Some stocks have so much momentum behind them that they defy the broader market. These equities even seem to be impervious to corrections, downturns and negative news. These are what are known as “hot stocks,” and they tend to march higher regardless of what is going on around them.
September was a tough month for investors. It was the first month since March that the Dow Jones Industrial Average ended lower.
However, while many stocks that led the rally, such as Apple (NASDAQ:AAPL) and Tesla (NASDAQ:TSLA) faltered in September, a few stocks remained on fire and continued to see their share prices rise during the month. Fortunately for investors who were lucky enough to ride these names higher, there is a lot more in store.
Here we look at seven hot stocks that offer triple the upside to investors, whether it be in the form of returns, dividends or long-term growth potential. These are red-hot stocks that stand above the crowd.
- Roku (NASDAQ:ROKU)
- Restoration Hardware (NYSE:RH)
- FedEx (NYSE:FDX)
- Amazon (NASDAQ:AMZN)
- Peloton (NASDAQ:PTON)
- Zoom Video (NASDAQ:ZM)
- StoneCo (NASDAQ:STNE)
Hot Stocks: Roku (ROKU)
While many other hot technology stocks seemed to fizzle out in September, connected television manufacturer Roku continued to blaze. ROKU stock has impressively risen since Sept. 1 and now trades at $223 a share. Year to date, the share price is up 68% and it continues to breakout despite weakness among its peers and the wider tech sector.
Analysts remain bullish on Roku, with several of them upgrading their price targets on the stock in recent weeks.
The enthusiasm is due to the fact that Roku has a dominant position. It has a 43% share of the connected TV market, compared with 35% for Amazon Fire TV and 27% for Apple TV. Also, the company scores extremely high in customer satisfaction ratings and has a long runway ahead of it given that two-thirds of consumers have not yet purchased a connected TV. Investors looking for a new tech darling should consider investing in ROKU stock.
Shares have been racing higher since August.
Restoration Hardware (RH)
After a brief dip in early September, upscale furniture company Restoration Hardware, or RH, saw its stock have a huge breakout. Shares soared 24% during the month.
Today, RH stock is worth $366 a share and is up more than 300% from its March bottom. The share price has continued to be hot despite the global pandemic that has destroyed consumer sentiment and led to the steepest economic downturn on record. RH also happens to be a stock held in the Berkshire Hathaway (NYSE:BRK.A, NYSE:BRK.B) portfolio of legendary investor Warren Buffett. This gives it an added vote of confidence.
Driving the momentum at RH has been continued strong consumer spending on household items such as furniture. This trend has led to strong sales and financial results for the company, as well as several analyst upgrades in recent months. In its most recent quarterly results, Restoration Hardware said it earned $4.90 a share on revenue of $709.7 million, both of which beat consensus estimates. The company also reported that its free cash flow doubled, its margins expanded and demand improved month-over-month. That is all music to investors’ ears.
The 13 analysts offering 12-month price forecasts for RH stock have a median price target of $400. The high estimate on the stock price is $500. This is one retailer that seems to be immune to the trends in the broader economy.
Hot Stocks: FedEx (FDX)
FedEx might not be sexy or the latest cutting-edge tech play, but the tried-and-true delivery company has seen its stock burn bright this year. After languishing for much of 2019, FDX stock has climbed nearly 200% from its March low to nearly $275 a share today.
The median 12-month price target on the stock is $297.50 a share, with a high estimate of $372.
Propelling the share price higher has been increased demand for FedEx’s delivery services during the pandemic. As individuals continue to shelter at home, and as businesses rely on same-day and overnight shipments, FedEx has become a winner. With the holiday shopping (and shipping) season fast approaching, and businesses continuing to operate remotely for the foreseeable future, FedEx is likely to keep booming for many months to come.
As the leading e-commerce company in the United States, Amazon stock pulled back sharply in September, falling 16% in the month to under $3,000 a share. However, given its high price, most analysts saw this dip as a buying opportunity and encouraged investors to grab shares before their next rally.
Why? The company has literally cashed in on the Covid-19 pandemic and shows no signs of slowing down. Earnings should grow 40% in 2021 and revenues by nearly 20%. AMZN stock doubled between March and the end of August this year and currently trades for $3,387 a share.
Complementing the e-commerce side of the business is strong adoption of the company’s AWS product, which is fast making Amazon a dominant cloud company. Amazon is also the leader in the $5.5 billion smart speaker market and recently announced new hardware products that include new Echo smart speakers, new Fire TV Stick video streamers and new Ring security cameras. The company is holding is super popular Prime Day on Oct. 13 and Oct. 14 this year, which should help to further drive sales and revenue. Did we mention that there are rumors of a coming stock split?
Hot Stocks: Peloton (PTON)
Winter is coming. That means even more people will be looking to exercise indoors amid the frigid, snowy weather. With most gyms closed because of the pandemic, exercise equipment company Peloton looks well positioned to cash in on the exercise-at-home movement.
Like Amazon, the New York-based company has been cashing in on Covid-19 all year and its stock remains hot heading into the colder months. PTON stock has grown more than 300% year to date and rose 18% in September. The share price now stands at $124 and continues to inch higher.
The company’s connected fitness subscriptions for live interactive workouts on fitness bikes and treadmills have proven to be popular with consumers. And it looks like virtual workouts are here to stay.
A survey conducted by TD Ameritrade found that 59% of people are unlikely to renew their gym membership after Covid-19. In its most recent quarter, Peloton’s connected fitness subscriptions grew 113% year-over-year. The company also claims that 23,000 people streamed one of its live workout classes in April. Peloton has now set itself the goal of reaching 1 million subscriptions. Achieving that goal would certainly be good for PTON shareholders.
Zoom Video (ZM)
One of the very hottest stocks of the year is Zoom Video.
The stock has been so hot that many analysts have been calling for a pullback in the share price. But ZM stock has not complied. On the contrary, it rose 45% in September while the majority of the market sank.
Year-to-date, the stock of the video conferencing company is up 635% to $500 a share. With more and more organizations relying on video conferencing, Zoom remains a leader in the market and continues to defy the skeptics on Wall Street who claim the share price has run too far, too fast.
In addition to companies using video conferencing for meetings and to stay connected with employees, Zoom Video has also benefitted from remote learning at schools and the growing trend toward telemedicine. While the company faces stiff competition, it has retained a strong market position with its cloud-based software that sets up the video calls, easy-to-use chat tools and the ability to easily share content. Given the stock’s continued torrid pace, investors should jump on this moving train now before it speeds up even more.
Hot Stocks: StoneCo (STNE)
StoneCo is known as the PayPal of Brazil. It is a fintech company that is used primarily by entrepreneurs and small businesses. And while this lesser-known company may seem like an odd choice for a hot stock, its share price has risen 225% since its March bottom to $58.
STNE has become a favorite stock of many on Wall Street and is even held by Warren Buffett’s Berkshire Hathaway. STNE stock rallied 16% in September, bucking the overall downward trend during the month.
In terms of its business, StoneCo management says that the company has completely rebounded and returned to its pre-pandemic levels across all of its business units. In August, STNE stock got a boost after the company announced that it is buying retail software firm Linx (NYSE:LINX) in an all-stock deal valued at $1.1 billion. The combined businesses will merge leading hardware, software and services that online and traditional brick-and-mortar stores need and rely on to run their operations.
If it keeps moving higher, it likely won’t be long before StoneCo stock becomes better known among U.S. investors.
On the date of publication, Joel Baglole held a long position in AAPL, TSLA, ROKU and FDX.
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.