With summer vacation trips winding down and the first day of school now in sight for most, it’s tough to even think about finding great stocks to buy.
Besides, aren’t August and September typically lethargic months for stocks, anyway?
It is true that the market tends to lag all the way through the official end of summer (Sept. 23, this year), but that’s not to say all stocks will be napping their way to autumn.
In fact, this time of year — when most investors have their mind on other things — is a great time to go shopping for bargain stocks that are positioned to ride the bullish wave that almost always materializes in the fourth quarter.
With that as the backdrop, here’s a quick look at 10 stocks to buy for the last days of summer, with most of them poised to finish 2015 particularly strong.
Stocks to Buy: Walmart (WMT)
Although the event itself has almost become as cliche as Black Friday sales, there’s no denying that back-to-school shopping mania puts a lot of stocks on (or back on) investors’ radars.
Topping this year’s list of back-to-school stocks to buy is none other than Walmart (WMT).
Granted, WMT has been tough to own this year, with shares falling more than 20% from their peak around $90 in January and no end to the rout in sight. But, with the retailer finally starting to fix some of its nagging problems and drawing larger spending crowds in its last two reported quarters, Walmart might end up being surprisingly competitive in August.
The kicker: If all goes well during the back-to-school quarter, the market may well gain enough faith in the company to push WMT upward all the way through the holiday shopping season.
Stocks to Buy: Sirius XM Holdings (SIRI)
Consumers are still falling in love with the diversity of satellite-delivered radio, and Sirius XM has the numbers to prove it … numbers like a 46% increase in subscriber additions last quarter. SIRI added 692,000 new members in the second quarter, versus only 475,000 new members in the same quarter of 2014.
The rising growth rate has prompted the company to up its revenue guidance for the full year. Sirius XM is now looking for a top line of $4.5 billion in 2015, up from prior guidance of $4.47 billion. Guidance may well rise again when Q3’s figures are tallied.
While SIRI stock is still below its 2013 peak price, the 2014 lull is in the past. Sirius XM is one the market’s tops stocks to buy before the end of summer, because at the rate it’s going now, SIRI will be reaching new highs headed into the holiday shopping season … when the fireworks really start in earnest.
Stocks to Buy: Proto Labs (PRLB)
Proto Labs (PRLB) isn’t a household name … but maybe it should be.
The custom-manufacturing and prototype machining company has been growing the top and bottom lines solidly for several years now. Revenues have expanded from 2011’s $98.9 million to last year’s $209.6 million. Annual net income grew from $18 billion to $41.6 billion during that span, and Proto Labs just reported record quarterly sales and profits.
Better still, more of the same kind of double-digit growth is expected this year and next year.
And yet, its big growth isn’t the key reason PRLB is one of the top stocks to buy before the end of summer. It’s the fact that despite heroic sales and earnings growth since forever ago, shares are currently priced where they were in October 2013.
It’s not going to be easy to hold Proto Labs down much longer, though, in light of the company’s continued growth. The price-to-earnings ratio is shrinking awfully fast.
Investors may have their “a-ha!” moment soon.
Stocks to Buy: ACCO Brands (ACCO)
Walmart isn’t the only stock poised to benefit from back-to-school shopping mania.
Have you ever wondered who makes all those notebooks, index cards and binders that parents purchase to get their kids started on the right foot each school year? It’s a company called ACCO Brands (ACCO), though you may be more familiar with its brand names like Mead, Trapper and Cambridge.
It’s admittedly not the sexiest of businesses to be in, and ACCO Brands hasn’t helped itself by letting its top and bottom lines slip the last couple of years.
There’s no denying, however, that it’s the most relevant and timely of the late-summer stocks to buy, just because school’s around the corner. The big Q2 earnings beat (and subsequent bounce from the stock) doesn’t hurt the bullish case either, nor does its P/E of just 10.
Stocks to Buy: GoPro (GPRO)
There’s no denying it has a valuation problem, and sooner or later a competitor will unveil a true threat to GoPro (GPRO) and eat into GoPro’s commanding lead in the rapidly saturating market.
There’s enough momentum-driven life left in GPRO, however, to squeeze at least a few more months of bullishness out of the stock.
