October is almost in the books and that means November is right around the corner. The second month of the fourth quarter is historically kind to stocks. Over the past 20 years, the S&P 500 has averaged November gains of 1.2%, making it the fourth-best month of the year for benchmark domestic equity gauge behind March, April, and October.
Of course, there are no guarantees that seasonal trends repeat from year-to-year, but knowing the months in which stocks typically perform well can be instructive. Add to that, stocks have some momentum heading into the eleventh month of the year. The S&P 500 is up 24% this year, sits near record highs, and has, to this point, defied October’s often-volatile reputation.
Investors can also consider sector-level strategies in the upcoming month, something I’ll explore in greater detail later in this piece. For now, let’s get into some of the stocks to buy in November.
Microsoft (NASDAQ:MSFT) has already been on a torrid pace this year, surging 41% to rank as one of the best-performing names in the Dow Jones Industrial Average. The company recently reported third-quarter results. Thanks in large part to its Azure cloud businesses, the numbers were stellar and well-received by investors.
“For the quarter, the software giant reported revenue of $33.1 billion, up 14% from the comparable year-ago quarter and ahead of the Wall Street analyst consensus forecast of $32.23 billion,” reports Barron’s. “Profits were $1.38 a share, up 24% from a year ago and ahead of the consensus at $1.24 a share.”
Speaking of cloud computing and Microsoft, another point that could make this a stock to buy in November is a recent win over cloud rival Amazon (NASDAQ:AMZN) for a $10 billion Defense Department contract, a competition many market observers believed Amazon was leading.
There is some controversy already swirling around Microsoft winning this contract, but even if the bid is reversed (don’t bet on that), it could give investors a dip with which to embrace Microsoft as a stock to buy.
Wynn Resorts (WYNN)
Due to softness in the Chinese economy and recently tepid gaming revenue numbers out of Macau, the world’s largest gambling mecca, Wynn Resorts (NASDAQ:WYNN) may not appear to be an obvious stock to buy over the near-term.
However, the company reports third-quarter earnings on Nov. 6 and if its Macau results are in-line with or slightly better than already downbeat expectations, that would serve as a potential catalyst to make this a stock to buy. Investors considering a position in shares of Wynn cannot overlook the importance of Macau because the Chinese territory accounts for about two-thirds of the company’s revenue, if not more, on a quarter-to-quarter basis.
“While we believe WYNN shares could be stuck in neutral until we get more clarity around macro/political headwinds in China, at this point we still see value in the name for the patient investor who can stomach near-term volatility,” said Stifel analyst Steven Wieczynski in a recent note.
Industrial Select Sector SPDR (XLI)
Obviously, the Industrial Select Sector SPDR (NYSEARCA:XLI) is an exchange traded fund (ETF), not a stock, but the largest ETF dedicated to the industrial sector merits some consideration as a stock to buy in November. Historical data indicate that in the eleventh month of the year, each of the nine original sector SPDR ETFs post positive returns, but XLI is usually the second-best performer of the group.
At the holdings level, the market has already digested slack earnings and ugly guidance from XLI’s components Caterpillar (NYSE:CAT) and 3M (NYSE:MMM). Additionally, the recent spate of bad news surrounding Boeing (NYSE:BA), another important XLI holding, could be drawing to close. If that name becomes a stock to buy again, XLI’s fortunes would be immediately boosted.
Activision Blizzard (ATVI)
Video game publisher Activision Blizzard (NASDAQ:ATVI) reports earnings on Nov. 7, providing an opportunity for the company to potentially give some update on the performance of the recently released installment of the “Call of Duty” franchise. Additionally, investors may get some clarity on how the holiday shopping season is shaping up, possibly shedding new light on ATVI’s status as a stock to buy.
Adding to the interest around Activision possibly being a stock to buy in November is the Nov. 1 start of the company’s annual BlizzCon convention.
“The convention serves as a platform for Activision Blizzard to announce new games, hold esports tournaments, and offer fans exclusive merchandise related to its first-party titles,” according to Business Insider. “The video game company is famous for its World of Warcraft, Overwatch, and Diablo franchises, among others.”
There is talk that BlizzCon 2019 will feature multiple Diablo launches, the first ones in almost a decade, and possibly an Overwatch sequel as a well as a refreshed World of Warcraft.
All Apple (NASDAQ:AAPL) has done over the past month is jump more than 10%, bringing its year-to-date gain to north of 56% while reentering the $1 trillion market value club. All that without yet having reported earnings. Apple’s stock to buy status will be tested following its Wednesday, Oct. 30 earnings report, but of course, that status could be renewed if the company makes bullish commentary on iPhone 11 sales.
November will test Apple as a stock to buy for another reason: the company’s long-awaited streaming entertainment service, AppleTV+ debuts on Nov. 1. AppleTV+ may not immediately affect the stock, but it’s reasonable to surmise analysts will be running channel checks on the launch throughout the month and its possible investors will be able to digest some data and commentary on that front later in the month.
What’s interesting about Apple as a stock to buy over the near-term is that it has defied a historical tendency for weakness in September and October. In fact, the stock’s torrid pace this month has prompted a spate of analyst upgrades and bullish price target revisions. If the next earnings report is exceptional, more of the same could be coming in November.
Semiconductor maker Nvidia (NASDAQ:NVDA) is already a star stock this year, up more than 51%. On Friday, Oct. 25, the shares were around $204.50 after gaining almost 4% on above-average volume, cementing a recent breakout. That closing price is above the average analyst price target of $193, suggesting that Nvidia could be a stock to buy simply because analysts probably need to ratchet up price targets on the name.
Adding to the Nvidia as a stock to buy thesis is rival Intel’s (NASDAQ:INTC) recent blowout earnings report which allayed some of the concerns about chip stocks following a weak report from Texas Instruments (NASDAQ:TXN) several days prior. What’s important about Intel’s update was data bullishness, a market that’s important to Nvidia as well.
Intel’s “quarter showed that data center demand was higher than expected, which leads him to believe that Nvidia is positioned to benefit from higher growth as well,” reports Barron’s citing RBC Capital Markets analyst Mitch Steves. “That prompted him to boost his earnings estimates for next year, hence the price-target increase.”
Although Shopify (NYSE:SHOP) has more than doubled this year, the shares have been in a lull as of late with market participants debating whether recent weakness is a harbinger of more to come, or a buying opportunity in an e-commerce that rarely offers credible entry points.
No, Shopify still isn’t inexpensive, but that doesn’t mean it’s not a stock to buy. Actually, it may just be a stock to buy as holiday shopping ramps up thanks to a still firm U.S. economy supporting Shopify’s bread and butter clientele: small and medium businesses.
“Our small and medium business survey suggests the current demand trends across small and mid-sized merchants remains stable. E-commerce vendors continue to outpace traditional peers,” said Guggenheim analyst Ken Wong in a recent note to clients. “Our industry checks have been positive with expectations for gross merchandise value growth to mirror first half trends.”
Shopify’s Oct. 29 earnings announcement is likely to go a long way in charting the stock’s November fortunes, particularly if the company reports a narrower loss than the expected loss of 28 cents a share and if it can beat on the top line.
Todd Shriber does not own any of the aforementioned securities.