Broadly speaking, the COVID-19 pandemic divided companies into three camps: those that do well when people have to stay at home, those that do well when the economy reopens and mega-cap technology-related firms that can do well regardless.
The best hot stocks to buy at any given moment will tend to fall into one of these categories.
As the pandemic drags on it seems like we’ll continue to see some of these themes play out, albeit in shifts. At times, the at-home stocks will do well and at times the cyclical stocks will do well. Meantime, Big Tech will probably still offer a haven to investors while at the same time experiencing its own ebb and flow depending on the outlook for interest rates and inflation.
“Our overall outlook is that consumers are adjusting to the reality that we will be living with Covid in some variant for the foreseeable future,” says Adam Coons, portfolio manager with Winthrop Capital Management. “This will likely increase volatility as the economic recovery is strong but not as strong as originally estimated.”
So for those of you who’ve dedicated a small portion of your portfolio to riskier bets — a wiser move than going all-in on individual names — you might be trying to parse these opposing market undercurrents as you also look for momentum stocks with remaining upside.
Here are three hot stocks to buy today:
— Intellia Therapeutics Inc. (ticker: NTLA)
— Microsoft Corp. (MSFT)
— CrowdStrike Holdings Inc. (CRWD)
Intellia Therapeutics Inc. (NTLA)
With inflationary pressures on the rise and the economy looking more stable — albeit not perfect — at some point the Federal Reserve will probably raise interest rates to keep the economy from overheating, as well as taper its asset purchases. Both of those moves would signal headwinds for the stock market.
But even when the Fed tightens its monetary policy, says Clem Chambers, CEO of global financial markets and cryptocurrency site ADVFN, gene editing companies will still be able to perform well.
“Gene editing is world-changing technology,” he says.
One of his picks in that space is Intellia, which is developing therapeutics using a gene editing technology called CRISPR-Cas9 that yourgenome.org says is “creating a buzz in the science world” because “it is faster, cheaper and more accurate than previous techniques of editing DNA.”
Intellia’s shares have risen nearly 225% this year as of the Sept. 3 close, with much of those gains coming in June when it and its biotech partner Regeneron Pharmaceuticals Inc. ( REGN) announced the first-ever clinical data supporting the safety and efficacy of intravenously administered CRISPR genome editing in humans.
“From curing terrible diseases and increasing crop yields to making yogurt more efficiently, creating transgenic organs for replacement therapy and perhaps extending your life by decades, CRISPR technology is a revolution in genetics,” Chambers says.
Keep in mind that investing in relatively early stage biotech companies like Intellia can be risky as they tend to have years of development work and regulatory hurdles ahead of them.
Microsoft Corp. (MSFT)
One of the themes that emerged from the pandemic was an accelerated demand for technology that lets us work, play and educate ourselves from home. Microsoft has been one of the beneficiaries of this, as well as being one of those megacap technology companies that investors turn to for relative safety because of their size and track record.
And there’s a reason MSFT is one of the hot stocks to buy now: Even though Microsoft is up more than 35% this year through Friday’s close, Coons says many of the themes and secular shifts that were accelerated from the pandemic will continue boost the stock over the near term.
Coons is particularly drawn to the growth in the company’s Intelligent Cloud segment, which includes public, private and hybrid server products and cloud services for businesses and developers.
He expects Microsoft to earn more than $7.90 per share this year and $8.50 next year.
CrowdStrike Holdings Inc. (CRWD)
Along with growing dependence on internet-based technologies comes a growing cybersecurity threat, and one of the hot stocks to buy now is perfectly positioned to benefit from this troublesome trend.
Will Reese, director of equity research with UMB Bank, expects that CrowdStrike will continue gaining market share in the massive but fragmented cybersecurity market, helping drive 40% annual revenue growth over the next several years.
“A significant increase in ransomware attacks is driving growth in cybersecurity protection,” Reese says. “The popularity of cryptocurrency is partly to blame for the increased number of ransomware attacks. Ransomware attacks involve hackers taking over systems and demanding digital payments.”
While CrowdStrike isn’t the only cybersecurity company out there, Reese sees the company increasing its market share at a faster rate than legacy providers NortonLifeLock Inc. ( NLOK), formerly known as Symantec, and McAfee Corp. ( MCFE).
Although the company’s shares have risen more than 31% as of Friday’s close, Reese sees more upside because of rapid customer adoption amid the heightened cybersecurity threat environment.
“As the gold standard provider, Crowdstrike is well-positioned for growth,” he says.
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