It has been quite a run for stock markets. Despite the novel coronavirus pandemic, oil price shocks and the worst economic downturn since the Great Depression, stock markets have continued to run higher. The tech heavy Nasdaq is testing all-time highs and the S&P 500 is positive year-to-date. All of the turmoil has lead many to ask the question: what are the best stocks to invest in right now?
The Wall Street Journal recently called this year’s stock market performance a “melt-up” as opposed to a “meltdown.” But, as in all market rallies, there have been winners and losers in 2020.
While several big technology names, such as Apple (NASDAQ:AAPL) and Microsoft (NASDAQ:MSFT) have enjoyed spectacular runs in recent months, many major American brands such as McDonald’s (NYSE:MCD) and Ford (NYSE:F) continue to see their share prices languish.
With that in mind, here are seven of the best stocks to invest in right now:
- Advanced Micro Devices (NASDAQ:AMD)
- Berkshire Hathaway (NYSE:BRK.A, NYSE:BRK.B)
- Virgin Galactic (NYSE:SPCE)
- FedEx (NYSE:FDX)
- DexCom (NASDAQ:DXCM)
- Alibaba (NYSE:BABA)
- Restoration Hardware (NYSE:RH)
I made these selections based on their performance since the crash in March, and their prospects for future growth.
Best Stocks to Invest In Right Now: Advanced Micro Devices (AMD)
Until a few weeks ago, AMD stock was stuck in a trading range between $49 and $54 per share. The stock couldn’t breakout above $55 a share. This was extremely frustrating to investors who had to watch as AMD rival Nvidia’s (NASDAQ:NVDA) stock broke through one new all-time high after another. But now, AMD shareholders are laughing as the stock has risen nearly 50% since July 13.
The swift rise in AMD’s stock has been prompted by the company’s strong second quarter and after rival semiconductor company Intel (NASDAQ:INTC) announced delays in delivering its next generation chips. Shareholders and analysts not only agree that the share price appreciation is overdue, but also forecast that AMD stock will run higher for the remainder of the year. The median price target on the stock right now is $75 per share, with a high price target of $120 a share.
With a host of new products such as its third-generation EPYC processor due out shortly, and the launch of new gaming consoles that carry AMD chips arriving in time for Christmas, the bull run on AMD stock has likely just begun.
Berkshire Hathaway (BRK.B)
Are you really going to bet against Warren Buffett? He may be turning age 90 at the end of August, but the Oracle of Omaha is still the most successful investor of all time, and he carries a lifetime of wisdom in his head. With his holding company Berkshire Hathaway’s stock price currently depressed, now presents a great buying opportunity for long-term investors who look to the horizon.
Since the global pandemic caused markets to crash in March, Buffett has been widely criticized for selling all his airline stocks and hoarding $137 billion of cash rather than putting that money to work in the market or making a targeted acquisition. Rampant speculation that Buffett has lost his touch has kept BRK.B stock trading close to $190 a share. As the stock of technology companies and speculative plays such as Hertz (NYSE:HTZ) took off in recent months, BRK.B stock has lagged.
However, this is not the first time that Buffett has been criticized or that his stock has been punished. During the technology bubble of the late 1990s, Buffett was roundly vilified for refusing to invest in tech start-ups he claimed he couldn’t understand. Yet he stood tall when the tech bubble burst and day traders lost millions of dollars.
Don’t count Buffett out yet. In recent weeks, his company has made several targeted investments that should help to shore-up an already rock solid Berkshire Hathaway. In July, Buffett bought a total of $1.2 billion shares of Bank of America (NYSE:BAC). That move followed a $10 billion deal to buy most of Dominion Energy’s (NYSE:D) natural-gas assets. The notoriously conservative investor now sees some deals worth taking advantage of, and BRK.B stock will likely appreciate with the broader U.S. economic recovery.
Given its cash position and large holdings of stock in blue chip companies such as Coca-Cola (NYSE:KO) and Apple, investors should view BRK.B stock as a safe haven amid broader market turmoil.
Virgin Galactic (SPCE)
Space is a hot sector right now as NASA increasingly contracts private companies to ferry astronauts and supplies to the International Space Station, among other tasks. Investors who want exposure to the fast growing space industry have few options outside or Sir Richard Branson’s Virgin Galactic.
Other space focused companies such as Elon Musk’s SpaceX and Jeff Bezos’ Blue Origin are privately held. Since the end of June, SPCE stock has been on a run, rising 57% from $16.25 to $25.54 a share. While the stock has given back some gains recently, it is still trading above $23 per share and could test its 52-week high of $42.49.
Rocketing the stock higher has been a spate of successful test flights for its ships as well as media friendly unveils of the interior of its space planes that will, eventually, carry tourists into outer space at a cost of $250,000 per person. While space tourism remains an industry that has yet to takeoff, Virgin Galactic is still managing to capitalize on contracts with NASA.
At the end of June, it was announced that the company had signed an agreement with NASA to train astronauts for trips to the International Space Station. Such contracts are carrying Virgin Galactic along while it refines and prepares to launch its core business of space tourism. Going forward, SPCE stock should attract investors who have an appetite for risk and want exposure to the final frontier.
