There are have been some big stock winners this year -- among them 3M Co. (MMM -0.01%), Juno Therapeutics (JUNO) and Microsoft (MSFT -1.96%). Each has seen it share price jump by at least 30% so far, and all are on solid trajectories that could bring more growth into 2018.
Let's take a closer look at what happened drove these companies' stock price pops this year, and why next year might bring them more good news.
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Strong tailwinds should keep this dividend champion going
Neha Chamaria (3M): Shares of 3M are up nearly 30% year to date, and I believe that could just be the beginning of a longer bull run for the blue-chip stock.
You see, 3M recently delivered a surprisingly strong set of third-quarter numbers which sent its stock soaring to 52-week highs. As I always say, investors need to look beyond the quarterly earnings headlines and focus on whether the trends that played out during the last quarter are here to stay.
In 3M's case, the two biggest takeaways from its Q3 earnings report were the 6.6% jump in total organic local-currency sales, and a 13.1% surge in sales from its electronics and energy business. You may know 3M for its Post-in Notes and Scotch tape, but its consumer goods businesses is just one of the five that 3M operates, the other four being industrial, healthcare, electronics and energy, and safety and graphics. 3M has an incredibly well-balanced portfolio, with each business contributing at least 14% to sales in 2016.
It is this diversity that's going to keep 3M's momentum going. So if 3M's consumer segment was muted in Q3, robust demand for electronic components (such as display films used in gadgets), especially from the Asia-Pacific region, boosted its top line.
3M continues to earn copious amounts of cash flows, expects to convert 95% to 100% of its net income into free cash flow in fiscal 2017, and remains a top-notch Dividend Aristocrat. With management now projecting fiscal 2017 earnings per share to be 10% to 12% higher than 2016, and the stock yielding 2%, I strongly believe 3M stock has what it takes to head further north.
A rising tide
George Budwell (Juno Therapeutics): So far this year, this clinical-stage adoptive cell transfer company, has seen its shares rise by a staggering 211%. Even so, the red hot biotech stock is arguably still deeply undervalued in light of the enormous commercial potential of its anti-cancer platform.
Juno's rocket-like rise this year was the result of the ongoing maturation of the high-value adoptive cell transfer market -- punctuated by the back-to-back approvals of the first two chimeric antigen receptor T cell therapies (CAR-T for short) by Novartis and Gilead Sciences, respectively.
CAR-Ts offer a unique approach to fighting cancer; the technology involves genetically modifying a patient's own T cells to first recognize, and subsequently kill, their specific types of tumor cells. And unlike traditional therapies, CAR-Ts offer the potential for long-lasting functional cures for a host of leukemias and lymphomas, and possibly even some solid-tumor cancers as well.
Juno is currently racing to become the third major player in this evolving marketplace with its lead CAR-T candidate, JCAR017. The short version of the story is that JCAR017 is showing tremendous promise as a game-changing new treatment option for patients with advanced forms of diffuse large B-cell lymphoma. If approved, it should eventually generate more than $1 billion in peak sales, transforming Juno into a cash-flow-positive company.
The best part, though, is that the adoptive cell transfer market remains in its infancy. As such, Juno should end up sporting an exceptionally long growth trajectory, fueled mainly by the expansion of CAR-T therapies into earlier lines of treatment for a diverse array of blood cancers.
This cloud player won't quit
Chris Neiger (Microsoft): Microsoft has been around the block more than a few times already, but that doesn't mean there still isn't plenty of life left in this tech stalwart. The Windows maker's share price is already up more than 30% this year, and I think its cloud computing opportunity gives it plenty of room to grow.
The company recently hit its internal goal for a cloud computing annual revenue run rate of $20 billion, a target it set just two years ago. Its cloud business -- which includes its Azure unit -- is rapidly growing, which is adding to the company's top line, and Microsoft believes it's just getting started.
On the company's first-quarter fiscal 2018 call, CFO Amy Hood said:
Azure revenue grew 90% and 89% in constant currency, and Azure premium revenue grew triple digits for the 13th consecutive quarter. Our unique ability to provide a distributed hybrid model for the intelligent cloud and intelligent edge continues to attract customers to Microsoft.
The broad public cloud computing market is expected to generate $384 billion in revenue by 2020, and Azure is already putting Microsoft on a clear path to benefit. The company's commercial cloud revenue exceeded $5 billion in the first quarter, and as the market continues to expand, Microsoft's No. 2 position in the cloud space (behind Amazon) means that the company should be able to grow along with it.
CEO Satya Nadella said that investors can expect to see "more product integration in fiscal 2018" as the company accelerates its cloud innovations, and analysts are predicting more top- and bottom-line growth through 2018 because of Microsoft's cloud offerings as well. It all points to a great upcoming year for Microsoft.
