The big news last week was the S&P 500 blasting to a record high. Thursday’s close of $2,958 officially eclipsed the previous peak notched on April 30 earlier this year and signals the end of the summer correction.
At least, that’s what stock bulls are hoping.
History proves it’s usually worth betting on continuation over reversal when record levels are reached. It certainly provides a favorable backdrop for traders seeking stocks to buy.
Think of all that is implied in the simple three-word phrase, “all-time highs.” It means people are willing to pay a higher price than ever before. It means every single participant on the planet currently long the stock is sitting on a winning position. And all those who are short are experiencing more losses than ever before. Anyone who used to own the stock regrets selling too early and anyone who has never held it certainly wishes they did.
Throw it all together, and you have an environment where demand is significant and supply small. In celebration of last week’s record-setting action, here are three stocks to buy that are each making all-time highs.
3 All-Time High Stocks to Buy: Disney (DIS)
Thursday’s close of $142.02 marked a new record closing high for Disney (NYSE:DIS). The mouse house is well on its way to clinching a banner year for shareholders. The upside catalysts continue to stack up. From the record-smashing release of Avengers:Endgame and the long-awaited debut of Star Wars:Galaxy Edge, to details surrounding its hotly anticipated Disney+ streaming service (set for release later this year), DIS stock has enjoyed a flurry of bullish news.
Its share price is retreating just in time for today’s pick. Today’s 1% dip is ushering its price toward the rising 20-day and 50-day moving averages. With so many potential support levels looming beneath, the two-day drop has to be viewed as a potential buying opportunity.
If you’re willing to bet the stock reaches $145 by August, then buy the Aug $140/$145 bull call spread for $1.80. Your risk is limited to the initial purchase price of $1.80, and the potenial reward is $3.20.
Purists will cry foul at Cisco’s (NASDAQ:CSCO) inclusion to today’s gallery. Technically last Thursday’s $57.41 close marks a new 20-year high, not an all-time record. But, I suspect there are extremely few current shareholders that owned it back during the height of the dot-com bubble. For all but the oldest of dinosaurs, this is a new high.
While Friday’s failed breakout bar might give us some pause in the short-term, the overall trend of CSCO stock looks fantastic. The past two months of chop have allowed Cisco shares to digest recent gains and build a base for its next up-leg.
With an implied volatility rank of 30%, option premiums aren’t really juiced enough to sell. So, we’re going with a long premium play. Buy the Aug $57.50/$62.50 bull call spread for around $1.40. The risk is limited to $1.40, and the reward is $3.60.
Shopify (NYSE:SHOP) is the poster child for momentum stocks. Driven by high earnings and sales growth, SHOP stock has become a monster winner for 2019, up 135%. What’s particularly impressive is the consistency of its trend. It’s toeing the technical analysis line like a champ. Every breakout has seen followthrough, and every dip has been bought.
Even broader market corrections like the May drop proved unable to knock the SHOP trend. Last week’s rally launched the stock to a new record, but we’ve since seen a multi-day pullback develop. Thus far the volume has been minimal signaling a garden variety pullback and not some institutionally-driven exodus.
Someday the trend will end, but if you think the good times roll for at least another month or two, then bull call spreads provide a low-cost strategy to capitalize. Buy the Aug $320/$340 bull calls spread for around $8. The risk is $8 and the reward is $12.
As of this writing, Tyler Craig held bullish options positions in DIS. Check out his recently released Bear Market Survival Guide to learn how to defend your portfolio against market volatility.