We have seen plenty of volatility during 2018 in the markets, but the overall theme is positive despite so many unknowns lurking out in the distance.
Rising interest rates, a trade war with China, and strong oil prices all have the potential to slow things down, but for now the market is focused on the strong underlying economy, and the major indexes remain near record highs.
The gains have been harder fought in 2018 versus the previous year, but the overall market is in trending slowly higher.
Some stocks have kept pace with the overall market, while others have suffered badly and still others have simply been on fire.
We want to home in on a couple of these stocks that have outperformed the market to look at what is driving the sharp run in stock price and if conditions remain favorable moving forward.
Here are five stocks that have been on fire this year.
Apparel retailer Boot Barn (BOOT) has been among the strongest stocks this year, with shares appreciating 68% year to date. The stock is currently trading down a bit from its recent 52-week high, but the outlook remains very favorable. The stock has a forward P/E of 20.4, and analysts forecast the company to grow earnings by 50.6% during the current year. Looking further out, earnings are expected to rise 25% per annum over the next five years, which would justify the stock building on 2018’s gains moving forward. BOOT trades at $27.86 with an average price target of $28.75. The company will next report earnings November 6.
Credit card leader Visa (V) has quietly put together an incredibly strong year. There have been very few dips in the stock this year, which is currently up 33% on the year. We are witnessing a shift to a cashless society, and in addition to credit cards there have been a wide variety of electronic payment solutions see major increases in usage. Apple Pay, Google Pay, and crytpos are just a few of the examples of electronic payment platforms in addition to traditional credit cards. Visa not only enjoys increased credit card usage, but it is also involved in all the major platforms, so it benefits across the board as consumers use less cash to handle their needs. The company is expected to grow earnings 32% this year, and 19% per annum over the next five years. The stock trades at $149.34 with an average price target of $157.59 and the company next reports earnings October 24.
Athletic apparel and accessories giant Nike (NKE) is another stock enjoying a strong bull run in 2018. Shares are up 37% during the current year and are currently just pennies below their all-time high. The biggest news with Nike recently was its decision to use Colin Kaepernick as the face of its “Just Do It” campaign. While some consumers were furious over using Kaepernick, the decision to use him in the 30th annual “Just Do It” campaign is viewed by some as genius. The stock is up sharply since the news broke, and the amount of free marketing the company received is valued in the billions. Earnings have been on the rise, with profits expected to rise 11.7% this year, and by an average 13.7% a year over the next five years. The stock trades at $84.61 with an average price target of $83.86 and the company will next report earnings on September 25.
Off-price retailer Ross Stores (ROST) is now trading just shy of an all-time high after appreciating 23% in 2018. Overall economic conditions remain favorable in the U.S., and low unemployment and strong consumer confidence should continue to keep strength in top retailers. While consumer confidence remains strong, we have seen particular strength in discount retailers as consumers continue to spend but remain cost-conscience. Ross is expected to grow profits 23.4% during the current year, and by 12.1% per annum over the next five years. Ross has topped estimates on the top and bottom line in each of the last nine quarters and will next report earnings on November 22. ROST trades at $97.99 with an average price target of $94.58.
World Wrestling Entertainment
One of the strongest performing stocks in 2018 has been World Wrestling Entertainment (WWE). The media and entertainment company continues to expand and grow its global footprint, and earnings have been very impressive in recent years. Over the last five years the company has grown profits by 27% a year, and its growth is accelerating and expected to average 74% per annum over the next five years. The stock has spiked 202% in 2018, and shares are just pennies below their record high. The stock has a high valuation, with a forward P/E of 68, but given the strength of its forecast earnings growth the valuation should not slow down the stock unless the company is unable to hit its future estimates. Last quarter earnings were weaker than expected, but sales shattered estimates and the market pushed the stock higher. The company will next report earnings October 25 and analysts have an average price target of $93.38.