Think the U.S. stock market will gain another 20%-plus in 2018? Guess again. With stocks richly priced, the bull market nearly nine years old, and the Federal Reserve likely to raise interest rates three times in 2018, expect much lower returns.
But some stocks will still deliver handsome profits. For promising picks, I turned to Eric Marshall, co-manager of the Hodges Fund (symbol HDPMX), an all-cap fund that has beaten Standard & Poor’s 500-stock index by an average of 3.2 percentage points per year over the past five years. Below are Marshall’s five favorites for 2018—all small and midsize stocks. All, he says, will benefit from the new tax law, which slashes corporate tax rates. Four out of five pay a dividend.
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