Markets swooned in the second half of 2018, but have turned up since Christmas, regaining much of their lost ground. These last few trading sessions have seen a slip, with the NASDAQ down 2.2% and the S&P 500 down 1.6%. It’s a reminder that volatility is a feature of the stock markets, that traders will have to expect.
According to Morgane Delledonne of BMO Global Asset Management, “The global economy is entering a late-cycle phase, where economic growth remains strong but is losing momentum.… As a result, we expect market volatility will remain elevated through 2019 and market corrections will become more frequent.”
One smart way to deal with market volatility of this nature is to keep a number of reliable growth and income stocks in the portfolio – stocks that have shown consistent price and/or dividend appreciation regardless of overall market movements. In short, invest in the steady, predictable stocks that will even out the fluctuations in your portfolio growth.
Here we’ll look at three such stocks, all with ‘Strong Buy’ ratings and consistent gains over a span of several years. We’ll dip into TipRanks’ database to review the stocks histories, and see what top-rated analysts have to say about them.
Anthem, Inc. (ANTM – Research Report)
With 40 million members and $90 billion in annual revenue, Anthem is the second largest health insurer in the US. Its stock, ANTM, is also a dependable, long-term profit engine. ANTM shares have gained 114% over the last three years, compared to the S&P 500’s gain of 35%.
Anthem has been in the news recently, as it has sped up a planned switch to its in-house pharmacy benefit manager, IngenioRx. The move comes months ahead of schedule, as the previous PBM, Express Scripts, has been acquired by Cigna. Anthem has had a series of disputes with Express Scripts over the past several years, so the IngenioRx launch comes as something of a relief for the company. The $4 billion in projected annual savings from the move has definitely helped both the company’s outlook and the bottom line.
Writing from Stephens, market analyst Scott Fidel (Track Record & Ratings) says that he “expects the company to achieve about 16% EPS growth through 2021.” Fidel sees that growth rate as an opportunity for Anthem to update its long-term growth outlook. He gives the company an Overweight rating, expecting it to outperform the market, with a $350 price target suggesting an upside of 18%.
Steven Halper (Track Record & Ratings), a five-star analyst from Cantor Fitzgerald, agrees with Fidel that Anthem has a bright outlook. Commenting after the company’s investor day meeting, he says, “Our 12- month price target remains at $360. The company hosted an investor meeting, which highlighted many of the company’s new growth initiatives. Indeed, many of the initiatives are likely to be driven by redeploying the savings generated by the launch of IngenioRx.” Halper’s $360 price target implies an upside potential of 22% for ANTM.
Anthem’s shares have an analyst consensus of ‘Strong Buy,’ based on 11 ‘buy’ ratings and 1 ‘hold.’ The average price target, $354, gives an upside of 20% when compared to the share price of $295.
Microsoft Corporation (MSFT – Research Report)
Microsoft needs no introduction. The software giant started by Bill Gates in back in the 1970s is famous for its Windows operating system, and it has been successfully moving the Office software package onto the cloud, as Office 365.
As an investment, Microsoft has provided helped lead the bull market of the last 10 years. The company has provided an average annual return of 25%, and while the dividend yield is only 1.68%, that still gives a reliable annual payout of $1.84 per share. In short, you simply can’t go wrong buying Microsoft (even if you prefer working on a Mac!).
The market’s analysts are not shy in their praises of this stock. From Wedbush, Daniel Ives (Track Record & Ratings) gives MSFT a $140 price target with a 24% upside. In his comments he says, “Microsoft remains in an enviable position heading into the next 12 to 18 months on the heels of its cloud success and is firing on all cylinders around its Office 365 and Azure strategic vision.”
Five-star analyst Keith Weiss (Track Record & Ratings), from Morgan Stanley, agrees with the rosy outlook on Microsoft. He believes that the software company “will pull ahead as the best secularly positioned firm in tech and that the company’s secular positioning and durable growth give it the best risk/reward in software.” Lives Ives, Weiss gives MSFT shares a $140 price target.
Overall, Microsoft has 20 ‘buy’ ratings, 1 ‘hold,’ and 1 ‘sell,’ giving it a ‘Strong Buy’ on the analyst consensus. The average price target is $123, which suggests a 9.6% upside from the $112 current share price.
Dollar General Corporation (DG – Research Report)
Great stock buys can be found in any sector. We’ve looked at a health insurer and a major industrial manufacturer so far; now we’ll take a look at a discount retailer. Dollar General caters to the low-end consumer, offering a variety of groceries and household goods – everything from snack foods and candy to hair products and towels to men’s and women’s apparel – at discount goods. The chain also carries several exclusive store brands.
As an investment stock, DG has plenty to offer. Shares have gained 43% over the last three years, and while the dividend is low (only averaging 25 cents per share), it has been paid out reliably. DG is no blockbuster, but it is a classic defensive stock: steady gains, and a regular dividend to pocket or reinvest. Compared to the other stocks on this list, DG presents a bargain for the buyer, as well: it’s share price, at $118, is much lower than ANTM’s or BA’s, giving it an easier cost of entry.
Wall Street’s top analysts have taken note of Dollar General’s solid performance, and their optimism is reflected in the ratings. Back in January, KeyBanc’s Bradley Thomas (Track Record & Ratings) upgraded DG from ‘hold’ to ‘buy,’ while last month Raymond James’ Dan Wewer (Track Record & Ratings) raised his price target 7.6% to $127.
More recently, on March 4, five-star Oppenheimer analyst Rupesh Parikh (Track Record & Ratings) laid out the bullish position for DG, saying that he sees “the case for outperformance and believes the shares represent a core holding for investors in the latter parts of the U.S. economic cycle.” He adds that “Dollar General continues to remain a top pick in the food retailing/grocery portion of the coverage universe.” Parikh’s target price, $130, suggests an upside of 9.5% for Dollar General shares.
DG is another ‘Strong Buy’ stock in the analyst consensus, with 8 ‘buy’ ratings and 1 ‘hold.’ Shares are trading at $118 now, and the average price target of $125 gives the stock a 5.3% upside.
Enjoy Research Reports on the Stocks in this Article:
Anthem, Inc. (ANTM) Research Report
Dollar General Corporation (DG) Research Report)
Microsoft Corporation (MSFT) Research Report
TipRanks compiles a comprehensive database of the best Wall Street analysts, ranked and sorted by the accuracy and success of their stock ratings. You can find the very best of the professional analysts on our Top 25 Wall Street Analysts page, follow them, and see for yourself which stocks they recommend. Go to the Top Analyst page now.
