2017 may well go down in history as the best year the stock market has ever witnessed. But it could also be remembered as the year the roaring bull market ended and the economy plunges into dark days. While no one knows which outcome the rest of the year will bring, investors can prepare for any situation by investing in the major themes of this year.
Next, regulatory changes are on the forefront. 2017 has proven to be a year of transition, both in the world of taxation and the social space. One of the most dramatic changes is the acceptance of and decriminalization of marijuana in the medical sector, and some places for recreational use.
An ongoing megatrend that will very likely to continue in 2017 is pet ownership. Not only do consumers own more pets, but they are also spending more on them.
The final major theme I have identified is the environment. Firms focused on cleaning up the earth, recycling, and green energy are experiencing renewed interest in 2017.
5 Stocks To Keep On Your Radar
1. Johnson & Johnson (NYSE: JNJ)
Professional investors seek to protect against downside through various methods, but one of the simplest is diversification. And it's during bull markets that investors can diversify most easily.
Despite the stock market rally, many professional investors are expecting a sharp pullback in 2017. A few are even calling for an economic recession to start this year. Should this occur, it is critical to be diversified into consumer staple stocks, as they can weather any economic storm.
Johnson & Johnson is the leading company in the consumer staple healthcare industry. You likely have one or more of its products in your kitchen or medicine cabinet. Diversified, global brands like Tylenol, Listerine, and Neutrogena assure that consumers will continue to buy from the company, no matter how much they rein in their spending.
Looking out into 2017, JNJ forecasts organic sales to increase 5% and earnings to grow by approximately 8%. These metrics signal a significant long-term investment regardless if the market pulls back or not.
2. GW Pharmaceuticals (Nasdaq: GWPH)
One of the hottest investment topics is the legalization of marijuana for medical purposes. Multiple companies are riding this radical legislative change, but GW Pharmaceuticals is the leading marijuana stock to watch in 2017.
Shares have surged nearly 40% over the last 52 weeks and are higher by over 5% in the first quarter of 2017. GW, boasting a market cap of $3 billion, is no flash-in-the-pan startup.
The company has several life-saving drugs in the approval pipeline. Epidolex, a cannabis-derived childhood epilepsy medication, is expected to be submitted to the FDA for approval this year. Two other pending marijuana drugs are moving up the pipeline in 2017. Sativex, a cerebral palsy symptom treatment and Cannabidivarin, which targets partial-onset epilepsy, make GW Pharmaceuticals a stock to watch in 2017.
3. Hudson Technologies (Nasdaq: HDSN)
Environmental concerns will remain a major theme through 2017. Trump's presidency has acted as a rallying cry for environmentalists who fear the administration's policies are not earth-friendly. Regardless of the merits or true rationality of this stance, it has increased the visibility and investment interest in environmentally focused companies such as Hudson Technologies.
Hudson specializes in recycling and supplying refrigerant in the United States. Environmental concerns have the market changing from CFC to HFC refrigerant which has helped fuel the company's growth.
Hudson is riding a high societal trend and forecasts earnings to increase by over 30% in 2017.
4. Aratana Therapeutics (Nasdaq: PETX)
Americans spent over $55 billion on their pets in 2016. As the economy continues to improve, this number will only move higher. Aratana, with its fitting ticker symbol, is a unique biotechnology company. It specializes in medications for pets, namely dogs and cats. The company has multiple products in its pipeline, but Galliprant and Entyce are its standout animal drugs.
Although the company is still on the money-losing side, I expect its situation to continue to improve this year.
5. Guggenheim S&P High Income Infrastructure (NYSE: GHII)
The ETF is invested in 50 stocks with a focus on global infrastructure, providing investors with international diversification. Most of these names have long-term government contracts, allowing this ETF to yield a very impressive four percent.
I like the yield and the fact that this ETF is diversified outside of the United States. U.S. infrastructure focus has lifted global infrastructure's visibility and fueled investor interest. Stocks held by this ETF may also benefit from a "follow the leader" effect, with nations seeking to emulate the United States by increasing infrastructure spending.
Risks To Consider: Change is the only constant in the stock market. Despite following the hot themes of 2017, no one knows for certain what the future holds. Always use stops and position size reasonably.
Action To Take: Keep these stocks on your potential "buy" list as their supporting trends develop through 2017.