Must Own Stock #1 – Teradyne

Investment Type: High-Potential Growth Stocks
Sector: Semiconductors
Buy Below: $39.00

Teradyne, Inc. (NYSE:TER) is a company that has been around since 1960, and as such, you may not think much of this tech player. But as a supplier of automation systems for testing semiconductors, wireless devices and storage systems, it really is a stock that’s tailor made for 2018.

Automation has really come into its own in the last several years, and TER stock has seized its moment. Its purchase of Universal Robots a few years ago catapulted Teradyne into the 21st century and made it a lead player in “collaborative robotics technology.”

In a nutshell, these are low-cost robots that are used in conjunction with production workers — helping with packing, assembly, gluing and polishing. You can understand how this is a fast-growing segment of the economy at large. But if you want to see what it means for Teradyne in particular, look at its robots segment, which saw revenues spike almost 120% recently!

Industrial automation is undoubtedly the way of the future. And with Teradyne coming into its own lately, it is at the center of that trend. Organic growth is impressive, with double-digit revenue expansion forecast this year and an even better 25% jump in earnings-per-share.

However, the medium-term potential of robotics could be dwarfed by a big-ticket buyout in 2018 from larger industrial players like Siemens AG (ADR) (OTCMKTS:SIEGY) or Rockwell Automation (NYSE:ROK) that would send shares skyrocketing.

Must Own Stock #2 – Meritor

Investment Type: High-Potential Growth Stocks
Sector: Auto Parts
Buy Below: $28.00

Meritor, Inc. (NYSE:MTOR) could be my absolute favorite growth play right now — which may sound silly to say about an auto parts company. But as a supplier of heavy-duty truck and trailer components to both original equipment manufacturers (OEMs) and to aftermarket customers, this is one play on the consumer space that is very safe from disruption via e-commerce.

I mean, can you imagine people ever logging on to Amazon.com (NASDAQ:AMZN) to buy parts for their semi? Maybe in a distant future … but it doesn’t seem likely in 2018, that’s for sure.

Meritor has made big investments in its aftermarket auto operations, including a great e-commerce engine that allows it to sell directly at better margins. And while its OEM sales are still the bread and butter of the business, you don’t have to worry about a slowdown in truck sales the same way you have to worry about the risk of peak auto sales hurting companies like General Motors (NYSE:GM) or Ford (NYSE:F).

With cheap gas, trucking remains the lifeblood of American logistics. And as a key player in that space, Meritor is thriving based on this trend. Just look at the fact that analysts right now expect its fourth-quarter EPS figure to almost DOUBLE year-over-year as its fiscal 2018 forecast projects another 30% profit growth in the year ahead!

The icing on the cake is that this company still trades at a bargain price-to-earnings ratio of under 13. What’s not to like?

Must Own Stock #3 – Coherent

Investment Type: High-Potential Growth Stocks
Sector: Scientific Instruments
Buy Below: $280.00

Coherent, Inc. (NASDAQ:COHR) built its first laser over 50 years ago, and it has since grown to be one of the dominant companies in the industry. Tech companies use its lasers to measure or fabricate electronics, healthcare companies use the lasers in research and a host of other applications are always emerging for Coherent’s best-in-class devices.

The results of its business model speak for themselves, with the company tracking 100% revenue growth in fiscal 2017 when the dust settles on the year, with impressive growth ahead in 2018, too. As for profits, COHR is set to see EPS explode from $4.75 to more than $12.20 — that’s greater than a 150% surge in profits!

Now, Coherent is certainly a high-octane stock that is prone to volatility. Although its 2017 returns are over 70%, the fact remains that it was a bumpy ride with a few periods of declines before the stock got its mojo back.

If you’re willing to take on a bit more risk in your portfolio in pursuit of big returns, however, Coherent is worth a look. If you buy below $280 a share, you should be able to enter at a forward valuation of less than 18 times earnings — better than the S&P 500, on average, and certainly a fair premium to pay on such a high-growth company.

Must Own Stock #4 – FireEye

Investment Type: High-Potential Growth Stocks
Sector: Cybersecurity
Buy Below: $18.50

After the data breach at Equifax in the fall of 2017, security plays are looking better than even in 2018. And one stock particularly worth looking at is one-time momentum darling FireEye, Inc. (NASDAQ:FEYE).

Sure, shares are still over 70% below their peak of $80 immediately after a late 2013 debut on Wall Street. But overenthusiastic traders who may have gotten ahead of themselves — as can happen with tech IPOs — were right about the long-term promise of this company, even if they overbid the stock during its early days of trading.

Case in point — FEYE has seen roughly 40% gains in 2017 — more than triple the S&P 500 — and it is looking to build on that impressive success in 2018.

