The fourth and final quarter of 2021 is fast approaching and there remains plenty of cheap stocks to buy.
Many leading blue-chip stocks as well as growth oriented companies have seen their share prices slump over the summer and during the historically difficult month of September.
This decline has set-up many stocks for big runs in the final months of the year, which includes the busy holiday sales season when consumer spending is typically at its peak. Often, these are opportunities for investors to take advantage of.
Here are three cheap stocks to buy for the fourth quarter:
Cheap Stocks to Buy in Q4: Walt Disney (DIS)
Shares of entertainment giant Walt Disney are a bargain right now around $178 per share. Down from their 52-week high of $203.02 and consolidating for the better part of six months now, DIS stock offers investors an attractive entry point at its current price.
There is also reason to believe that the Mouse House’s share price will rally in the final months of the year and again breach the $200 level.
Ark Invest’s Cathie Wood has been loading up on the stock recently, buying more than 20,000 shares in a single week for her various exchange-traded funds (ETFs).
The optimism comes as Disney theme parks and cruises once again factor into the company’s earnings. And, as its Disney+ streaming service continues to add subscribers, albeit at a slower pace than during the height of the pandemic.
Disney’s “parks, experiences, and products” segment, which includes its theme parks, hotels and cruises reported $4.34 billion in sales in the most recent quarter and an operating profit of $356 million. That compares to $1.07 billion in sales and a $1.88 billion operating loss in the same Covid-19 ravaged quarter of 2020.
While concerns linger about the delta variant of the novel coronavirus and its potential impact on Disney and its operations, DIS stock is an attractive buy at its current price. As a result, it is first on the list of cheap stocks to buy.
United Parcel Service (UPS)
At around $190 a share, United Parcel Service stock would be a great pick-up heading into the fourth quarter, which includes the busy holiday season that is the shipping and logistics company’s most profitable period of the year.
Currently, UPS stock is about 14% below its 52-week high of just under $220 a share reached in early May.
The share price has pulled back throughout the summer and now looks cheap based on its underlying fundamentals and growth potential. With holiday shipments on the horizon, it wouldn’t be surprising to see the stock rally in the final months of 2021.
The stock sold off after management disappointed by downgrading its forecast for its U.S. domestic package operating margin, saying it expects it to be at 9.2% in the second half of this year compared to 11% in the year’s first half.
However, analysts who remain bullish on UPS stock point out that the company’s margin is forecast to expand 12.7% to 13.7% by 2023. This is driven by an improvement in U.S. domestic package margin from 7.7% in 2020 to 12% in 2023.
The improving margins will come as the growth in e-commerce related shipments continues unabated.
Cheap Stocks to Buy in Q4: Mastercard (MA)
Speaking of cheap stocks and fourth-quarter holiday sales, how about credit card behemoth Mastercard?
Despite the economic reopening and increased consumer spending, MA stock has largely traded sideways. Year-to-date, the company’s share price is down more than 2% at about $340.
While disappointing to existing shareholders, investors looking for a great financial stock to add to their portfolio should see a buying opportunity in Mastercard. MA stock has always been a reliable blue chip stock and delivered returns of 237% over the past five years.
While Mastercard’s core credit card business continues to perform well, the company is also pushing into the realm of digital payments, announcing an acquisition of Danish financial technology (fintech) company Aiia.
Mastercard is also expanding into cryptocurrencies with its buy of blockchain analytics start-up CipherTrace.
The payments giant is clearly trying to grow into new areas while maintaining its traditional credit card business. This area should see a hefty boost as consumers charge their way through the busy Thanksgiving and Christmas periods.
Disclosure: On the date of publication, Joel Baglole held long positions in DIS and UPS. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
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.