Most stocks that rally more than 60% in four months the way GoPro shares have would likely be overbought, overextended and ripe for a pullback. But even with that heroic move, GPRO is still well below its peak price of $98.47 hit in October of last year — and the company has more going for it now than it did then.
It’s a fad trade, to be sure, but the fad isn’t over yet. In fact, the rally seems to be accelerating headed into the end of the year, keeping GPRO on a list of the market’s best stocks to buy … even if it’s just a trade.
Stocks to Buy: NetSuite (N)
Cloud-based software company NetSuite (N) might be one of the market’s most misunderstood organizations. That misunderstanding, however, is finally starting to fade, and N shares are finally starting to perk up as a result.
Much longer, and it could be back in a full bullish groove, making NetSuite one of those few great stocks to buy in the near future.
The source of the confusion is NetSuite’s accounting statements. On a GAAP basis, not only is NetSuite losing money, but the more revenue it drives, the bigger the losses get. On an operating basis, though, a long string of rising revenue is indeed leading to widening profit margins.
Although the stock has been a lackluster performer since early 2014 when investors started to have a tough time rectifying the two sets of results, the higher low made in mid-July and the 12% gain since then strongly suggests the bulls and buyers are testing the waters again.
Stocks to Buy: Principal Financial Group (PFG)
While most other stocks are struggling just to keep their heads above water this summer, Principal Financial Group (PFG) has recently managed to waltz its way toward multimonth highs.
And Thursday’s push above $55.07 did the trick.
The renewed rally effort has largely been driven by its second-quarter results. Principal Financial Group managed to top expectations for a profit of $1.04 per share of PFG on $2.61 billion in revenue by reporting per-share income of $1.09 and sales of $3.41 billion.
It’s not just results that clinched PFG a spot on a list of late-summer stocks to buy, however. It was the introduction of a new revenue stream. Principal Financial Group is getting into the exchange-traded fund business. Investors are understandably stoked. The stock could get several weeks if not months of traction from the news, as new ETFs are launched.
Speaking of ETFs …
Stocks to Buy: Utilities SPDR (XLU)
All too often, investors become so immersed in the hunt for the right stocks to buy and the right time to buy them that they’ll forget to consider ETFs.
Sector-based ETFs are ideally suited for theme- and calendar-based trade. And no other fund looks as well-positioned to move solidly higher over the course of the coming couple of months as the Utilities SPDR (XLU).
According to recent research from CXO Advisory Group, the utility sector’s key ETF — XLU — is the only major sector ETF to have averaged a gain of any sort in August as well as September between 2009 and 2014. It was the best September performer overall, and was the second-best performer in August, for the five-year span.
That tendency alone is especially worth shooting for in 2015, as utility stocks have perked up as of late July after poor results over the course of the first half of the year.
Stocks to Buy: AT&T (T)
Much like Sirius XM Holdings and Proto Labs, investors assumed the worst for AT&T (T) a couple of years back, putting the stock into a sideways trading range in 2012 that it’s still stuck in today.
As it turns out, though, AT&T has not only held up in the midst of a price war — it has managed to keep growing its top and bottom lines even when some thought it wouldn’t be able to when competition stepped up.
AT&T deserves consideration as one of only a handful of stocks to buy in the midst of the current quarter, however, as the market may finally be ready to recognize there’s little that can actually stand in the company’s way — one of the perks of being the biggest player on the court.
Next year’s projected revenue growth of 10.6% and expected earnings growth of 8.2% may not be red-hot, but it’s dependable, and investors could finally warm up to it again at any time.
Stocks to Buy: Walt Disney (DIS)
Last but not least, add Walt Disney (DIS) to your list of stocks to buy sooner rather than later.
Warning: It won’t come cheap. DIS shares are currently priced at a trailing P/E of 25.5 and a forward-looking P/E of about 21. And, on a related note, the stock itself is technically overbought.
You have to pay for quality, though, and something that could be quite catalytic for Disney is right around the corner: the release of the first Star Wars film since 2005. Star Wars: The Force Awakens is scheduled to debut on Dec. 18, but the buzz has already started.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
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