Stock returns of the last decade, and especially of the pandemic year, show that regular and long-term investing can bring investors significant fortunes. But not all stocks go up all the time, as profit-taking typically puts pressure on most names at some point during the year. Such declines in share prices mean investors could find stocks for a quick profit. Today’s article introduces seven short-term stocks to buy, especially for the short-term in May.
Broader markets have seen record highs in recent days. Yet there are still opportunities for buying robust names for a lot less than what they were worth several months ago. In other words, not all companies have participated in the up moves of the past several weeks. The tech and growth darlings of the pandemic have especially seen a loss of momentum in price action.
As seasoned investors would concur, even stocks that have numerous significant catalysts come under stress occasionally. However, what sets good companies apart from many others is their ability to come back and even each reach new highs before too long. Therefore the stocks I’ll discuss for the short-term could easily be bought in long-term diversified portfolios as well.
With that information, here are seven stocks to buy for a short-term quick profit:
- Activision Blizzard (NASDAQ:ATVI)
- Beyond Meat (NASDAQ:BYND)
- Microsoft (NASDAQ:MSFT)
- PayPal (NASDAQ:PYPL)
- Pinterest (NYSE:PINS)
- Tesla Inc (NASDAQ:TSLA)
- Walmart (NYSE:WMT)
Stocks to buy: Activision Blizzard (ATVI)
52-week range: $66.59 – $104.53
Dividend yield: 0.52%
Year-to-date (YTD) price change: Down 2.5%
Santa Monica, California-based Activision Blizzard is one of the most important developers and publishers of interactive entertainment. Founded in 1979, it owns some of the biggest video game franchises. It is also one of the largest gaming businesses in terms of revenue and market cap. Operations and revenue got a major boost during the “stay-at-home” days of the pandemic.
On Feb. 4, Activision released fourth-quarter and 2020 financial year results. Net revenue was $2.41 billion, up 21% from $1.99 billion in the prior year quarter. On a non-GAAP basis, Activision’s operating margin was 31% and earnings per diluted share (EPS) was 76 cents, compared to 62 cents for Q4 2019. Operating cash flow came at $1.14 billion. A year ago, it had been $918 million.
The company operates under three main segments:
- Activision (produces franchises such as the ever-popular Call of Duty franchise and it’s popular Warzone addition, and focuses on console gaming)
- Blizzard (produces franchises such as World of Warcraft, Hearthstone, Overwatch, StarCraft and Diablo, and focuses on online PC games with an emphasis on subscription-based business models)
- King (produces mobile games, such as Candy Crush, Bubble Witch, and Farm Heroes)
CEO Bobby Kotick cited, “In a year filled with adversity our extraordinary employees were determined to provide connection and joy to our 400 million players around the world.”
On Feb 16, ATVI stock hot a record high of $104.53. Since then it has come under pressure, falling about 15%. Forward price-to-earnings (P/E) and price-to-sales (P/S) ratios stand at 25.32 and 8.77, respectively. Those investors who want to have access to the secular growth of the video gaming and entertainment industry could consider buying the shares around the current levels.
Beyond Meat (BYND)
52-week range: $96.66 – $221.00
YTD price change: Down about 2.5%
Beyond Meat brings plant-based meat alternatives to consumers. Competition is fast increasing in this food category. But many analysts regard the company as the leader among its peers. Lockdowns have been challenging for Beyond Meat. It has, nonetheless, been investing in future growth. For instance, in April, it announced a significant retail expansion in numerous European countries, a continent where “plant-based foods market has seen aggressive growth with sales increasing by 49% over the last two years.”
On Feb. 25, Beyond Meat released fourth-quarter and full-year results. Net revenue increased 3.5% to $101.9 million, compared to $98.5 million in the prior year period. Adjusted net loss was $21.4 million, or 34 cents per common share, compared to adjusted net loss of $0.5 million, or 1 cent per common share, in the prior year period.
