It’s about time. The year 2020 is finally coming to an end, and, for once, there’s some light at the end of the tunnel.
Several vaccines seem close to imminent approval by the U.S. Food and Drug Administration, with the potential for certain high-risk segments of the population to be inoculated in the coming weeks.
Additionally, the prospects for a much-needed second major round of fiscal stimulus seem to be brightening, with markets starting to anticipate a bipartisan deal sometime before the end of the year.
Good news has been scarce this year, but there’s a reason for at least some optimism heading into 2021. Before ringing in the New Year, here are five of the best stocks to buy for December:
— Adobe (ticker: ADBE)
— Alibaba Group Holding (BABA)
— ViacomCBS (VIAC)
— CVS Health Corp. (CVS)
— PayPal Holdings (PYPL)
The creative software giant Adobe is not simply one of the top stocks to buy for December; it’s one of the best “buy and hold” stocks — especially for large-cap growth investors — in the whole market. Adobe’s next earnings report will come on Dec. 9, and, after record-setting quarterly results in the last period, analysts are expecting more of the same from the cloud-based software stock.
Analysts expect revenue to grow by about 12% year over year and for earnings per share growth to eclipse 16%. Double-digit growth in earnings and revenue are hard to find on a consistent basis in the stock market, but it has come to be expected from Adobe, whose suite of essential creative products includes Photoshop, Premiere, InDesign, Acrobat, Lightroom and Illustrator.
Alibaba Group Holding (BABA)
Now’s a good time to snap up Alibaba shares after a pullback from their October highs. Although it’s one of the single-largest publicly traded companies in the world — with a market capitalization around $700 billion — China’s largest e-commerce company is still growing at prodigious rates, with sales up 30% last quarter alone.
It’s rare to see such large, well-established companies growing so quickly in the first place, much less for those stocks to trade for about 21 times forward earnings. That compares favorably to other large-cap growth stocks like Facebook ( FB), which trades for about 27 times earnings and is growing revenue at a slower, albeit still impressive, 22% rate.
Named one of the best stocks to buy at the beginning of 2020, BABA remains a steal to round out the year.
Mere months ago, ViacomCBS was considered an absolute dog of a stock, and shares had been sold off all the way down to the lowly sum of $10.10 a share in the depths of the pandemic, a steep decline from VIAC’s 2017 highs around $70 a share.
The fear that live sports would be gone from the airwaves for the foreseeable future turned out to be unfounded, which has been good news for VIAC shareholders, who’ve seen the stock more than triple from its lows earlier this year.
Even after the rally, shares of this media giant trade for less than nine times earnings and pay a 2.6% dividend.
CVS Health Corp. (CVS)
As one of the most dominant pharmacy chains in the world, CVS is finally about to get its chance to really shine when it plays a major role in the distribution of the coming vaccine. As far as distribution is concerned, pharmacies with huge footprints like CVS and Walgreens ( WBA) will be absolutely vital in making sure these two-shot doses are available to as many Americans as possible.
Already an important player in the testing phase of the pandemic, with hundreds of millions of Americans wanting a vaccine as well, the potential for a bump in foot traffic in CVS locations is very real — and that should translate to improved retail sales and perhaps a boost in pharmacy revenue to boot.
CVS trades for 12 times earnings and pays a 2.9% dividend.
PayPal Holdings (PYPL)
Last and certainly not least among the best stocks to buy is PayPal, the digital payments giant worth more than $250 billion.
Also falling into the category of large-cap growth stocks, PayPal doesn’t pay a dividend but is persistently growing revenue by more than 20% annually, has scarce long-term debt, enjoys increasing relevance with its ownership of Venmo and the growth of e-commerce, and will soon start taking Bitcoin payments.
PYPL has essentially doubled in 2020 through the early days of December, but one of PayPal’s key catalysts this year, the growing shift to e-commerce, is likely to not just be a pandemic fad but a longer-term secular change in consumer behavior. That’s bullish for PYPL shareholders in 2021 and beyond.
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