Finance: Five emerging leadership stocks
PHUKET: From a technical standpoint, the stock market is starting to look more and more like a strong bull market rather than another counter-trend rally, but we can’t be absolutely certain the worst is over – especially with earnings season underway, the ever present possibility of another black swan event, like the Paris and Brussels terrorist attacks, and some scheduled uncertainties such as the November US Presidential elections.
However, if the US markets or major market indices can break to new highs, I would expect a continuation of the bull market that would likely see the following stocks become leadership stocks for investors:
Small cap Ligand Pharmaceuticals (NASDAQ: LGND) is a biopharmaceutical company focused on developing or acquiring technologies that help pharmaceutical companies discover and develop medicines.
While the biotech sector has given investors a less than stellar performance lately, Ligand Pharmaceuticals could have an action-packed 2016 with potentially five new product approvals from partners, advancements and expansion of its license portfolio and revenue growth forecasted to be approximately 60 per cent. The company will report Q1 earnings on May 4.
Large cap Broadcom Ltd (NASDAQ: AVGO) is a leading designer, developer and global supplier of a broad range of analog and digital semiconductor connectivity solutions. Last year, Avago bought Broadcom in a blockbuster US$37 billion merger that achieved commanding positions for the merged company in diversified sectors such as wireless, wired infrastructure, industrial markets and enterprise storage. On the negative side, some see the company as having too much debt from the recent merger ($14bn).
Mid cap Elbit Systems Ltd (NASDAQ: ESLT) is an international high technology company headquartered in Israel that is involved in a wide range of defense, homeland security and commercial programs throughout the world. In their March-issued earnings report, they expect further revenue and profit growth this year as the European defense market recovers. The migration crisis and security fears are creating big opportunities for the company, and Asia-Pacific remains strong with defense spending growing sharply in India and Australia.
Small cap Universal Display Corporation – NASDAQ: OLED – is a leading developer and deliverer of state-of-the-art, organic light emitting diode (OLED) technologies, materials and services to the display and lighting industries.
Some analysts have expressed growing excitement over a multi-year capacity expansion by OLED display manufacturers and there has been talk that Apple might move its iPhone to OLED-based screens from the current LCD materials.
On the negative side, Universal Display Corporation would have some over-dependence on mobile handset behemoths Apple and Samsung. Demand from both can be unpredictable and the company has a habit of giving guidance that’s too optimistic and leads to investor disappointment after earnings.
Large cap UnitedHealth Group (NYSE: UNH) is a diversified health care company whose UnitedHealthcare division provides health care coverage and benefits services. Its Optum division supplies information and technology-enabled health services. UnitedHealth Group recently surged to an all-time high after the company reported earnings on April 19 following a decision to exit most Obamacare exchanges in 2017.
At the same time, United Health Group is escalating an already aggressive effort to become a nationwide provider of medical care by targeting 75 markets across the country for expansion via its Optum healthcare services unit.
Again, earnings season is underway and there could still be plenty of surprises that either move individual stocks, sectors or the entire market in one direction or the other. Nevertheless, the above five stocks are at least worth having on your stock watchlist as they are potentially emerging as leadership stocks should the markets continue to power higher.
Is there room in your portfolio for the above potential leadership stocks?
Don Freeman, BSME, is president of Freeman Capital Management, a Registered Investment Advisor with the US Securities Exchange Commission (SEC), based in Phuket. He has over 15 years’ experience working with expatriates, specializing in portfolio management, US tax preparation, financial planning and UK pension transfers. Call for a free portfolio review. Don can be reached at 089-970 5795 or email: freemancapital@gmail.com
— Don Freeman
