July brought great tidings for the stock market, despite surging virus cases in parts of the U.S., weaker-than-expected labor market numbers in the final week of the month and the expiration of the $600 per week in enhanced unemployment benefits entering August.
Persistent optimism, along with an earnings season that has been far better than feared, helped send all three major U.S. stock market indexes up between 2.3% and 4.3% in July.
It’s hard to say what August holds in store, but a five-stock portfolio of blue-chip stalwarts, commodities plays, momentum stocks and deep value names contains a little something for all types of investors.
Here are five of the best stocks to buy for August:
— Walmart (ticker: WMT)
— Newmont Mining (NEM)
— Advanced Micro Devices (AMD)
— ViacomCBS (VIAC)
— Amazon.com (AMZN)
Walmart (ticker: WMT)
It’s tough to think of many mega-cap, low-risk stocks that stack up well to Walmart on the issue of surviving — and succeeding — in recessions. In the 2008 recession, for example, WMT stock absolutely walloped the S&P 500 in one of the worst years on record, clocking about an 18% gain as the wider market lost 38.5%.
Fast-forward more than a decade, and Walmart’s resilience when it counts is still one of its stock’s strongest attributes. Though not outperforming at the pace they did in 2008, Walmart shares had tacked on more than 9% in 2020 through the end of July, again outperforming the S&P 500.
Walmart’s status as a go-to consumer defensive stock, its regular, sustainable dividend (now around 1.7%) and its ability to adapt by increasing curbside pickup and e-commerce sales make it one of the best stocks to buy for August. WMT is currently expected to report earnings on Aug. 18.
Newmont Mining (NEM)
It’s always important to keep your portfolio somewhat insulated from worst-case scenarios, as any investor half awake in 2020 can tell you. That means the classic admonition to diversify remains relevant as ever, as does gold’s status as a hedge in times of uncertainty.
Shareholders of gold and copper miner Newmont Corp., listed as one of U.S. News’ 10 Best Stocks to Buy for 2020, have seen just how powerful that hedge can be when true uncertainty rears its head. Shares of NEM are up about 59% year to date through the end of July, as Newmont soars on the heels of record-high gold prices, which recently hit $2,000 an ounce for the first time.
Last quarter, Newmont’s adjusted profit per share nearly tripled from the same quarter in 2019, advancing from 12 cents to 32 cents. If there’s a stock market sell-off in August, investors flocking to less risky assets like gold could continue to drive NEM shares higher.
Advanced Micro Devices (AMD)
Tech stocks have been a consistent outperformer in 2020, and in AMD’s case there’s a good reason: There’s a major changing of the guard going on in the semiconductor world, and AMD is on the right side of things.
Specifically, Intel ( INTC) said in late July that it would be forced to delay products with its next-generation 7-nanometer chip until 2022 or 2023; AMD, for its part, already sells 7-nanometer chips. Last week also saw AMD report impressive Q2 sales, and a rosy outlook for sales to grow 32% for the year — blowing analysts’ consensus estimates of 25% growth out of the water.
With just about one-tenth the sales of its much larger rival Intel, AMD has plenty additional market share it can capture in verticals like server chips, PCs and gaming.
At the time of this writing, shares are up by about 60% year to date.
Not all of the best stocks to buy for August have to be tremendous outperformers or companies that have navigated the pandemic like pros.
In fact, communications and entertainment giant ViacomCBS has been ravaged by 2020, with shares off about 38% year to date. There are clear reasons VIAC has underperformed this year. The cord-cutting trend continues, hurting the company’s broad portfolio of cable network assets, and live sports had all but disappeared in recent months, causing VIAC to miss out on billions in ad revenue.
That said, the company also has the premiere Showtime platform under its portfolio, and live sports are already coming back — even if they’re off to a bumpy start.
This stock is a bit of a contrarian’s bet, but Wall Street has so deeply discounted the shares that its price-earnings ratio of 6 and 3.7% dividend make VIAC stock a risk worth taking this month.
The company reports earnings on Aug. 6.
Last and far from least by market cap is Amazon.com. The old saying, “If it ain’t broke, don’t fix it,” can often apply to stock selection, and there’s absolutely nothing broken about Amazon. For the third quarter, Amazon expects a range of an operating income between $2 billion and $5 billion.
Despite a market capitalization around $1.5 trillion, AMZN shares have added more than 64% year to date. Although it’s a difficult company to value, Amazon’s CEO Jeff Bezos is undeniably one of the best at allocating capital, having started his company from a garage in 1994.
What Amazon has is a culture of innovation, customer obsession and, let’s be honest, ruthless competition. A two-headed beast, both its e-commerce division and its cloud computing division, Amazon Web Services, are growing like weeds as the pandemic ravages many smaller, more vulnerable businesses.
Amazon is here for decades to come; it’s not just a stock to buy for August, it’s a stock to “buy and hold” forever.
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