Three U.S. stocks with potential to outperform this year

These stocks returned more than 55% in 2018, but are still trading close to, or below, our fair value estimates, indicating potential to rise further in 2019

Vikram Barhat 2 January, 2019 | 6:00PM

After a year of spectacular gains in 2017, North American stock markets ended in the red in 2018. The stocks surrendered all the gains made in the first half of the year, thanks to volatility and weakening sentiment in the latter half. Some market analysts are bullish on market turn around, but they are outnumbered by those warning that the worst may not be over yet.

All the negative microeconomic headlines and the approximate -7% returns for the S&P 500 index, however, could not keep some stocks making hefty gains. In fact, the ugly benchmark numbers only served to amplify returns clocked by the year’s best performing stocks, some of which more than doubled in value in 2018 before giving up a portion of those gains and ending the year with more than 50% returns.

However, despite delivering outsized gains, the following stocks have room to run as they are trading below or close to their fair value, offering some margin of safety. The solid performance of these stocks in a year of negative index returns is a testament to their robust fundamentals and competitive strength in difficult market conditions. Moreover, a market rebound could push these stocks to even greater heights. Investors taking annual stock of their portfolio may find compelling opportunities in these companies.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar Rating
Advance Auto Parts Inc134.45 USD0.52
Fortinet Inc145.80 USD-2.54
TripAdvisor Inc19.61 USD1.19

About Author

Vikram Barhat

Vikram Barhat  Vikram Barhat is a Toronto-based financial writer specializing in investing, stock markets, personal finance and other areas of the financial services industry. He also writes for CNBC, BBC, The Globe and Mail, and Toronto Star.

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