5 Top Multibagger Stocks To Buy In 2018

By all measures, 2017 was a stellar year for U.S. stocks, with the Dow hitting several record highs and the S&P 500 closing at an eye-popping level of 2,700. But, will the smooth sail continue this year? Wall Street’s bulls believe that sweeping tax cuts by the Republican-led Congress will add up to bigger profits and larger stock gains this year. The market is also expected to continue its winning streak banking on a rise in wages and more confident consumers. Needless to say, the economy is on track to see the fastest expansion in decades. And it has successfully unloaded some of the baggage that had slowed it down since the Great Recession in 2009.

As many of the supportive conditions that boosted the market in 2017 are likely to stay in 2018, investing in multibaggers seems judicious. These stocks will make most of the bull run, courtesy of strong fundamentals and businesses that can multiply in a short span of time. After all, these stocks have seen their prices increase multiple times their initial investment values.

Markets Pin Hopes on Another Banner Year

In 2017, the Dow gained 25.1% after hitting 71 record closing highs, the highest since the blue-chip index’s creation in 1896. The S&P 500 added 19.4%, while the Nasdaq outperformed both with a 29% gain. The tech-heavy index moved north for the sixth straight year — its longest streak since the one that lasted from 1975 to 1980, per WSJ Market Data Group. In fact, all the three major bourses recorded the best year since 2013.

The most optimistic stock strategist further says that U.S. stocks will post sizeable returns this year as well. While some expect the Dow to hit 30,000, Tony Dwyer, the chief market strategist at New York financial firm Canaccord Genuity, raised 2018 year-end target for the S&P 500 to 3,100, up from an earlier projection of 2,800. This will mark a return of almost 16% higher than its current level of around 2,680.

So, what’s driving such bullish sentiments?

Landmark Tax Bill

President Trump’s tax cut had lifted optimism about corporate earnings, prompting many analysts to raise their forecast for business profits. The House of Representatives approved the biggest overhaul of the U.S. tax code in 30 years. Republicans successfully countered opposition from Democrats to pass the bill that will slash corporate taxes and provide temporary tax relief to both wealthy and middle-class Americans. The headline-grabbing move was that the corporate tax rate will be lowered from 35% to 21% and will be implemented next year, instead of being delayed until 2019.

Republicans also repealed the 20% corporate alternative minimum tax, while any income brought back from overseas will be taxed 8% to 15.5%, instead of the current 35%. Immediate offset of spending on short lived capital equipment is expected to further save U.S. companies around $32.5 billion in 2018, as per Congress’s joint committee on taxation (read more: Original post

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Written By: Zacks Investment Research