7 of the Best Stocks to Buy for 2018

The 7 best stocks to buy for 2018.

The bull market that began in March 2009 is now nine years old. And in aging bull markets, it can be tough (but not impossible) to find underpriced securities. Wall Street always offers opportunity, and each of the seven best stocks to buy for 2018 offer impressive potential returns. The economic backdrop is encouraging, with steady jobs growth, business confidence, low unemployment and solid corporate earnings momentum painting a rosy picture. The following companies range between large- and small-cap, span different industries, and offer mixes of growth and value. Together, this basket of the best stocks to buy for 2018 should outperform the market.

Updated on April 18, 2018: This story was originally published on Nov. 16, 2017, and has been updated with new information.

Facebook (FB)

Named as one of U.S. News's seven best stocks to buy last year, Facebook is the only repeat name on 2018's buy list. Facebook and Alphabet (GOOG, GOOGL) have essentially formed a duopoly in a highly profitable and fast-growing industry: digital advertising. While the Cambridge Analytica data scandal set shares back in the first quarter, that's a blessing in disguise for anyone looking to buy on a pullback. Wall Street still expects Facebook's 2.2 billion users to fuel 35 percent revenue growth this year, nearly double that of GOOG, at 20 percent. Yet FB trades for 19 times forward earnings to GOOG's 21 times. Higher growth at a lower cost? Yes please.

Customers Bancorp (CUBI)

This small-cap bank stock couldn't be more different from Facebook, aside from the fact that they're each among 2018's best stocks to buy. A truly under-the-radar name with a valuation around $900 million, CUBI is planning to spin off BankMobile, its digital-banking division catering to college students and the underbanked. That deal should close before mid-2018, and shareholders will get $3.57 per share of equity in the spinoff. Assuming a modest price-earnings multiple of 13 on 2018 consensus earnings per share of $2.69, and adding in the $3.57 per share windfall, CUBI could reasonably be valued at $38.54 per share by the end of 2018 -- roughly 30 percent upside.

Store Capital Corp. (STOR)

Since 2000, shares of Berkshire Hathaway (BRK.A, BRK.B), Warren Buffett's famous holding company, gained 438 percent, trouncing the Standard & Poor's 500 index. The old man's still got it. And in mid-2016, Berkshire bought a 9.8 percent stake in Store Capital, a real estate investment trust focused on buying and managing single-tenant operational real estate (get it? STORE?) properties like restaurants, movie theaters, and childhood education centers. With more than 99 percent occupancy, a widely diversified portfolio spanning 397 tenants and over 100 industries, a 4.9 percent dividend and backing from the Oracle of Omaha, STOR is one of the best stocks to buy for 2018.

Alibaba Group Holding (BABA)

Alibaba shares doubled over the course of 2017, but there's no rule putting a cap on rallies, and Alibaba still deserves one. Simply put, BABA is a unicorn. It's the only company worth more than $60 billion that's increased revenue 50 percent annually for the last five years. Revenue growth in the December quarter was still hot, jumping 56 percent on the heels of 104 percent cloud-computing growth. Amazon.com (AMZN) in 2009 had about the same revenue that Alibaba did in 2016 ($24 billion). In 2010, AMZN revenue jumped 40 percent; in calendar 2017, BABA revenue grew more than 50 percent. Growth like that doesn't come around every day.

Ryanair Holdings PLC (ADR) (RYAAY)

Europe's most-frequented airline, Ryanair, continues to dominate the skies and expects to post record-high profits in fiscal 2018 despite a pilot shortage that caused the carrier to cancel 20,000 flights. Analysts expect business to continue improving through fiscal 2019 too, as the budget airline keeps expanding its customer base beyond 129 million. Three of its competitors -- Air Berlin, Alitalia and Monarch -- went insolvent in 2017, helping put upward pressure on fares. With RYAAY trading at dirt-cheap P/E and PEG multiples, it makes sense to own this smooth operator whose cost advantages give it a powerful competitive advantage. For these reasons, Ryanair is one of the best stocks to buy for 2018.

Travelers Companies (TRV)

Property, casualty and auto insurer Travelers proved its remarkable resiliency in 2017, a year from hell for insurers. While TRV stock underperformed the wider market through late 2017, it remained profitable in the third quarter, a period when two historically powerful storms -- Hurricane Harvey and Hurricane Irma -- devastated the continental U.S. The California wildfires in the fourth quarter will hurt profits, but after assessing losses, TRV decided to resume share buybacks. Needless to say, if 2018's weather is worse than 2017's, citizens might have bigger problems on their hands. TRV pays a 2.1 percent dividend and benefits when rates rise.

Delphi Technologies (DLPH), Aptiv (APTV)

When this list was first published in November 2017, we were bullish on Delphi Automotive -- and we still are, even though Delphi split into two companies on Dec. 5. That resulted in the lower-growth powertrain division, Delphi Technologies Plc, and a higher-growth company focused on self-driving car technology, called Aptiv. Both spun-off companies trade at low multiples, APTV trading at 15 times forward earnings and DLPH at under 10 times forward earnings. That said, Aptiv's growth profile is currently far better than Delphi Technologies'. Spinoffs often outperform the market, and this one should prove lucrative for original Delphi Automotive shareholders.

John Divine is an investing reporter for U.S. News & World Report, where he covers financial markets and the economy, with a focus on individual stock analysis. He has been an investor himself for over 10 years, and has been writing professionally about stocks and investing for the last five years. He previously wrote about the stock market for The Motley Fool and InvestorPlace, and his work has appeared on Yahoo! Finance, MSN Money, and AOL DailyFinance. He graduated from Appalachian State University in 2011 with a bachelor's degree in finance and banking. At Appalachian, he was a member of the Bowden Investment Group, a team of students that ran a real-money portfolio worth over $100,000. You can follow him on Twitter or give him the Tip of the Century at jdivine@usnews.com.