CEO Ethan Brown commented, “Although weakened foodservice demand resulting from the global pandemic has impacted our near-term profitability, we continue to press forward with strategic investments in service of our future growth, including the build out of our production facilities in China and Europe.”
BYND stock hit a 52-week high of 221.00 in late January. Since then, the shares have lost over 40% of their value. Investors have been worried about the lack of profits. BYND stock’s P/S ratio is 20.16. As a young company in a niche industry, there are likely to be challenges ahead for management. However, given the sharp correction in a matter of weeks, I believe a rebound is possible.
Stocks to buy: Microsoft (MSFT)
52-Week range: $175.68 – $263.19
Dividend yield: 0.89%
YTD price change: Up about 12%
Technology giant Microsoft announced Q3 FY21 earnings on April 27. Revenue was $41.7 billion and increased 19% year-over-year (YoY). Non-GAAP net income came at $14.8 billion, up 38% YoY. Non-GAAP diluted EPS was $1.95, up 39% YoY. Cash and equivalents totaled $13.7 billion, increasing 17% YoY.
The company reports revenue in three segments:
- Productivity and Business Processes (revenue was $13.6 billion and increased 15%);
- Intelligent Cloud (revenue was $15.1 billion and increased 23%);
- More Personal Computing (revenue was $13 billion and increased 19%).
Management emphasized the importance of Intelligent Cloud for the company, their fastest-growing business unit. CFO Amy Hood stated, “The Microsoft Cloud, with its end-to-end solutions, continues to provide compelling value to our customers generating $17.7 billion in commercial cloud revenue, up 33% year over year.”
MSFT stock’s P/E and P/S ratios are 30.3 and 12.02, respectively. Analysts agree Q3 was a robust quarter. Yet, since the release of earnings, investors have hit the “sell” button and the stock is down about 5%. Interested investors could regard this drop as a good opportunity to buy Microsoft stock as the long-term structural growth is likely to continue in future quarters.
PayPal (PYPL)
52-week range: $124.85 – $309.14
YTD price change: Up about 7%
Our next stock, PayPal, has become a dominant force in the financial technology (fintech) revolution. Its combined payment solutions include PayPal, PayPal Credit, Braintree, Venmo, Xoom and Paydiant products. PayPal also enables U.S.-based users to buy and sell Bitcoin on its platform. Over 90% of its revenue comes from transaction fees charged to merchants and individuals.
The group released Q4 and full-year 2020 results on Feb. 3. Quarterly revenue came at $6.12 billion, an increase of 23% YoY. Non-GAAP net income was $1.3 billion, showing a 30% YoY growth. Non-GAAP earnings-per-share was $1.08, up 29% from Q4 2020. PayPal generated $1.35 billion in cash flow, a 46% YoY increase.
PYPL stock hit an all-time high of $309.14 in mid-February. Then came the loss of momentum and profit-taking. Now, the shares are around $250. Forward P/E and P/S ratios are 58.82 and 14.82, respectively. Analysts expect the group’s digital payment products to be in high demand. With a market capitalization (cap) of about $293 billion, PayPal could certainly grow further. The company is profitable and in good financial health. Its international presence is likely to grow further, too. Buy-and-hold investors would find value around these levels.
Stocks to buy: Pinterest (PINS)
52-Week range: $15.82 – $89.90
YTD price change: Down about 8%
San Francisco, California-based Pinterest operates a platform where users can create and share theme-based image collections. The company was founded in 2010 and today has over 2,200 employees.
Pinterest released Q1 earnings in late April. Revenue grew 78% YoY to $485 million. Non-GAAP net income was $78.5 million versus a loss of $60 million a year ago. Non-GAAP net income per share was 11 cents versus a loss per share of 10 cents during the same period prior year. Cash and equivalents by March 31, 2021 were $913.7 million, up 23.3% YoY.
The Street was pleased to see that the U.S. Average Revenue Per User (ARPU) was up 50% YoY. Put another way, the platform is able to engage commercially with users who contribute to the top line. Pinterest now has about 100 million Monthly Active Users (MAUs) from the U.S. These numbers show the enormous potential for further monetization.
