The year 2021 has been memorable in the world of investing. Meme stock and cryptocurrencies have dominated headlines with multi-fold returns in a short span of time. And with the holiday season approaching now, it’s time to go on a shopping binge. It would be best if the shopping festival can be funded through some quick gains. How can investors do so? Well, there are a handful of solid stocks to buy out there to help fund the fun.
More specifically, there are non-speculative stocks to buy that seem positioned for a 10% to 15% rally in the coming weeks. And even as the S&P 500 Index trades at a cyclically adjusted price-earnings ratio (P/E) of 38.3, these are stocks to buy that can provide decent returns.
Overall, I believe that these stocks are also worth considering for the long-term. For now, though, let’s analyze seven stocks and the catalysts behind some near-term returns for them.
- Riot Blockchain (NASDAQ:RIOT)
- Target Corporation (NYSE:TGT)
- Chevron (NYSE:CVX)
- Robinhood (NASDAQ:HOOD)
- Novavax (NASDAQ:NVAX)
- Ford (NYSE:F)
- Coinbase (NASDAQ:COIN)
Now, let’s dive in and take a closer look at each one.
Stocks to Buy Before the Holidays: Riot Blockchain (RIOT)
With growing interest in cryptocurrencies and the renewed uptrend in Bitcoin (CCC:BTC-USD), RIOT stock looks positioned for a rally. After moving higher by over 855% in the last 12 months, RIOT stock has been in a consolidation modeas of late. A fresh breakout seems likely as mining activities accelerate.
Talking about the potential growth, Riot has a current mining capacity of 2.2 ex-hash per second. The company expects to increase the capacity to 7.7EH/s in the coming quarters. In all probability, Riot will be mining three times more Bitcoin towards the end of 2022 as compared to the fourth quarter of 2021.
It’s also worth noting that for Q2 2021, the company mined 675 Bitcoin and reported $28.8 million in EBITDA. With increase in Bitcoin price coupled with mining growth, Riot is positioned for quarterly EBITDA of over $100 million by Q4 2022.
Collectively, with an increase in financial flexibility, it seems likely that the company will continue to pursue growth and diversification. After trending lower by 25% in the last six months, the correction seems overdone for RIOT stock. Thus, a sharp rally in Q4 2021 seems likely.
Target Corporation (TGT)
TGT stock has been trending higher with returns of 24% in the last six months. However, the stock still trades at a forward P/E ratio of 20.3. Therefore, valuations seem attractive for further upside.
In particular, with Target delivering healthy comparable store sales numbers. For Q2 2021, Target reported comparable sales growth of 8.9%. An important point to note is that comparable sales growth was driven entirely by traffic. And with the holiday season approaching, it’s likely that sales will be strong for the last quarter of the year.
I also like the fact that Target has been successful in building a strong omni-channel sales capability. The company has committed to invest $4 billion annually for the next few years.
The investment will be targeted towards scaling capabilities across its retail platform. Target has also been focused on opening of smaller-format stores. These stores are further likely to improve the company’s same-day services that include order pick-up, drive-up and shipments.
Overall, Target is likely to continue delivering strong numbers. With robust cash flows, there is dividend growth visibility. Target also announced a $15 billion share repurchase program in Q2 2021. In turn, value creation is likely to sustain in the near-term and long-term.
Stocks to Buy Before the Holidays: Chevron (CVX)
Brent is already trading just under $85 per barrel and with an approaching winter season, it’s unlikely that energy prices will decline. Inflation is already a concern and is manifesting in the form of higher energy and commodity prices.
Overall, CVX stock has surged in the past few months with an upside in oil price. And the stock looks attractive for further rally in the coming weeks.
Moreover, it was recently reported that the “scarcity premium embedded in the structure of Brent crude oil futures has widened to the most since 2013….” It might therefore not be long before oil hits $100 per barrel. In turn, this is likely to translate into sustained upside for CVX stock. In addition to the upside potential, the stock also has a healthy dividend yield of 4.7%.
Another reason to talk about Chevron is the fact that the company’s assets have a low break-even. Even in 2020, Chevron delivered positive operating cash flows.
So with the current price of oil per barrel, the company is positioned for robust operating and free cash flow (FCF). In fact, Chevron already has a quality balance sheet with a debt ratio of 24.4%. Thus, strong cash flows will allow the company to increase dividends and stock repurchase.
