Editor’s note: “9 Stocks to Buy This Month” was originally published July 9, 2020. It is updated monthly to reflect the current state of the markets and best stocks to buy for that month.
With the presidential election just over two weeks away, the case for stocks to buy this month couldn’t be more tense. At the start of 2020, President Trump seemed almost invincible as a robust economy tremendously helped his reelection cause. Now, that argument has been completely flipped onto its head as former Vice President Joe Biden is so far taking a commanding lead in the polls.
Still, let me remind the audience about what happened in 2016. Leading up to that fateful November day, Trump incurred all kinds of controversies over past lewd behaviors. As well, he didn’t exactly help himself with some outrageous comments that would have sunk any garden variety politician. Therefore, it very much seemed as if former Secretary of State Hillary Clinton had it in the bag.
That said, the current circumstances appear significantly different enough that investors should consider stocks to buy under a Biden administration. As you know, the novel coronavirus is the most pressing issue for Americans. Yes, it’s great that the national unemployment rate is 7.9%. But until we gain control over the pandemic, the economy won’t fully recover. Here, the Trump administration failed to take the crisis seriously, which explains the rise of healthcare-related stocks to buy.
And this segues into the coronavirus itself. According to data from the Centers for Disease Control and Prevention, new infections have been increasing worryingly since the first half of September. Therefore, you may want to consider these stocks to buy since we’re clearly not out of the woods yet.
- Dollar General (NYSE:DG)
- Home Depot (NYSE:HD)
- American Well (NYSE:AMWL)
- Smith & Wesson Brands (NASDAQ:SWBI)
- Albertsons Companies (NYSE:ACI)
- Wheaton Precious Metals (NYSE:WPM)
- Nike (NYSE:NKE)
- Gilead Sciences (NASDAQ:GILD)
- Sociedad Quimica y Minera de Chile (NYSE:SQM)
But even to this day, some folks are still hoping that the pandemic has been an exaggerated event. While I genuinely wish that was the case, the New York Times reported that Europe is facing a second wave. Really, we should learn from the mistakes of others so that we can save our fellow citizens.
But if I’m being brutally honest, we’re probably not going to do that. And that means October is turning out to be a wild month as well. Take advantage with these best stocks to buy.
Stocks to Buy This Month: Dollar General (DG)
One of the surprising realities of this pandemic has been the resultant economic crisis. Specifically, this is Robin Hood – the legend, not the app – in reverse. Viciously, Mr. Covid has taken what little the impoverished and disenfranchised had and gave it to the rich. Forget the coronavirus being a hoax. You want a real conspiracy? How about billionaires engineering SARS-CoV-2 so that they can get even richer?
Now, I’m being facetious, but billionaires did add to their wealth, that’s a fact. But it’s not just the uber-wealthy. Millions of white-collar employees who were able to work from home benefitted by not having to waste money in their daily commute. And that has bolstered the case for big-box retailers like Walmart (NYSE:WMT). However, I still like discount stores like Dollar General as candidates for stocks to buy this month.
Look, we live in a paradigm where possibly 85% of independent restaurants will close their doors permanently. That’s a staggering statistic that spells challenges for retailers that cater to a higher-income bracket. But DG stock? This has always been associated with consumers of all income levels.
And because Dollar General specializes in the essentials – sustenance and household goods – DG stock should perform reasonably well, even in a recession.
Home Depot (HD)
As a home repair and renovation specialist, Home Depot is simply one of the best stocks to buy in any environment. Bull market or bear, Murphy’s law doesn’t care. I learned that lesson the hard way when my smoke detector started screaming at three in the morning – it’s always three in the morning, isn’t it? – forcing me to replace the batteries.
Fortunately, I was prepared. I had my 9-volt batteries and a telescoping ladder. Further, I have an ample set of tools and accessories should anything else go awry. The pandemic has been a lesson of basic preparedness for all of us, driving the narrative for HD stock.
Another reason to consider shares is that 2020 is turning out to be a rotten year. From the pandemic to economic woes to outbursts of violence throughout this nation, we’ve been through a lot. Unfortunately, we’re only halfway through.
As it stands, we’re facing a record-breaking hurricane season and unusual climate events. Honestly, who knows what surprises await us? While this is somewhat of a cynical play, I believe having some exposure to HD stock makes sense.
American Well (AMWL)
With the very real possibility of a second wave, the case for telehealth investments in your portfolio of stocks to buy makes fine sense. Typically, that equated to Teladoc Health (NYSE:TDOC). And believe me, when I look at the rising infection numbers in the U.S., TDOC sounds awfully enticing.
At the same time, Teladoc shares have skyrocketed this year. For those who want an alternative, you should consider American Well. As a direct competitor in the telehealth industry, AMWL stock offers similar exposure to a relevant market. Plus, with patients having become acclimated to the new normal, they may be looking for service/package alternatives. This should also help lift the case for AMWL.
Of course, you should be aware that American Well recently had its initial public offering. Therefore, it’s too early to say whether AMWL stock will perform like TDOC did during this pandemic.
However, we have a wildly contested election coming up. With people out on the streets vigorously campaigning for their side, the sheer volume of humanity may spark even more cases. Cynically, that would support the bullish argument for American Well.
Smith & Wesson Brands (SWBI)
When former Vice President Joe Biden picked Kamala Harris as his running mate, President Trump predictably launched into attack mode. Presumably, many conservatives are licking their lips because they view Harris as a liability. However, Harris arguably has a likable personality, which could serve this ticket well.
