It’s never easy to find the best stocks to buy for your portfolio. That’s why U.S. News put together this list of the five best stocks to buy for October. Hopefully, it makes your search just a little bit easier.
[See: 9 Psychological Biases That Hurt Investors.]
After all, there are thousands of publicly traded stocks pulling at your attention. Investors all have different needs, preferences and resources too, and when you sprinkle in the powerful and often misleading variable of human emotion, poof! — you’re looking at a financial obstacle course for the ages.
Our simplified guide may remove some of those obstacles and give you some ideas to work (and profit) with. Here they are: five of the best stocks to buy for October.
General Motors (NYSE: GM). Sure, GM’s no diamond in the rough. The $58 billion automaker is a Motor City titan and a household name. But sometimes the best stocks to buy on Wall Street can be found right under your nose.
One reason to be bullish is simply how absurdly bullish all GM stock’s fundamentals are. General Motors shares boast a price-earnings ratio of only 7, less than one-third the P/E of the Standard & Poor’s 500 index itself, which trades for over 24 times earnings.
An arguably more useful metric for determining a stock’s value, the PEG ratio, sits at just 0.78. Dividing a stock’s P/E ratio by its growth rate gives you its PEG ratio, and anything below 1 is considered a value.
But it wasn’t just ratios that earned GM a spot on the “best stocks to buy for October” list.
Deutsche Bank recently upgraded GM stock from “hold” to “buy,” raising its price target from $36 to $51 a share. More compelling than that, however, was the reason: The Wall Street research firm thinks GM could have a fully autonomous vehicle on the market within the next six quarters, potentially beating competitors like Tesla ( TSLA) to market with that technology by years.
Oh, and GM’s dividend isn’t too shabby either, clocking in at 3.8 percent.
Realty Income Corp. (O). A yield like GM’s is tough to beat, but not impossible. While at the moment GM seems to appeal to both growth and income investors, Realty Income Corp. is more fine-tuned for the latter.
“Realty Income is a REIT that not only delivers a steady stream of monthly dividend payments, but it’s also increased its payout for 90 consecutive months. Below $60, it’s a great value with a yield over 4 percent. This is a classic ‘buy and hold’ core position for conservative-minded investors,” says Justin Bayne, co-founder and chief development officer of Firmspace.
[Read: Dividend Stocks vs. REITs: 7 Crucial Differences.]
In other words, while going bullish on O throughout October seems terribly appropriate, Bayne thinks this REIT — which owns and leases its diversified commercial real estate portfolio to about 5,000 tenants in 47 different industries across the U.S. — is one of the best stocks to buy for the long term as well.
Cheesecake Factory Inc. (CAKE). The great thing about dirt cheap stocks is that you can find them anywhere, in any industry, at almost any time. But with the stock market hitting record highs almost every time you turn your head and the Dow Jones industrial average up 23 percent in the last year, 2017 isn’t exactly overflowing with value stocks.
CAKE is a rare exception.
Unlike the market, its shares are down 29 percent this calendar year. “CAKE has been hit hard, with the investment community believing mall traffic will suffer and Cheesecake’s traffic numbers will remain stagnant,” says Yale Bock, a portfolio manager for Interactive Brokers Asset Management, the Boston-based online investing company.
“The company has a strong balance sheet with a minimal net debt position and generates enough cash to easily cover debt expenses, capital expenditures, and a dividend of nearly 3 percent,” Bock says.
Some additional facts that make CAKE shares worthy of inclusion on our monthly “best stocks to buy” list: a P/E below 15, a rising 2.75 percent dividend that was boosted 21 percent last quarter, and an attractive short-term chart pattern that strongly hints the stock’s lowest levels were hit in early September.
AutoZone Inc. (AZO). Like Cheesecake Factory, Autozone should be considered another contrarian value pick that simply got off to 2017 on the wrong foot.
Investors may remember AZO for its stellar long-term performance over the past decade, as the stock roared from $100 a share in 2008 to over $800 a share last year. With shares down 25 percent this year, you may be understandably wary of buying into this auto parts supplier. Frankly speaking, though, shares were overvalued earlier this year, and the subsequent correction was long overdue.
With AZO now a few months and $100 into a rebound from its July lows near $491 — and coming off a September earnings announcement that beat expectations to boot — Autozone still seems unloved, and it deserves its spot among the best stocks to buy for October.
Atlassian Corporation PLC (TEAM). Understand this above all about Atlassian: This is not a value stock. With revenue that grew from $149 million in fiscal 2013 to $620 million in fiscal 2017 (and free cash flow that quadrupled over that short time as well), it’s tough to keep a stock like this “secret” from Wall Street.
Scratch that. It’s impossible.
Shares of the enterprise software company, which makes workplace collaboration software to help productivity and communication, rose 46 percent through the first nine months of this year.
TEAM, which trades at over 12 times sales and is not profitable, is the highest risk and highest reward opportunity of the five best stocks to buy for October.
Still, it’s never had a penny of debt on its balance sheet, revenue grows by 30 to 40 percent annually like clockwork, and it’s aggressively investing in the future, spending more than 50 percent of its revenue on research and development.
[See: 7 Notable Quotes From Warren Buffett.]
No stock is perfect, but some are better than others. Consider the above five names as you position your portfolio for success.
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5 of the Best Stocks to Buy for October 2017 originally appeared on usnews.com
