2017 was a great year for investing and the market’s main trend remains up.
Thus, I’m betting on further growth in 2018—interrupted, of course, by the occasional sharp correction to keep investors from getting too complacent.
And where am I putting my money?
In these five stock market trends that various Cabot analysts have highlighted.
But before we get to the list, let me say this. The list is organized by degree of acceptability to the general public.
What this means is that the early ideas will seem rather obvious—it will be hard to argue that I’m wrong—while the later ideas will be harder for some people to accept.
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So read the list of my stock market trends (or, more accurately, trends that could impact the stock market), consider the five stocks I mention and then make your own choices. And best wishes for a profitable 2018!
5 Stock Market Trends for 2018
Stock Market Trend #1: Leisure Time Grows
This trend goes back centuries, through the digital revolution, the electronic revolution, the electric revolution, the industrial revolution, the agricultural revolution, etc. (so it’s hard to argue with it).
Every development that reduces the need for labor increases demand for leisure. So today, as we venture into the age of artificial intelligence, I see continued growth of leisure time, as well as money to spend on it. And one popular way to spend it is at casinos!
Wynn Resorts (WYNN)
With two resorts in Las Vegas, one in Macau, and one set to open in Boston in June 2019, Wynn is seasoned (it pays a 1.2% dividend), yet has plenty of potential for growth. Today, 68% of revenues come from casinos, 12% from rooms, and the remainder from food, beverage and entertainment.
Looking ahead, analysts expect earnings growth of 26% next year, and the stock trades at a P/E of 25 times estimates, which seems fair. Best of all, the chart says that investors continue to climb on board.
Note: You can also consider cruise lines, though those stocks have bigger swings thanks to fluctuations in the price of fuel.
Stock Market Trend #2: Social Media Gets Bigger
Well, this is a no-brainer, but still, I think it needs to be said. And while there are a growing number of contenders for your social media investment dollar, the safest choice is still the biggest of them all, Facebook.
Facebook doesn’t pay a dividend yet; it’s still growing too fast for that. In the third quarter, revenues grew 47% from the year before, while earnings surged 77%. For the full year, analysts expect that earnings will grow 68%, and slow to 13% next year (they tend to be conservative).
And the stock looks good!
FB was recommended way back in 2013 by Mike Cintolo of Cabot Growth Investor, and his readers now have profits exceeding 360%—and he’s telling them to hold on tight. But what if you don’t own it now? I suggest you look at some of Mike’s newest recommendations, right here!
Stock Market Trend #3: The Chinese Economy Grows
The Chinese economy is currently #2 in the world, second only to the U.S. when measured by GDP. But if you measure by Purchasing Power Parity (PPP), China is actually first!
In any case, China is growing faster than the U.S., and fast-growing companies that are part of that growth continue to be great investments.
GDS Holdings (GDS)
GDS Holdings is one of these companies, growing fast by building carrier-neutral, cloud-neutral data centers to serve all the major internet companies in China (including Alibaba (BABA) and Tencent Holdings (TCEHY)). In the third quarter, revenues grew 43% to $64 million.
The stock is not well known—even to Chinese investors. It came public just over a year ago at 10, and since then it’s doubled. And the chart still looks good!
Stock Market Trend #4: The Electric Car Industry Grows
The Grand Transition from the internal combustion engine to the electric motor is well under way, but it’s still in the early stages. In fact, the majority of people are still reluctant to give up the security of the internal combustion engine they’ve known for so long. But the electrically powered car is more efficient and better for the environment, and more suited to self-driving vehicles, so the trend is clear.
Tesla is the acknowledged leader of the movement, but it’s far from an undiscovered company. Still, holding makes great sense if you have big profits like the readers of my Cabot Stock of the Week do. (I originally recommended it in late 2011 at 29 and readers who’ve followed my advice are now sitting on profits of 987%.)
But TSLA is no longer the young, undiscovered, strong stock that it used to be, so if you want to see what I’m telling my readers to buy now, you should click here.
Stock Market Trend #5: Marijuana Legalization Spreads
Here in the U.S. Bitcoin was the hot new thing in 2017—until it began to cool off in December. But over the border in Canada, marijuana stocks took center stage, with the top three growers seeing their stocks triple from August through year-end!
And for good reason!
While it’s still difficult to know how to value bitcoin, valuing marijuana stocks is no more difficult than valuing any agricultural producer.
The main difference between corn and marijuana is that marijuana has a much higher value per pound and the market is growing a lot faster.
Canopy Growth (TWMJF)
Canopy Growth is the biggest producer of marijuana in Canada, and like all the Canadian producers, it’s growing fast as the medical marijuana market spreads across the country and big growers buy up smaller growers. In the third quarter of 2017, Canopy saw revenues grow 106%! But the really big business starts in the summer of 2018, when buying and selling of marijuana for recreational purposes becomes legal across the entire country.
Canopy’s stock went ballistic toward the end of the year, just like all marijuana growers, and readers who bought back in August when I recommended the stock in Cabot’s Ten Best Marijuana Stocks are now looking at profits of 246%!
To see what I’m recommending now, sign up for your own copy. This is just the beginning!
Timothy Lutts heads one of America’s most respected independent investment advisory services. Each week, Tim personally picks the single best stock in his exclusive Cabot Stock of the Week advisory. Build your wealth and reduce your risk with the top stock each week for current market conditionsLearn More