Federal Express (FDX)
FedEx was struggling before the Covid-19 pandemic. FDX stock fell from nearly $200 to a low of $143 per share late last year as investors fretted about rising competition in the package delivery space from the likes of Amazon (NASDAQ:AMZN) and doubted FedEx’s ability to keep up.
When the bottom fell out of the market in March, FDX stock was trading at $90.49 a share. However, FedEx’s fortunes have turned around in recent months as Americans shelter in place and order increasing amounts of products delivered to their homes.
FedEx’s most recent earnings surprised on the upside, with the company reporting earnings of $2.53 per share, well above the consensus estimate of $1.42 a share. Quarterly revenues of $17.35 billion also beat the consensus estimate of $16.12 billion. The better-than-expected results have driven FDX stock up 50% from about $115 in May to $173.16 a share today.
While the company’s business deliveries continue to face challenges amid the global pandemic, the company is being buoyed by increase demand for consumer deliveries, which has enabled the company to raise the prices it charges customers. Analysts think this stock has room to run. The high price target for FDX stock is $188 a share, with some analysts forecasting that shares will be above $200 by year’s end. The consensus view is to “buy” FDX stock.
DexCom’s share price is up 124% from its March low. DXCM stock today trades at $428.82 a share, up sharply from $191.16 on March 18.
There’s no question that it has been an impressive run for the San Diego, California-based company that manufactures continuous glucose monitoring systems for people afflicted with diabetes. And DexCom is a duel threat. Not only is the company a leader in the healthcare space, it is also a niche Internet of Things (IoT) player.
Dexcom flagship glucose monitor, called G6, includes an internet connected auto-applicator, sensor, transmitter and a touchscreen receiver that displays real-time glucose data. Smartphones and smartwatches can also be connected and used to display information related to a patient’s glucose levels. The adoption and integration of leading edge technology has kept DexCom ahead of its competitors and enabled the company to dominate the diabetes segment.
Investors who put money into DXCM stock will gain exposure to the red hot Internet of Things market as well as the growing healthcare industry. Analysts seem to think investing in DXCM stock is a smart move. The median price target on the company’s stock is $476.50 a share, with a high estimate of $540 per share. The consensus view is to “buy” DXCM stock. Best to do it before it gets more expensive.
E-commerce juggernaut Alibaba is one of the safest and fastest growing Chinese stocks. The “Amazon of China” as Alibaba is called is involved in everything from online commerce to cloud computing, digital payments to artificial intelligence.
The diversification and market dominance throughout Asia is propelling Alibaba towards its goal of serving more than one billion Chinese consumers and generating $1.4 trillion in revenue across all of its platforms within the next five years.
Investors who find AMZN stock too pricey at more than $3,000 a share may find BABA stock more appealing at $250 per share. And BABA stock has been moving higher since the end of June, up 17% to $252.26 from $215.70 a share.
While analysts and investors continue to cheer Alibaba’s growth story, this stock tends to be more volatile than other companies on this list owing to the fact that it is China’s flagship company and tends to get caught up in the roller coaster of U.S.-China relations. BABA’s stock price whipsawed from $244.84 to $253.91 a share in one five-day trading span recently as the American and Chinese governments closed consulates in each other’s countries.
Despite the short-term volatility, BABA stock has been trending in the right direction and remains one of the best ways to invest in China and a massive multinational e-commerce and technology company. Among 56 analysts who cover Alibaba, all have a “buy” rating on the company’s stock. There are currently no sell ratings. And some analysts see BABA stock rising more than 700% in the next 12-months to greater than $2,000 per share. All of this makes it one of the best stocks to invest in right now.
Restoration Hardware (RH)
You wouldn’t think that Restoration Hardware would be rising given that the majority of its 83 retail store locations have been shuttered by the pandemic. But RH stock has gone against the current and defied conventional logic throughout this difficult year.
During the second quarter, at the height of the Covid-19 lock down, RH stock rose 143% and was up 112% on June 30 compared to a year earlier. Currently, RH stock trades at $290.68 a share, more than triple its March low of $80.43 per share.
The company has been able to rise above the economic downturn by catering to wealthy customers who have money to spend, and by offering a white glove delivery service that it manages internally to ensure that its high-end furniture and housewares arrive in pristine condition. Not only does this approach ensure fewer costly product returns, but it has also helped Restoration Hardware develop an extremely loyal customer base.
The global pandemic has only served to refocus the company on its catalog and online business. Although it has added upscale restaurants to its retail stores, which have proved to be popular and should help to drive foot traffic as social distancing protocols are lifted.
Despite RH stock’s gravity defying run this year, analysts maintain a “buy” rating and feel there is more runway ahead for the company. The high estimate on RH stock is currently $310 a share. Restoration Hardware is well positioned to come out of the pandemic and industry observers see the company growing internationally for several years to come, particularly in Europe where the luxury goods market is fragmented and primed for disruption.
Joel Baglole has been a business journalist for 20 years. He spent five years as a staff reporter at The Wall Street Journal, and has also written for The Washington Post and Toronto Star newspapers, as well as financial websites such as The Motley Fool and Investopedia. As of this writing, Joel Baglole held shares of AAPL, MSFT, MCD, F, BRK.B, FDX, BABA, SPCE, DXCM, NVDA and BAC.