The late-July rally was precipitated by ECB President Mario Draghi saying it “is willing to do whatever it takes to preserve the euro.” However, the public isn’t buying. Volume and breadth have declined, and the July 17 AAII sentiment survey had the “bulls” at just 22.19%, indicating that the public is out of the market.
Even though AAII’s bulls rebounded by 5.9% last week, the mutual fund figures confirm the public’s fear of stocks. This month, retail investors will likely redeem over $5 billion of equity-based funds, bringing year-to-date liquidations to the highest number since 2008.
In such an uncertain environment, it is best to stick with high-quality stocks. This month’s picks are based on proven performance with above-average dividend yields. Here are your top stocks to buy for August:
Top Stock to Buy #1 – Baker Hughes (BHI)
Large-cap oil well services company Baker Hughes (NYSE:BHI) rose to a new high in late July, following better-than-expected quarterly results. A reversal from under its 50-day moving average and a breakaway gap through its 200-day moving average are strong technical signals that target the stock at the mid-$50s.
Other supporting technical signals include a close above its bearish resistance line (red dotted line) and a strong buy signal from the MACD indicator.
Top Stock to Buy #2 – Bristol-Myers Squibb (BMY)
Global pharmaceutical company Bristol-Myers Squibb (NYSE:BMY) has had many of its core patents run out. However, new drugs are in the works, and the company is expected to announce a dividend increase and an acceleration of its stock buyback policy soon.
On the chart, note the break from a triple-top, the new MACD buy signal, and the recent increase in volume. BMY has a trading target of $42.
Top Stock to Buy #3 – Dominion Resources (D)
Stability has marked the history of Dominion Resources (NYSE:D), one of the largest producers and transporters of energy in the United States. The company also operates the largest natural gas storage system serving retail energy customers in 15 states. It is expected to earn $3.47 in 2013 versus $3.20 in 2012.
On July 27, the stock broke from a quadruple-top to a new high as it sprang from support at its 50-day moving average and was supported by a MACD buy signal. The target for D is $60.
Top Stock to Buy #4 – Harmony Gold Mining Co. (HMY)
Harmony Gold Mining Co. (NYSE:HMY) is engaged in underground and surface mining. It has increased sales over the past five years from a growth rate of 6.45% to 19.49%, and net margins have improved as well.
Recent moves by the European Union to shore up the euro have driven investors to hard assets, and HMY jumped from under $9 to over $10 from July 24 to July 27.
HMY is a highly volatile and speculative investment, but if the euro turns strong it is likely that it could jump to the mid-teens.
Top Stock to Buy #5 – Qualcomm (QCOM)
Qualcomm (NASDAQ:QCOM) is a leader in developing products and services based on its advanced wireless broadband technology. And the stock’s performance had been outstanding until it was hit with a shortage of chips from Japan. That and profit-taking drove it from its March high of over $68 to under its 200-day moving average.
QCOM appears to have found support at a quadruple-bottom just under $54, where eight sessions ago, it reversed with a breakaway gap. The gap was covered, and the stock quickly reversed up and closed above its 50-day moving average (blue line) and then its 200-day moving average (red line). Its MACD indicator is on a strong buy signal.
Analysts have a target of between $70 and $81 within 12 months. Long-term buyers should add this premier tech stock to their portfolios now, and traders should expect a rebound to $63 to $65.
Top Stock to Buy #6 – Simon Property Group (SPG)
Real estate investment trust (REIT) Simon Property Group (NYSE:SPG) has benefited from strong cash flows and pursues a policy of increasing dividends, with a current yield of 2.6%.
SPG is strong in the Washington, D.C., area, and is also one of the largest owners and managers of shopping centers in the United States. Its leases are for 5 or 10 years and include some of the top blue-chip U.S. retailers.
Barclays recently raised its price target based on fundamental analysis from $180 to $183.