest cryptocurrency by market cap, and has a much broader application usecase. ETH, unlike Bitcoin (which gets all the press coverage), enables the smart contract platform allowing other companies to leverage on the underlying blockchain and just focus on business logic instead. In addition, the team at Ethereum has made tremendous headway at scalability problems (crossed 1M transactions per day in Dec 2017) and has a very good roadmap going forward. While BTC enjoys the "reserve currency" status in the crypto world, ETH comes a close second, while providing a great alternative for users who want manageable transaction times, low transaction fees, and more importantly an overall better user experience."
"Acquisitions will be accretive in 2018 and more to come."
"Magnolia (MAG). Swedish property company which is underpriced with more than 80%. Why it will gain? Because people think that just because it´s a property company, the revenue comes from property sales. Itsn´t not, so in this case, the market is wrong. Target price for 2018 is 95 SEK and while writing the price is 50 SEK. "
"With a ticker name of WEED and legalization in Canada coming up. Why not?"
"I went into detail as to why I think video games and China in particular offers a compelling investment opportunity in my post here and I had to pick one stock that will do well in 2018 it's NTES. It has exposure to the video game market and growing exposure to the Chinese e-commerce market, both of which I expect to grow at a solid clip due to the emergence of the Chinese middle class."
"My choose for Top investment pick for 2018 is finnish Sampo Oyj. Sampo is finnish "Buffett style" insurance company. Sampo has relatively low valuation P/E 10,75 and P/B 1,99. It has Sampo has relatively low valuation P/E 10,75 and P/B 1,99. It has bought during last 3 years 45% Danish Insurer TopDanmark in my opinion very low price. first 25% they boght few years ago and then ownership rises over 30% via company's ownshares byuing program. Therefore Sampo must make byuing offer and they did. They get 15 % actually under the stock market price. Sampo has also decided that Topdanmark is starting pay dividend instead of buying own stocks. This will help in the future sampo rise already nice 5,1% dividend. Now they have to write up owner of Topdanmark and everybody see's it in figures. Think is one driver for company price even it made in paper. In the other hand I assume interest rates will rise in Nordic countries and Europe or at least some of them and speed up Sampo's return of investments. Insurance IF, Topdanmark and banking Nordea (25%). Sampo and it's Björn Walhroos is well known with Comporate arrangements. There has been some rumors. You can found Wahlroos name for example here."
So, there you have it - the top investment picks for 2018. In order to track them centrally, I have created this spreadsheet (also presented below) 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 one pick is duplicated -- 'silver' by David Brady and Income Surfer. There are 5 cryptocurrency picks, which goes to show how hot the sector is right now. Two investors picked ETFs and the rest have gone with individual stocks. This will be interesting to monitor over the year and I will provide quarterly updates on how these securities are doing. You can also find the live coverage anytime by returning to the Stock Picks page.
What are your thoughts on the stocks/funds/cryptos picked by the 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 BTC, LTC, ETH. 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.