Investing

Five Big Upside Sector Winners for 2014

As the stock market is challenging all-time highs around a holiday week, investors have to be considering how to position their portfolios and assets for 2014 and beyond. 24/7 Wall St. has been issuing value outlooks and sector outlooks for 2014 to see where the best spots are ahead.

It turns out that there may be some incredible upside left in selective autos and biotechs. Some financial stocks may offer upside, and there is still some value in oil and gas. We will be following up with more 2014 outlook pieces in December.

The best carmaker for 2014 appears to be General Motors Co. (NYSE: GM). With the government out of the shares, its stock muted since its re-IPO and an attractive earnings multiple of only eight times expected earnings in 2014, GM was the winner against peers. By the way, analysts see more than 25% gains on average in GM’s share price over the next year.

Regions Financial Corp. (NYSE: RF) is a top pick at Jefferies for 2014 in its most recent sector and themes trend report for the year ahead. The super-regional bank is the 15th largest one in the United States, and its net interest margin keeps moving up. Regions’ consensus analyst price target is posted up about $1 from current prices, implying gains of 10% over the coming year.

The top exporters could have a great 2014 if the stars align properly. Deutsche Bank pointed out Caterpillar Inc. (NYSE: CAT) and several other key winners for the theme of exporting from America in 2014. Investors have been disappointed, but its 2.9% dividend may entice holders to remain patient. Caterpillar has been among the worst Dow Jones Industrial Average (DJIA) performers of 2013, and the consensus price target is about 10% higher than the price now.

Chevron Corp. (NYSE: CVX) appears to be the best value for 2014 among the integrated oil and gas giants. The stock has close to 10% in expected upside from the analysts that cover it, it has a high yield of 3.2% and it trades at only ten times expected 2014 earnings. We expect that dividend to keep marching higher as well.

NPS Pharmaceuticals Inc. (NASDAQ: NPSP) is among the best revenue growth possibilities for biotech in 2014. The company’s revenue growth is expected to be 71%. We would caution that the consensus analyst price target of $37 implies more than 40% upside, but what our readers need to know is that this stock has been an incredibly volatile one. With shares around $25, it has a 52-week range of $7.35 to $35.72.

Goldman Sachs recently issued a call for the S&P 500 up to 1,900 in 2014, with the possibility of a 10% correction between now and then. Merrill Lynch also came out and gave a global economic outlook calling for calmer seas ahead in 2014 after comparing the situation at the start of 2013 and also at the start of 2014. Lastly, we are looking for eight big dividend hikes before the end of 2013 and some of those are DJIA stocks.

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