Most investors would probably love to forget October ever happened, move on with their lives and look to the future. With that in mind, U.S. News has put together five of the best stocks to buy for November.
Since last month was such a bloodbath — the S&P 500 fell 9 percent while the Nasdaq composite suffered a 12 percent sell-off — the following five stocks are largely defensively positioned. While it’s more likely that November produces gains, it doesn’t hurt to showcase a few attractively valued stocks that can hold their own should volatility continue.
With names hailing from defensive sectors like consumer goods, real estate and utilities, here are five of November’s best stocks to buy.
Starbucks Corp. (Nasdaq: SBUX). You should know upfront that the world’s favorite coffee shop chain reports earnings after market close on Nov. 1, so if you’d rather not be around for the potential earnings volatility you should wait until after the quarterly numbers are announced.
No matter what quarterly earnings shake out to be, SBUX goes down as one of the best stocks to buy for November for a few reasons.
Going into the report, Starbucks looks like Warren Buffett’s ideal stock: a great company trading at a fair price. And another billionaire, hedge fund manager Bill Ackman recently announced he’s a big fan of the stock, owning about $900 million worth.
Ackman believes China is Starbucks’ biggest growth opportunity, notes share buybacks in the next two years will account for something like 20 percent of its current market cap, and thinks SBUX could double in three years.
That’s a bold prediction, but Starbucks isn’t just a solid long-term holding selling for a fair earnings multiple (18), it also went up in a bearish October and pays a 2.5 percent dividend.
The primary reason MFA makes November’s best stocks to buy list is its enormous dividend, which currently sits at 11.6 percent annually. On top of that, the stock’s long-term technicals reveal an interesting trend: since 2011, every time MFA has fallen below $7, it’s failed to stay there long before advancing.
Many investors like to know the level of support for a high-dividend stock like this, because it de-risks the stock for any patient investors looking to buy, hold, and get a stream of income in the meantime.
Keep in mind that even the best stocks have risk, however, and MFA is no exception. The company invests heavily in mortgage-backed securities, an obscure investment that played a starring role in the last financial crisis.
Still, MFA weathered the 08-09 crisis beautifully and is still going strong a decade later. The REIT reports earnings on Nov. 6 before market open.
Public Service Enterprise Group (PEG). Perhaps obscure REITs don’t tickle your fancy. You just want a nice, conservative, defensive business to own and forget about. Great! Look no further than PEG, a large-cap diversified utilities stock.
There’s no rule saying the best stocks to buy now have to be high-flying, glamorous names plucked from a Silicon Valley phone book. Quite the opposite: in a market pulling back from recent highs and wary of the high-growth tech sector, many money managers and institutions might find themselves repositioning out of riskier names into more Steady Eddie businesses.
Utilities like PEG have a built-in customer base regardless of how bad the economy gets, making business stable and cash flows relatively predictable. A 3.3 percent dividend yield isn’t bad either, and the company uses just 40 percent of earnings to pay it.
During October, a month many well-known tech stocks plunged 10 percent or more, PEG posted 4 percent gains.
Kroger Co. (KR). America’s largest traditional supermarket chain, Kroger is just the sort of defensive stock investors love to love in times of uncertainty.
Still not back to the levels KR sold for just before Amazon.com ( AMZN) purchased Whole Foods in 2017, hammering all publicly traded grocers, Kroger shares go for just 8 times earnings.
KR is one of the best stocks to buy for November due to its cheap valuation and the smooth nature of its business. Americans will continue buying and eating food, and purchasing consumer staples like toilet paper and toothpaste, regardless of the state of the economy.
Don’t expect high growth from Kroger, but conservative investors should appreciate this pick, and its sustainable 2 percent dividend helps out too. Though same-store sales will likely be sluggish to finish out 2018 due to store remodels, Kroger sees digital sales soaring 80 percent to $9 billion next fiscal year.
Apple (AAPL). Last but not least, the world’s most valuable company rounds out the list of the best stocks to buy for November.
While it’s true that the tech center was at the epicenter of October’s steep stock market pullback, it’s foolhardy to swear off tech in your portfolio. Not only do the hardest-hit sectors often lead the market when stocks bounce back, but many of the world’s most exciting long-term stocks are in tech.
Plus, at 19 times earnings, Apple stock is by no means flagrantly overvalued.
A 1.4 percent dividend, an aggressive stock buyback program, and a rapidly growing high-margin services business, when combined with Apple’s impeccable brand, devoted following and closed-end ecosystem, make for an attractive yet conservative investment.
Apple, like Starbucks, reports earnings on Nov. 1, so invest accordingly.
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