Overall, 2015 has been a very lousy year for investors. With the indexes struggling just to break even, the only true performance generated was from the mega-cap technology Internet companies. In fact the FANG stocks, or Facebook, Amazon, Netflix and Google, rose an average of 81% in 2015. The real question given the big rise in the stocks is where are the compelling values for 2016?

A new RBC research report says that this coming year could very well be the year of the BAGEL stocks, or Alibaba, Amazon, Google (Alphabet), Expedia and LinkedIn. The RBC team feels they can not only be the dominate forces in 2016, but also show a more reasonable valuation level. With mobile soaring, it’s a new ball game.

Here are the five BAGEL stocks for 2016. They are ranked from one to five in order of preference at RBC.

Alphabet

The technology giant is the top pick at RBC for 2016. Alphabet Inc. (NASDAQ: GOOGL) recently introduced Android Pay, a revamped photos and a lightweight Android derivative operating system called Brillo, which is designed to power the Internet of Things. The company also recently announced a new mobile version for the Android OS, which was released this fall.

Google remains the undisputed leader in Internet search, and when you add in a diverse portfolio that includes everything from the Android platform to YouTube, from Google Wallet for automatic pay to the Google Flights tool, continued growth is not out of the question. YouTube watch time accelerated a massive 60% year over year and the average view session was up 50% to 40 minutes, the best growth in two years.

RBC lauds the upcoming catalysts and point out that the company showed consistent revenue growth and margin stabilization, and it finally gave cash back in the form of a $5.1 billion stock buyback. Last, but certainly not least, the company remains one of the best overall portfolio plays that focuses on the biggest Internet trends: the mobile/multi-screen shift, wearable devices, video, the Internet of Things and much more. Alphabet delivers investors the full package.

The RBC price target for the stock is monster $880. The Thomson/First Call consensus price target is $848.07. The stock closed trading on Thursday at $769.83.

Amazon

This is the absolute leader in online retail and also a dominate player in cloud storage business. It crushed earnings this past quarter. Amazon.com Inc. (NASDAQ: AMZN) serves consumers through retail websites that primarily include merchandise and content purchased for resale from vendors and those offered by third-party sellers.

In addition, the company serves developers and enterprises through Amazon Web Services (AWS), which provides compute, storage, database, analytics, applications and deployment services that virtually enable various businesses, a momentum part of the company RBC says is one of the most compelling in tech today.

Amazon has had outstanding unit and revenue growth. In addition, the online retail giant’s fulfillment advantage over peers may end up being one of the most significant silos in the company’s overall business structure. In fact, headlines have said the company is looking to form its own air-cargo delivery service.

The analysts also noted that holiday spending data suggests that desktop online sales grew but rates slowed from last year, with mobile significantly outgrowing desktop. They cited Channel Advisor data that noted that Amazon showed an outstanding 21% growth rate on Black Friday this year. RBC thinks that the company has as many as 50 million Amazon Prime subscribers in the U.S. alone.

RBC has a gigantic $775 price target, and the consensus target is $738.85. The stock closed Thursday at $670.65.
LinkedIn

This stock has rallied hard since a big sell-off, but still could be offering aggressive tech investors an outstanding entry point. It also is one of the best companies to work for. LinkedIn Corp. (NASDAQ: LNKD) continues to dominate the interconnecting of business professionals, with well over 300 million members worldwide, but uneven earnings and some corporate missteps have turned the stock into a volatility victim. An improving economy and demand for highly skilled workers have provided the impetus for earnings surprises.

The new Sales Navigator (SN) product, launched last year, is doing well, and LinkedIn has ramped sales, selling the product to well over 200 at this point, with field sales having an increasingly rising impact. Field sales accounted for almost 50% of bookings in the second and third quarter and almost 50% of revenue. In addition, last year most of SN revenue and bookings were generated on a self-serve basis.

With little threat of competition to the company’s Talent Solution segment, and the rise of the Sponsored Updates along with auction-pricing dynamics and rising member engagement in Marketing Solutions, and emerging growth for Sales Navigator in Premium Subscriptions, RBC feels everything is full speed ahead for 2016.

The $300 RBC price target is higher than the consensus target of $280.17. The shares closed Thursday at $231.15.

Expedia

This online travel leader is poised for a potential big 2016. Expedia Inc. (NASDAQ: EXPE) has absolutely exploded pricewise over the past year, and more gains are expected, especially given the pace in television advertising. The company provides travel products and services to leisure and corporate travelers, offline retail travel agents and travel service providers through a diverse portfolio of brands.

RBC sees it as a story of improving execution and a very reasonable valuation. Many Wall Street analysts think the company is starting to finally match Priceline’s growth metrics. As long as the U.S. dollar remains strong, Expedia should be a better online travel stock than Priceline.

Expedia’s divestment from eLong and the acquisitions of Orbitz and HomeAway will make year-over-year comparisons difficult. Orbitz should increase Expedia’s exposure to the U.S. market and reduce some of the dependence on the overseas business, while HomeAway will give it a firm foothold in the growing holiday rentals market, and RBC feels it was a tremendous acquisition.

Investors receive a 0.75% dividend. RBC has a $180 target price. The consensus target is $150.29. Expedia closed Thursday at $128.67.

Alibaba

This time last year, this company was the hottest thing on the planet. Alibaba Group Holding Ltd. (NYSE: BABA) is the largest online and mobile commerce company as measured by gross merchandise volume, and it had the highest profile IPO of 2014. The stock has acted horrible since printing highs at $120 in mid-November of last year.

Plain and simple, the dominance in Alibaba’s core business, the very hard barrier to entry for competition and new growth opportunities like cross-border e-commerce make the stock extremely attractive. With most of the damage to the China equity markets seemingly subsided for now, the residual effect to the company may subside.

The company recently made a nonbinding offer to Youku to acquire the 82% of the company that Alibaba doesn’t already own. This comes as little surprise to Wall Street, given Jack Ma’s vision for digital content and delivery. While a few of the leading video sites continue to struggle, there is a ton of synergies overall in the combination.

The RBC team sees the company as cheap, with outstanding premium growth potential. They also note that the company has reached a mobile monetization inflection point as China Online retail continues to go online. They believe this means that Alibaba will be able to sustain premium growth rates in its key Retail segment, which is 80% of the company’s overall revenue for at least the foreseeable future.

The RBC price target is a conservative $95, and the consensus estimate is right in line at $95.09. Shares closed Thursday at $83.56.

There you have it, the BAGEL stocks for 2016 from RBC, with no cream cheese or lox needed. The only downside is that these stocks are almost all in the triple digits pricewise, and that makes acquiring big positions difficult. Aggressive investors could consider buying long-term calls or LEAPs to increase their position.

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