HOOD stock has remained weak after an initial surge post the initial public offering. Recently, the company reported Q3 2021 results, and the numbers were well below estimates. This has been another catalyst for a sharp selloff in the stock.
It’s worth noting that weak numbers for Q3 2021 was primarily due to a decline in cryptocurrency trading revenue. Nonetheless, I believe that corrective measures are in the cards, and this is likely to include listing of more cryptocurrencies.
Shiba Inu (CCC:SHIB-USD) recently surged with 450,000 signatures on a petition for Robinhood to list the coin. In turn, it’s likely that more meme coins will be listed to boost trading volumes. Cryptocurrency adoption remains robust and few corrective measures can boost crypto trading revenue.
Therefore, it might be too early to write off HOOD stock. On the contrary, the worst of the downside seems to be over. Any potential news on listing of one of few highly traded cryptocurrencies can reverse the stock sentiment. Therefore, I believe that investors can make a quick 10% to 15% return on the stock.
Stocks to Buy Before the Holidays: Novavax (NVAX)
In February 2021, NVAX stock had touched highs of $331.68. Amidst volatility, the stock has corrected to current levels of $190. With that in mind, I believe that a sharp reversal from current levels is on the cards with several catalysts on the horizon.
On Oct. 27, Novavax announced that the company has filed for authorization of its Covid-19 vaccine in the U.K. The company also expects to submit for approval in the Canada, Australia and New Zealand. An approval submission to the U.S. Food and Drug Administration (FDA) is also pending for year end. And once approvals start coming, NVAX stock is likely to trend higher.
Novavax has also partnered with the Serum Institute of India, which is the world’s largest vaccine manufacturer. It’s likely that the vaccine will get an approval in India by January 2022. Additionally, the partnership has already committed 1.1 billion doses to the COVAX facility. This is likely to provide healthy cash flow visibility for 2022.
Overall, with these impending catalysts, NVAX stock looks attractive. It’s also worth noting that the company has a strong cash buffer with visibility for healthy cash inflows in the next few years. This will help Novavax is further deepening the clinical research pipeline.
Ford recently reported results for Q3 2021, and I believe strong quarterly numbers are a big reason for a potential rally in the coming weeks.
Leaving aside the headline numbers, Ford reported adjusted FCF of $7.7 billion for the quarter. This was the highest reported FCF in the last six quarters. The company ended Q3 2021 with a total cash balance and liquidity of $47.4 billion.
With a strong cash buffer, there are two important points to note.
First and foremost, Ford is pushing towards an all-electric future. With new models in the pipeline, the company has ample financial flexibility to invest in innovation.
Furthermore, as the company’s financial flexibility increases, F stock is due for a re-rating. The company announced reinstatement of quarterly dividends from Q4 2021. This is indicative of the positive outlook the management holds on potential future cash flows.
It’s worth noting that F stock has already trended higher by 108% for year-to-date (YTD). However, at a forward P/E ratio of 8.6, the stock still looks attractive for a meaningful rally.
Stocks to Buy Before the Holidays: Coinbase (COIN)
In the past month, COIN stock has surged by 46%. This is not surprising with Bitcoin touching new higher. Furthermore, with wider adoption of cryptocurrencies, the growth momentum is likely to sustain for the company.
Recently, Citibank analyst Peter Christianson initiated coverage on COIN stock with a price target of $415. This would imply an upside potential of 23% from current levels of $337.
It’s worth noting that for Q2 2021, Coinbase reported revenue of $2 billion and adjusted EBITDA of $1.1 billion. With healthy margins, the company is positioned to deliver strong cash flows as revenue growth sustains.
Another important point to note is that Coinbase reported that more than 9,000 institutional clients. This is another segment that will contribute to growth in the coming years.
Moreover, Coinbase has also been increasing the number of assets and trading pairs on the platform. In September 2021, Coinbase listed Shiba for trading. And with the meme coin frenzy, trading volumes are likely to surge.
Overall, cryptocurrency is still at an early adoption stage, but Coinbase seems well-positioned to benefit. And the current rally is likely to sustain as Bitcoin seems positioned for further upside.
On the date of publication, Faisal Humayun did not have (either directly or indirectly) any positions in any of the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Faisal Humayun is a senior research analyst with 12 years of industry experience in the field of credit research, equity research and financial modelling. Faisal has authored over 1,500 stock specific articles with focus on the technology, energy and commodities sector.