If you had invested in the beginning of 2015 in stocks for Fingerprint Cards AB, a Swedish biometric technology maker, you could have realized huge returns. Even in an environment where analysts ignored the company, it managed to soar its sales, though, in recent years, the company has been associated with faked press release and alleged insider trading activity. Nonetheless, this may be an ideal example of some of the undervalued stocks, which often result in huge returns. The company had a 1,391 percent increase in value of its stocks in 2015 and was tagged the biggest gainer among more than 1,000 companies listed on Bloomberg World EMEA Index.
2016 interest rates could haunt the Stock Market
The stock market is in an unclear situation caused by extreme volatility and investor anxiety over bleak global economic scenario. There is also concerns over next year’s effect likely to be brought about by the recent increase in the Fed’s interest rates. Some economists even worry that there may be a threat of an impending recession, something unlikely to happen though.
The president and chief investment Strategist, Ed Yardeni of Yardeni Research says that from recent conversations with players in the stock market, the consensus is pessimistic about what is likely to happen next year— there is a mix of cross currents in S&P 500’s technical picture.
Chief equity strategist at S&P Capital IQ, Sam Stovall has warned that increased market volatility may worsen in the coming year. It is typical for volatility to pick up after the beginning of interest rate-tightening cycle meaning things may get tough in the next months. While there was some volatility in 2015, this is likely to increase in 2016, though without experiencing price appreciation.
The downtrend in gold is likely to continue in better part of 2016 due to higher interest rates in U.S. and the strengthening dollar value, according to analysts. Carsten Menke, a research analyst for commodities at Julius Baer said that precious metals including gold are likely to be out of favour for many investors in next year. The longer-term downtrend in gold prices is driven by the fading investment demand and expected sound growth and higher interest rates coupled with muted inflation.
With market volatility, investors are keen to find out which stock they need to pick for 2016. By choosing sound stocks, it helps protect and shield investors from shifting stock market dimensions. When you are armed with solidly positioned and underappreciated stocks, you are less vulnerable to being hit by market wild swings.
Custom picked equities likely outperform the different markets
On top of that, finely picked equities are likely to outperform the stormy markets. According to Stovall, he says that S&P analysts have indicated strong buys on stocks such as Harman International Industries, Gilead Sciences, and Frontier Communications.
Harman International Industries (HAR), is a company that manufactures audio products and electronic systems. S&P has a 12-month prices target of $145 for Harman. Gilead Sciences (GILD) is a biopharmaceutical company specializing in treatment of viral, bacterial, as well as fungal infections. It also deals with treatment for respiratory disorders, cancer, and cardiovascular conditions. S&P predicts a 12-month price target of about $155 for GILD. Frontier Communications (FTR) is a company that offers wireline telecom services such as voice, data, and video. S&P has a price target of about $6 in a 12-month period.
Jonathan Boyar the president of Boyar Research has picked some stocks that are considered undervalued investments and may be the right fit for investors wishing to diversify and increase their portfolio in 2016. These stocks include Tribune Media (TRCO), a media and entertainment company based in U.S. and Madison Square Garden Co. (MSG), which owns and operates sports teams, venues, and entertainment production. The third company is MSG Network (MSGN), which produces content for distribution in various platforms.
Stephen Leeb has also identified some stocks that may be a favorite choice for 2016. His stocks are a reflection of rebound in oil and gold price and comeback of China’s economy. Stephen Leeb thinks that Rio Tinto (RIO), Deere (DE), Barrick Gold (ABX), NovaGold Resources (NG), and Ecolab (ECL) may be favorable stocks to buy in 2016.
Rio Tinto (RIO) is a London based mining company that operates in extraction of metals and minerals. Rio Tinto has the lowest cost for iron core and makes a major stake in aluminum and copper. Deere (DE) is a global leader is the production of farm equipment and construction machinery.>Gold is predicted to be a hot equity for 2016
Barrick Gold (ABX) is the world’s largest gold company in regard to production and reserves. It is considered one of the highly undervalued yet underdeveloped gold plays within North America. Leeb says that Barrick Gold has a huge potential and is a right pick for investors in 2016. However, investors should also look at the market price for gold and precious metals, which are likely to remain on the downward trend.
NovaGold Resources (NG) is a mineral exploration company dealing with silver, copper, and gold. This company does exploration and development of mineral properties in Canada and U.S. Ecolab (ECL) is a leading marketer of water, energy and hygiene technologies. This company serves the food service industry, hospitality, oil and gas market, healthcare, and food processing.