CEO Ben Silbermann commented, “I’m proud that we now help 478 million people every month find inspiration to create a life they love. This quarter, we continued strong growth internationally, including our recent launch of advertising in Brazil, and made significant progress with shopping, making it easier for people to discover and buy products they find on Pinterest.”
In mid-Feb, PINS stock hit a record high of $89.90. Since then, the stock has depreciated by over 25%. Forward P/E and P/S ratios are 75.76 and 21.81, respectively. The Street believes Pinterest will likely benefit from the growing e-commerce market, bringing new advertisers to the platform. It also has robust growth prospects internationally. Buying the dips could potentially bring significant short-term returns.
Tesla Inc (TSLA)
52-Week range: $152.22 – $900.40
YTD price change: Down about 6%
Long-term Tesla shareholders mostly regard the company as an engine of innovation. Thus when the group reports earnings, the market pays close attention. On April 26, the electric vehicle (EV) darling released Q1 metrics. Total revenue was $10.4 billion, up 74% YoY. Non-GAAP net income of $1.1 billion meant an increase of 363% YoY. Similarly, non-GAAP diluted EPS was 93 cents, up 304% YoY.
Analysts noted Bitcoin (CCC:BTC-USD) and credit sales helped Tesla offset more losses during the quarter. In fact, Tesla reported more profits from its Bitcoin investments than selling cars. Not everyone was impressed that Bitcoin has become the tool to enhance the automaker’s financial metrics.
CEO Elon Musk cited, “Tesla achieved record production, deliveries and surpassed $1 billion in non-GAAP net income for the first time… We’re building factories as quickly as we can. Both Texas and Berlin are progressing well, and we expect to have initial limited production from those factories this year and volume production from Texas and Berlin next year. At this time, we are continuing to ramp production of Model Y in Fremont and Shanghai. In the background, we’re continuing work — development work on the Semi, Cybertruck, the Roadster and other products.”
In late January, TSLA stock hit a record high of $900.40. Since then, the shares have declined over 25%. Forward P/E and P/S ratios are 158.73 and 22.06, respectively. Before long, Tesla fans will likely start putting their faith and capital back into the shares. If you’re looking for short-term gains, keep TSLA stock on your radar.
Stocks to buy: Walmart (WMT)
52-week range: $117.01 – 153.66
Dividend yield: 1.55%
YTD change: Down about 2%
With a market capitalization of $392 billion, Walmart, the largest retailer in the world, hardly needs an introduction. In the U.S., most of the nation lives within 10 miles of a Walmart store. The group employs around 2.2. million people globally. Its scale and experience gives stability and efficiency to most of its operations. The pandemic year meant increased revenues and cash flow pop.
In mid-February, Walmart released robust Q4 earnings. Total revenue was a record $152.1 billion, an increase of $10.4 billion, or 7.3% YoY. Its U.S. same-store sales grew by 8.6% with strength across most key categories. Investors were pleased to see that e-commerce sales jumped 69% with strong results across all sales channels. Adjusted EPS was $1.39 in the fourth quarter.
CEO Doug McMillon remarked, “Change in retail accelerated in 2020. Our business is strong, and we’re making it even stronger with targeted investments to accelerate growth, including raises for 425,000 associates in frontline roles driving the customer experience.”
Walmart’s current forward P/E and P/S ratios currently stand at 26.11 and 0.71, respectively. If you believe the winter slump might soon be over, you might consider buying the dips in the shares.
On the date of publication, Tezcan Gecgil did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Tezcan Gecgil has worked in investment management for over two decades in the U.S. and U.K. In addition to formal higher education in the field, she has also completed all three levels of the Chartered Market Technician (CMT) examination. Her passion is for options trading based on technical analysis of fundamentally strong companies. She especially enjoys setting up weekly covered calls for income generation.