Amid constant hacking concerns for corporate America and the U.S. government, cybersecurity will remain a hot topic for some time. And hot topics always lead to big M&A targets, particularly among private equity firms. With a valuation that’s still under $3 billion, this is a pretty digestible play for the big boys out there like Cisco Systems, Inc. (NASDAQ:CSCO) and Intel Corporation (NASDAQ:INTC) that have a focus on security software these days.

Private equity is sitting on record cash right now, and the big players in the space constantly mention FireEye. FEYE could easily be worth at least $30 a share when you bake in a buyout premium. But even if acquisition rumors don’t bear out in the short-term, FireEye is making big strides to prove its standalone power. For instance, a recent quarterly report showed that roughly $9 out of every $10 in revenue was derived from subscription and service sales — theoretically recurring business that sets a great foundation for FEYE stock.

Admittedly, the company is not yet profitable as it invests heavily in growth. But it has a nice cash cushion and it has plenty of will to succeed, making it a higher-risk but higher-reward investment in the tech sector.

Must Own Stock #5 – Omega Healthcare

Investment Type: High-Dividend Income Stocks
Sector: Healthcare REIT
Buy Below: $32.50

Moving on to the income-oriented investments on this list, I’ll point out that many investors feel there’s a choice to be made between a big dividend now or the hope of future payout growth later.

Well, Omega Healthcare Investors, Inc. (NYSE:OHI) manages to do both of those things — proving you don’t have to choose between getting paid now or getting paid later. Omega has raised its dividend every year since 2003 — 20 consecutive quarters. Over the last 10 years, the real estate investment trust (REIT) has raised its dividend at an annualized clip of 9.5% per year.

It also yields roughly 8% at current prices!

The high growth and powerful dividend is easy enough to understand when you dig into the business. OHI is a landlord specializing in skilled nursing and senior living facilities, and America is an aging country. And when you consider that the baby boomers are just now entering the stage of life where senior care is a need, there’s a lot more growth where that came from.

As for the high yield, this is a valuation issue. The market is extremely wary of any company that depends on reimbursement from Medicare or Medicaid, as — in case you hadn’t noticed — our government is broke and looking to cut corners. So, Wall Street has pushed down the stock prices of many skilled nursing REITs, which pushes their yields higher.

But there are two things most investors are missing: First, the continued saber rattling about healthcare reforms have gone nowhere — and second, Omega is a landlord and not really a true Medicare service. If Uncle Sam ever cuts back on the profits of some of Omega’s tenants by putting the screws to Medicare spending — something that is far from a sure thing — that’s not really an issue for OHI stock. So long as its tenants are able to make the rent payment, Omega could care less about profit margins shrinking for doctors or outpatient surgery centers.

The combination of overly negative sentiment that has depressed prices and the long track record of continued dividend growth makes this income investment too good to pass up in 2018.

Must Own Stock #6 – Enterprise Products

Investment Type: High-Dividend Income Stocks
Sector: Energy Pipelines
Buy Below: $27.50

Oil and gas pipeline operator Enterprise Products Partners L.P. (NYSE:EPD) got a bad rap in 2017 as energy prices remained low and pressure was seen across the industry. However, that’s largely because many investors don’t understand what this partnership has to offer.

For starters, EPD is not an exploration company but a “midstream” company that just transports and stores oil and gas. As a glorified toll-taker, it is much more insulated from volatility in actual energy prices.

Furthermore, while many oil and gas companies have been dealing out junk bonds like candy in recent years, Enterprise Products Partners has been more responsible and kept its debt load manageable; its total long-term debt has grown in the low single digits over each of the last few years, even as other companies have been stretched incredibly thin.

At the same time, EPD has been a remarkably consistent grower of its distributions, with an annual increase of about 5% over the last 10 years, regardless of how cheap or expensive oil is.

This plain but well-run company is committed to keeping its balance sheet in order and delivering long-term income potential to investors, instead of the “feast or famine” approach you see in more aggressive energy stocks.

And with a yield well north of 6%, you can afford to suffer a bit of short-term volatility if it means coming out ahead at the end of 2018 thanks to those big payouts.

Must Own Stock #7 – Life Storage

Investment Type: High-Dividend Income Stocks
Sector: Public Storage
Buy Below: $88.00

Life Storage, Inc. (NYSE:LSI) is a stock you’d be forgiven for ignoring. It’s a rather boring company, operating storage locker facilities; it’s also a rather small company that boasts a market capitalization of less than $4 billion.

But when you’re looking for reliable dividend payers, boring is often a good thing. After all, as long as the millions of Americans stashing extra furniture and boxes in Life Storage facilities remember to pay their bills each month, this storage play doesn’t ever have to be a household name.

The company is expanding slowly and steadily, and after the 2017 numbers are finalized, investors can expect to see revenue growth that tops 15% year-over-year. Furthermore, with LSI structured as a real estate investment trust like Omega Healthcare, there’s a mandate for big dividends as the company must return the lion’s share of its taxable income back to shareholders.

