It can be overwhelming to know which stocks to pile up on and which to shun, particularly amid the market's turbulence.
To cut through the clutter, here is a list of the top stocks to buy and ones to avoid, based on metrics that include dividend history, valuations and growth potential. These are factors that should matter to every discerning investor.
Best Stocks to Buy
Over the past year, Amazon's stock has climbed nearly 60%, but that doesn't mean that the rally will lose steam anytime soon. The median one-year analyst price target is $800, but some analysts who cover the stock think that it can still gain another 40% over the next 12 months, which would take it to the $1,000 mark.
Amazon is already an e-commerce giant, taking more and more market share from traditional retailers, though in the past few years the company has also expanded its revenue stream to ensure fast-paced growth.
Netflix and Alphabet's Google-operated YouTube may dominate the video streaming market, but Amazon is closing the gap fast.
Amazon Video has more than doubled its share of downstream Internet traffic this year to 4% from 2%, according to the latest biannual Global Internet Phenomena Report.
In addition, the Seattle-based company's decision to include an air component, Air Amazon, to its logistics system will also help save costs and improve margins and earnings.
Alphabet is a holding in Jim Cramer's Action Alerts PLUS Charitable Trust Portfolio. See how Cramer rates the stock here. Want to be alerted before Cramer buys or sells GOOGL? Learn more now.
At a price-earnings ratio of 9.20 and average price-earnings-growth ratio of 0.82, Ameriprise Financial is undervalued compared with its industry (with ratios of 12.08 and 1.34, respectively) and competitor Principal Financial Group (9.66 and 1.07, respectively).
Minneapolis-based Ameriprise, which provides financial products and advisory services and has been heavily recruiting from Wall Street firms, is a top choice in the financial sector with its more than 3% yield and median analyst price one-year target of $121.
Ameriprise Financial's trailing 12-month return on equity of 20.1% trumps the industry average of 8% by a huge margin.
The company's stable cash balance and payout ratio of 31.6% offers security to dividend payments, which have been growing for the past six years. Amerprise Financial stands out as a growth-and-income gem in an overvalued market.
One of the biggest attractions of the largest wireless carrier in the world is its dividend. At a yield of 7% and a dividend growth history of more than 30 years, this dividend aristocrat makes for a classic pick for an income investor.
The 2015 acquisition of Direct TV has helped AT&T take voice/data, pay television and broadband Internet to 355 million people in Mexico and the United States, and the potential hasn't even been fully realized yet. The company expects the acquisition to yield $2.5 billion in annual synergies by the end of 2018.
There are few stocks in the market that can match the balanced total return of AT&T. Over the past year, the stock has gained 15%, boosting its appeal as a total returns pick.
AT&T will be a growth stock winner this year and beyond.
At a forward P-E ratio of 13.68, the stock is on par with peers such as Verizon, despite brighter earnings prospects. The 8.18% annual earnings growth estimates for AT&T are higher than Verizon's at 3.18% and the industry's at 6.44%.
With the delay and uncertainty surrounding interest rate action, banks have taken a beating this year. But that is exactly what has made them attractive buys for the long term.
The financial crisis and tougher regulations that followed have strengthened banks, which will positively affect earnings.
And JPMorgan Chase is the best pick among the big banks, as the company has better fundamentals than its peers.
JPMorgan Chase outperforms peers Bank of America, Citigroup, Goldman Sachs and Morgan Stanley in return on equity, return on assets, operating margin and net profit margin, while yielding higher and have a better stock performance in the past year.
In terms of growth and expansion, JPMorgan Chase has set its sights on expanding operations into global markets, particularly China.
Citigroup is a holding in Jim Cramer's Action Alerts PLUS Charitable Trust Portfolio. See how Cramer rates the stock here. Want to be alerted before Cramer buys or sells C? Learn more now.
This company is the largest countywide provider of recycled original equipment manufacturer automotive replacement parts and related services. Its sales and processing facilities and redistribution centers tap several markets in the United States.
The company is expected to outpace for the next five years not just the industry's earnings growth rate but also its own earnings growth record of the past half a decade.
Sterne Agee, which initiated coverage on the stock with a buy rating, thinks that the stock is undervalued and is confident about management's projection that North America's 5% to 7% organic growth is likely sustainable over the next several years.
Worst Stocks to Buy
The oil and gas producer has been making efforts to reduce debt through debt-for-equity exchanges, but there are other concerns plaguing the stock, such as declining volumes, sub-par asset quality and upcoming liabilities, according to Jefferies.
The stock's decline could continue well into next year, the firm said.
Bad news has enveloped this generic pharmaceutical company.
The company said it will cut 12% of its workforce, or 740 jobs, as part of restructuring efforts triggered by price erosion, new entrants into the market and delays on regulatory actions.
The uncertainty around its mesh products business and high leverage make even the merger or acquisition route look difficult, possibly making it the next activist investor target.
With no dividend and uncertainty about how much more the stock can fall over after skidding 80% over the past year extends, Endo International is a bitter pill.
A high dividend yield is a top consideration for an income investor, but sometimes, a high yield is just bait.
With a dividend yield of 6.6%, HCP is just bad news as the health care real estate investment trust is operating in difficult market conditions.
The company was recently downgraded by Morgan Stanley, which said that senior housing triple-net rent coverage is a valuation risk to stocks such as HCP over the next 12 months.
Morgan Stanley is the fifth research firm to downgrade the company's stock this year.
The company's free cash flow on a trailing 12-month basis has also diminished compared with 2013 and 2014, further putting the sustainability of dividends into question.
The casino resort chain is already facing the heat, with Chinese gamblers staying away from the tables in Macau as the economy slows and the country cracks down on corruption. Upcoming property launches in Cotai by MGM Resorts and Wynn Resorts are making matters worse.
Xerox is already suffering from a track record of negative earnings growth annually over the past five years. For the next five years, too, at an anemic 3%, Xerox is expected to far underperform the industry's 17.2% annual earnings growth rate.
The fact that Xerox will split into two separately listed entities by the end of the year, will also be a drag on the company.
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