On Friday, Oct. 25, stocks ended the day in a crescendo of buying that sent the S&P 500 to a new record closing high. The Nasdaq closed at another 13-year high, and the Russell 2000 also set a record high.
Concerns for the economy caused by a drop in durable goods orders and disappointing jobs numbers led investors to conclude that the Federal Reserve will continue to pump money into the economy through its asset-purchase program. Many money managers believe that the Fed’s bond buying, under a new Fed chairman, will not only extend into 2014 but possibly even longer.
Higher revenues than expected and earnings surprises are propelling the Dow Jones Industrial Average. The senior index, which has thus far trailed the more aggressive indices, now appears capable of joining the youngsters in a full-fledged breakout. And if that occurs, we could see a dramatic rise in the blue chips. This month’s list of stocks to buy includes some well-established industry leaders.
Here are your top stocks to buy for November:
Top Stock to Buy #1 – Actavis (ACT)
On May 28, following a pop to $133 the prior week, I suggested that investors “either take profits or engage in protective strategies, like options writing or the purchase of put options, which would limit losses but enable them to participate in further gains.”
With the stock now near $146, it is obvious that I was too conservative. Last week, Citigroup (C) initiated coverage of the stock with a target price of $172, saying that it was their “favored name amongst the multinational generic companies.” And Zacks reiterated its “buy” recommendation. The consensus median target is $160, but that will likely be revised upward.
The company just reported a decline in third-quarter earnings due to higher acquisition-related charges and other items, but posted double-digit revenue growth and raised its guidance for the year.
Technically, ACT is in a powerful bull channel. MACD recently triggered a fresh buy signal following a quick round of profit-taking that dropped the stock to its support at the 50-day moving average. Buy ACT at the market with a trading target of $172.
Top Stock to Buy #2 – Apple (AAPL)
Apple (AAPL) has been a volatile performer, and I recommended selling it several times, including on Oct. 26, 2012, at $609 with a downside target of $587, on Dec. 17, at $509 with a target of $450, and on Feb. 28, at $444 with a target under $400.
Then, on July 9, near $414, I said, “Now, however, it is clear that all shorts should be covered in light of a possible saucer forming. A close above the resistance line at $465 would signal that a long-term bottom has finally been established.”
On Sept. 27: “The bullish saucer formation has continued to develop, a golden cross has formed, and MACD triggered a buy signal. The final bullish signal would be for AAPL to close above the resistance line at $500, but those who wish to take a modest risk could take positions now with a trading target of $570 and a stop-loss at $455. Apple has become a moving target, but a well-placed arrow here could result in a bushel of profits.”
The breakout at $500 occurred on Oct. 16, and the company just reported better-than-expected fiscal fourth-quarter results. The trading target is $600 by January.
Top Stock to Buy #3 – Boeing (BA)
Boeing (BA), the world’s largest manufacturer of commercial jets and second largest military weapons maker, is expected to see a 4% rise in sales this year and 9% in 2014, driven by its commercial airplane segment.
The consensus earnings estimate for 2013 is $6.71 per share and $7.46 in 2014. An average P/E of 19 renders a price target of $141.
Technically, the stock has been advancing in a powerful bull channel. But in October, it broke through the upper resistance line of the channel, driven by heavy volume.
The gap created on Oct. 23 at $123.80 to $126 may not close since it appears to be a breakaway gap. The technical target is in agreement with the fundamental target of $141.
Top Stock to Buy #4 – Canadian National Railway (CNI)
Canadian National Railway (CNI), Canada’s largest railroad, links customers in Canada, the U.S. and Mexico. S&P recently raised its price target from $115 to $125 based on accelerating volume growth. Earnings estimates were increased, as well, and S&P now expects $6.20 in 2013 and $7 in 2014.
On Oct. 24, the company reported Q3 earnings of $1.82 per share versus a consensus estimate of $1.68. It also announced its plans to repurchase up to 15 million shares.
The stock broke from a quadruple-top on high volume in October. The breakout resulted in a spike to $111.95. The angle of advance is so sharp that the current price will be difficult to maintain, so a buy under at $107 is recommended with a price target of $125.
Top Stock to Buy #5 – 8×8 (EGHT)
8×8 (EGHT) is a telecommunications company that develops services for Internet protocol (IP), telephony and video applications. It also offers Web-based conferencing and cloud-based computing services. The company was ranked 23rd out of 100 on Forbes’s 2013 list of “America’s Best Small Companies.”
I first recommended the stock on Nov. 17, 2011, at $3.85, and several times since as a key cloud computing holding. On Aug. 26, at $9.40, I said, “The bull channel formed following the breakout in late May provides added technical support. On July 31, and again on Aug. 21, the company was granted new patents related to its conferencing technologies.”
Technically, EGHT is trading in a powerful bull channel that began in April. It has support at its 50-day moving average at $10.14, and that would be the ideal spot to buy it on a pullback. But despite the overall market uncertainties, this stock has responded by holding its 20-day moving average at $10.76. The trading target remains $12, but long-term investors should buy now and hold indefinitely for possible substantial returns.
Top Stock to Buy #6 – Ventas (VTR)
Ventas (VTR) is a REIT with geographical diversity and a portfolio of senior housing and health care properties throughout the U.S. It has a dividend yield of 4% and a median target of $68 by fundamental analysts.
VTR reported third-quarter normalized funds from operations (FFO) of $1.04 per share, beating estimates of $1.02, and up 8.3% from the same quarter a year ago. S&P raised its 2013 FFO estimate by $0.04 to $4.13 and increased its 2014 projection by $0.10 to $4.40.
A near-term buy signal was triggered when the 20-day moving average crossed through the 50-day moving average. Resistance at the $69 to $70 area may slow down an advance, but possible selling should be easily overcome by an established bull channel. The six-month target is $79.