The icing on the cake is that it’s a pretty recession-proof investment in case you’re worried about a downturn in the next few years. If folks are forced to downsize out of that McMansion when times get tough, they are likely to get a unit from Life Storage to keep all the excess stuff instead of simply throwing it away. This counter-cyclical angle to LSI stock helps ensure the dividends will keep rolling, in both good times and bad.

And with a yield that’s twice what T-Notes offer at roughly 5%, the dividends are not just a sweetener but a good way to drive your total portfolio returns in 2018.

Must Own Stock #8 – AT&T

Investment Type: Low-Risk Bedrock Stocks
Sector: Telecommunications
Buy Below: $40.00

You can’t get more entrenched than AT&T (NYSE:T). Or can you? A mega-merger with media conglomerate Time Warner (NYSE:TWX) will take its existing and dominant business model to the next level in 2018, and make sure that less-powerful rivals such as T-Mobile (NASDAQ:TMUS) can’t do anything to erode its existing wireless market share.

Case in point: in late 2017, we already saw AT&T put a hefty focus on bundling and streaming top rated shows to customers. After the Time Warner deal is finalized and properties like HBO are formally under the corporate umbrella, you can expect this trend to continue in earnest and really squeeze out the competition.

And this comes after an already ambitious move with its purchase of DirecTV in 2015!

This telecom company aims to span your communications experience soup-to-nuts, by offering exclusivity on insanely popular programs like Game of Thrones as well as controlling conventional television and 21st century streaming distribution channels.

Some media or telecom companies are cash cows based on the sheer momentum of their old model. And some up-and-comers are ambitiously growing based on where the future of streaming and wireless are headed. AT&T has a foot planted firmly in both worlds, and as such, it is sure to be a big player no matter what.

With shares trading a fair valuation on par with the rest of the market and a 5% dividend as a sweetener, it’s hard to see how you lose owning this stock in your portfolio. It may not be as dynamic as some of the other names on this list, but AT&T is assuredly going nowhere but up in the years to come.

Must Own Stock #9 – Pfizer

Investment Type: Low-Risk Bedrock Stocks
Sector: Pharmaceuticals
Buy Below: $37.00

Pfizer, Inc. (NYSE:PFE) isn’t quite the typical bedrock stock, since it’s prone to short-lived bouts of volatility on news about its drug pipeline. However, a bad quarter here and there can’t hold this stock back over the long-term — and as one of the most dominant healthcare names on the planet, you can be sure it will be a valuable part of your portfolio in 2018 no matter what happens.

Pfizer has some of the biggest drugs on the planet in products such as Prevnar, Lyrica and Lipitor. However, it also has a little bit of consumer health mojo to stay stable — including consumer brands such as Advil, and even a thriving generics business to hedge against the need for patent-protected products.

Of course, those patented blockbuster medications are called blockbusters for a reason. Recently, the debut of its breast cancer drug Ibrance catapulted the stock to new highs and it is sure to pay off for many years to come.

Oh, and should Pfizer’s pipeline get stale? It has about $20 billion in cash and investments to throw at smaller biotech companies so it can gobble up potential cures and then market them using its tried-and-true methods.

The 3.5% dividend isn’t as robust as some of the other companies on this list, but taken alongside its strong balance sheet and the recession-proof nature of healthcare (consumers cut back on just about everything else before forgoing medical needs), PFE stock is a slam dunk for 2018 — and beyond.

Must Own Stock #10 – American States Water

Investment Type: Low-Risk Bedrock Stocks
Sector: Water and Wastewater Utility
Buy Below: $37.00

Utilities are often the go-to choice for low-risk investors. And while American States Water Co. (NYSE:AWR) has a slightly higher valuation and a lower dividend yield than some of your tried-and-true utility options, it’s an important play for low-risk investors because of its focus on water and sewer infrastructure instead of electricity.

As water issues increasingly become a concern, particularly in drought-plagued California, where the company is based, there is actually growth in this sector as well as stability. The icing on the cake is the fact that American States Water has increased dividends annually for 63 years — the longest streak of any publicly traded company — and it will continue to deliver reliable payouts on reliable revenue for a long time, no matter what happens in the rest of 2017.

There’s a lot of uncertainty around the specifics of energy right now, including the fate of nuclear and coal power generation as well as the current state of our nation’s not-so-stable electrical grid. But one thing that will never be in question is the fact that all Americans need reliable sources of clean water!

After the debacle in Flint, Mich., laid bare the problems of many aging municipal water systems, many communities are open to private solutions to this public health concern. That has created a big opportunity for AWR stock. But most importantly for investors looking at low-risk stocks, those contracts tend to be entrenched with many years of service and little chance of outside competition.

It all adds up to as close to a “sure thing” as you’ll find on Wall Street in 2018, regardless of economic climate or market sentiment.

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