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Here are four stocks I will be watching closely as 2019 unfolds.

Enbridge Inc. (ENB)

This widely held utility was on my list last year. At that time, I wrote: “The stock’s performance this year will tell us whether the market can come to terms with the enlarged company and the new business plan. If investors remain skeptical, the share price will flatline, despite the attractive yield."

It did worse than flatline. In early January of last year, the shares were trading in Toronto near $51. They closed on Wednesday at $45.70. Enbridge has been reporting decent numbers and the yield is up to 6.5 per cent, but investors still aren’t convinced.

Complicating the outlook further, the company has run into political resistance in Minnesota over its plans to upgrade its Line 3 pipeline, which had previously obtained approval from state regulators. It also faces opposition from the new Governor of Michigan over its proposal to replace the aging line that runs under the Straits of Mackinac.

The company will probably raise its dividend by another 10 per cent or so this year. Whether that will be enough to give the stock a boost is anyone’s guess. But as things stand right now, this appears to be an undervalued company and, unless the whole market melts down, we could see the price back in the $50 range by year-end.

Apple Inc. (APPL)

On a price-to-earnings basis, Apple was the most reasonably priced major tech stock. But that didn’t stop the shares from losing more than 10 per cent last Thursday after the company said it expects a significant revenue shortfall in its 2019 first quarter (to the end of December).

Some commentators are now describing Apple as a spent force that has lost its technological lead and is faced with a deteriorating market for its No. 1 product, the iPhone. Looking back, Microsoft Corp. was once described in the same way but managed to reposition itself and remains a potent force to this day. Don’t bet against Apple doing the same.

Still, the company has to contend with several headwinds, not least of which is the U.S.-China trade war, which Apple chief executive Tim Cook said is one of the main contributors to the revenue shortfall. On a price-to-earnings basis, the stock looks like good value at 12.5 (it closed on Wednesday at US$153.16, up US$2.41 on the day). Whether investors see it that way after the first-quarter earnings numbers come out on Jan. 29 will be one of the key stock stories of the year.

Suncor Energy Inc. (SU)

This is Canada’s largest petroleum company and its stock is a bellwether for the industry. The shares hit a high in Toronto of $55.47 in mid-2018 but have been trending down even since. They finished Wednesday at $40.56, down 26.9 per cent from the 52-week high.

If the TSX is going to finish in the black this year, it needs a boost from energy stocks. If that happens (and it’s a big if), Suncor could move significantly higher over the next 12 months, potentially to the $48-$50 range. The stock has started 2019 well, gaining $2.43, or 6.4 per cent, year to date. We’ll see if that pattern holds.

Royal Bank of Canada (RY)

Just as Suncor is a proxy for the energy sector, Royal Bank is the leader among financials. As it goes, so goes the sector. Last year was a bad one for bank stocks, which came as a bit of a surprise as they usually prosper during periods of rising interest rates. That didn’t happen this time around – the sector was down 12.5 per cent on the year and Royal Bank fell 17 per cent from its January high of $108.52 to a low of $90.10 in late December. It has since staged a modest rally, closing Wednesday at $95.74, up $2 on the day.

Concerns about a slowing economy hurting bank earnings, plus continuing worries about the still overvalued housing markets in Toronto and Vancouver have contributed to pushing bank shares lower – perhaps too low. Thanks to a recent dividend increase, RBC stock now yields 4.2 per cent. That’s a very attractive return from Canada’s largest bank. According to Bloomberg, analysts have a one-year price estimate of $108.87 on the stock. That strikes me as a little optimistic, but it would not surprise me to see the shares flirting with $100 by year-end.

Gordon Pape is editor and publisher of the Internet Wealth Builder and Income Investor newsletters.

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