Don’t even think about selling these winning stocks

 

When markets become more volatile, investors begin to worry about a potential major sell off, and often consider locking in gains in some of their top performing stocks. While there is nothing wrong with taking some money off the table when you are feeling uncomfortable with the market, there are some names you should resist the urge to unload.

The exception of course being if the recent gains have resulted in a stock being too heavily weighted in your portfolio. Investors should always have some idea of how much of their portfolio they are willing to risk on a particular stock, and if the stock rises too much you should always lock in some gains just to make sure you are adequately diversified.

Another important thing to remember is that you should not hold on your strongest stocks just because you believe its recent strength will lead to future strength. The markets change quick, and yesterday’s winners can quickly become today’s losers.

You have to dig deeper, and make sure the company is still growing, and that analysts remain bullish on the stock’s future.

Here are five stocks you should continue to hold and expect more gains moving forward.

Alphabet

Alphabet (GOOGL), the parent company behind search engine giant Google has been a Wall Street darling for years, and despite a shift to mobile search and cost per click falling, the company continues to grow at a rabid pace. As more users move to mobile, Google has a challenge in keeping sales and earnings growing, but that did not stop the search engine giant from growing sales 25% year over year in its recent quarter. However, one problem is that the company is spending more. The company’s profit margin fell to 22% from 27%, spooking some investors. We will have to keep a closer eye on how much it has to spend moving forward to maintain its sales growth, but for now the company’s spending seems to be working with impressive beats on both the top and bottom line. Until someone is able to dethrone Google as the king of search, it remains a must have in your portfolio. GOOGL trades at $1,035.83 with an average price target of $1,247.23.

Chart courtesy of www.stockcharts.com

Amazon.com

E-commerce leader Amazon.com (AMZN) is facing an attack by President Trump regarding its shipping costs and its tax policies. While Trump is unlikely to ease up his attacks on the company, the reality is that any changes will take a long time to make, and that assumes that Trump is able to do anything at all to change that amount of taxes the company pays, or the rates it pays to ship packages with the USPS. In the meantime, Amazon will keep growing, and will remain the king of online commerce. Amazon not only dominates e-commerce, it is a leader in cloud computing, which happens to be one of the fastest growing areas in tech. Amazon also has a strong hardware division and recent reported 100 million Amazon Prime members. The company is firing on all cylinders, and with earnings expected to rise 83% this year and by 20.5% per annum over the next five years, AMZN is not a stock to consider selling at this point. AMZN trades at $1,475.10 with an average price target of $1,682.71.

Chart courtesy of www.stockcharts.com

Caterpillar

Heavy machinery maker Caterpillar (CAT) came back to life in 2015, and shares have been on a steady upward trajectory for the last few years. The stock’s gains have been a result of improvements in the overall economy and strengthening commodities. Caterpillar relies heavily on both the housing market and the commodities market, and at this time both look good. Housing could run into problems with rising interest rates, but rates remain low enough on an historic basis to justify the housing market remaining on solid ground. Commodities have been strong, and most analysts agree that will continue through the year. CAT is expected to grow profits by 20.5% year over the next five years, and trades at $157.95 versus an average price target of $177.40.

Chart courtesy of www.stockcharts.com

Nike

Athletic footwear and apparel giant Nike (NKE) came roaring back to life last summer, and the stock is currently just shy of its 52-week high. Investors that bought into the stock when it was down last year have seen their investment rise sharply, but now is not the time to lock in gains and unload the position. After years of scorching stock gains the cooled off for a couple of years, but enthusiasm has returned, and the company is growing quick enough to keep Wall Street happy. Looking ahead analysts see Nike growing profits by 8.8% per annum over the next five years, which is great for such a competitive sector. The stock trades at $67.15 with an average price target of $68.17.

Chart courtesy of www.stockcharts.com

Micron Technologies

After an incredibly strong two-year run, shares have semiconductor maker Micron Technologies (MU) has cooled off so far in 2018. Micron surged higher to start the year, but shares have trended lower over the last month. While the stock has begun to cool, the outlook remains very favorable for the sector. Computing needs are increasing. A strong economy leads to corporate investments in their technology, and growing blockchain popularity produces strong demand for high-performance chips. Despite its strong run in recent years, the stock continues to trade with a forward P/E of just 4.8. With analysts expecting profits to rise by 30.3% per annum over the next five years, the stock has a lot of upside potential. The stock trades at $47.92, and analysts have set a very bullish $67.50 price target on the stock.

Chart courtesy of www.stockcharts.com

Symbols: AMZN CAT GOOGL MU NKE
Michael Fowlkes

Michael Fowlkes

Michael Fowlkes is a financial writer who has been with the Fresh Brewed Media family since 2004. Over the course of his tenure with Fresh Brewed Media, he has worn many hats, including portfolio manager, options analyst, and writer. Michael received his undergraduate degree from Virginia Tech in Accounting and got his start in finance working as a stock trader for six years at Chase Investment Counsel in Charlottesville, Va.

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