But whatever you think about Biden’s pick, one thing is for certain: it’s sending a chill down gun advocates’ spine. When it comes to gun control, Harris is very liberal. As MarieClaire.com argues, if elected, the pair could enact major gun control legislation. That’s not great news for the Second Amendment but is a strong catalyst for Smith & Wesson Brands.
Granted, SWBI stock faces longer-term pressure under a liberal administration. But in the run up to the election, I see this as one of the more robust stocks to buy this month. Certainly, if polls show Trump weakening, it would be all the better for the iconic gun manufacturer’s valuation.
Moreover, you have catalysts for SWBI stock outside of direct political motivations. Primarily, people are scared of rising chaos in society. The worse things get, the more likely they’ll turn to Smith & Wesson for protection.
Albertsons Companies (ACI)
When rumors started circulating that the coronavirus was coming to a neighborhood near you, Americans did what came naturally to them: rush to the store for toilet paper. But I shouldn’t just point the spotlight on our country. Several others, including the Aussies, also panic-bought supplies for their hind ends.
Suddenly, grocery stories like Albertsons Companies and Kroger (NYSE:KR) became the hottest places to go to. Recently, I browsed through my photos library on my iPhone. On March 8 of this year, 99% of the toilet paper at my local Kroger (Ralphs) store was gone. In theory, a second wave should bode very well for ACI stock.
Unfortunately, the price action for Albertsons has been somewhat disappointing, if I’m being perfectly honest. Still, the market may not be reflecting the demand spike that could occur if the second wave is much worse than the first. In addition, rising social tensions could cause a spike in “front-loaded” grocery sales as people hunker down for a volatile end to 2020.
Wheaton Precious Metals (WPM)
It seems like no matter what the market environment, gold is always risky. Therefore, you should take the idea of Wheaton Precious Metals being one of the best stocks to buy with a grain of salt. It’s not that I don’t believe in WPM stock because I do. Rather, this is a sector that has produced much disappointment.
Still, I hate to use this phrase, but this time could be different. For one thing, it is different. While we’ve suffered serious pandemics before – most notably the H1N1 pandemic of the late 2000s – we’ve never seen state and federal governments impose stay-at-home orders. Unsurprisingly, this imposed a hard stop on the economy, making WPM stock quite intriguing.
Primarily, the doom and gloom prognostications that will shoot gold to five-digit prices are just a tad more credible today. Frankly, the Federal Reserve doesn’t have many monetary weapons other than to adopt as accommodating a policy as possible. Theoretically, this should be very good for gold.
I also like Wheaton for its business model. As a streaming company, Wheaton doesn’t have the direct risks associated with all-or-nothing mining projects.
At first glance, the storyline for Nike being among the stocks to buy may not be that appealing, especially during this crisis. It’s not just about health concerns, though that is obviously a real threat. Rather, we have a severe economic emergency as well. As I mentioned near the top, permanent job losses have accelerated worryingly, contradicting the implications of an otherwise positive August jobs report.
Despite the terrible optics, NKE stock still enjoys bullish fundamentals. For one thing, we’re seeing a bifurcation in the economy. A great example is unemployment by race. Only white workers collectively enjoy a single-digit unemployment rate. Second, the unemployment rate for college-educated workers is 5.3%, which is far better than the rest of the nation.
In other words, those who work higher-paying office jobs have been insulated from this crisis. Indeed, because they don’t have to commute, the pandemic has been a financial boon. Better yet, they’re willing to spend, bolstering bullishness toward NKE stock.
Gilead Sciences (GILD)
Early into the coronavirus outbreak, Gilead Sciences enjoyed a significant lift higher. Thanks to a repurposed drug called remdesivir, Gilead had a potential treatment candidate ready. Further, the drug received support from both President Trump and White House health advisor Dr. Anthony Fauci, one of the notable instances of their public consensus.
However, the narrative began shifting toward vaccine development. As biotechnology firms raced for a viable, long-term solution, the case for remdesivir faded. With it, GILD stock no longer appeared like the robust contender among stocks to buy that it once was. To confirm, shares are in the red on a year-to-date basis at time of writing.
Nevertheless, contrarian investors may want to reconsider the case for GILD stock. First, most Americans will refuse to take a coronavirus vaccine on the first round. Second, a U.K. clinical trial patient that took a vaccine candidate made by AstraZeneca (NASDAQ:AZN) suffered an “unexplained illness.” This was followed up more recently by a clinical trial pause by Johnson & Johnson (NYSE:JNJ) for its Covid-19 vaccine candidate.
That’s not going to be helpful for the remaining vaccine manufacturers. However, it may support the bullish thesis for Gilead Sciences.
Sociedad Quimica y Minera de Chile (SQM)
Everybody is going crazy for electric vehicles these days. Despite the counterintuitive nature of this sector – why buy anything expensive during a health and economic crisis? – EV-based investments continue to defy gravity. However, picking individual stocks to buy in a particular month is a difficult task.
So, my solution is don’t bother. Instead, go for a company that specializes in the one commodity that all EVs require, lithium. For a mixture of growth potential and relative stability, you should look into Sociedad Quimica y Minera de Chile.
As one of the leading producers of lithium, Sociedad has enjoyed tremendous momentum following its March doldrums. Since around mid-May, SQM stock has formed a strong bullish trend channel. Because enthusiasm is so strong for companies like Tesla (NASDAQ:TSLA), I believe the upside movement is sustainable.
As I said earlier, SQM stock is a play on broader EV enthusiasm and not a specific manufacturer. Therefore, you don’t have to worry so much about consumer tastes, so long as they remain fixated on electric cars.
On the date of publication, Josh Enomoto held a long position in gold.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.