The stock market has not had an easy path so far in August, with U.S. indices under pressure. While the percentage losses are not all that bad, the constant daily declines are weighing on investor sentiment. However, it has other investors looking for the best stocks to buy in August.
The S&P 500 and Nasdaq have closed lower in six of the first seven trading sessions so far this month. However, the indices are only down by less than 5% so far this month. The Nasdaq’s dip has been a bit more pronounced due in part to the index’s steep year-to-date outperformance.
Even with the pullback, the S&P 500 is still up more than 16% so far this year, while the Nasdaq is up an impressive 39%.
While it’s been a disappointing start to the month, the trend over the last few months remains firmly bullish. If that changes, then so will investors’ approach to the markets. Until then, let’s look at the best stocks to buy in August.
The Trade Desk (TTD)
Maybe the move to buy shares of The Trade Desk (NASDAQ:TTD) is a bit premature, given that the company just reported earnings on August 9th. We’re in the midst of a technology stock correction and more selling pressure in TTD could fit the bill.
If the market is going to punish growth stocks and tech stocks, The Trade Desk is unlikely to avoid the selloff. However, shares fell almost 10% immediately after announcing its results, which included a top- and bottom-line beat with revenue growth of 21.4%. Further management guidance for second-quarter revenue of “at least $452 million,” which topped estimates of roughly $445.5 million.
While bulls nibbled shares higher in after-hours trading, it didn’t erase the post-earnings deficit. For reference, the stock opened lower by about 2.5% the next morning (on August 10th).
When the company last reported earnings in May, the stock experienced some temporary selling pressure too. Then it roared higher by more than 50% to its July high. I don’t know that another 50% rally is in the cards, but this is a high-quality business. If buyers step into the recent market dip, this stock should rally too.
Salesforce (CRM)
Salesforce (NYSE:CRM) has been under pressure and support has been wavering.
Technical traders are hoping that a dip down into the ~$200 area provides some relief. That’s where we get several monthly measures, including the 10-month and 50-month moving averages, as well as the monthly VWAP measure. It’s also where the 50% and 61.8% retracements come into play.
Investors looking for a bounce should keep this area highlighted on their screens, as a break below this zone will not be a positive development from a technical perspective.
From a fundamental perspective, Salesforce doesn’t report earnings until later this month. So far this year, investors have been receptive to the company’s results and management has provided firm outlooks. Well, mostly receptive. The stock did dip slightly when the company reported May, but the losses were minor compared to the rally into the earnings print, while Salesforce consolidated sideways and eventually rallied to new 52-week highs.
Analysts expect solid double-digit growth for several years while Salesforce continues to grow its bottom line. This stock was trading at a huge discount several quarters ago, but as soon as the activists piled into this name, the share price exploded.
Keep an eye on ~$200.
Exxon Mobil (XOM)
Energy stocks have been trading much better lately as the group continues to storm higher. Oil and natural gas prices have been on the rise, driving the sector higher. If these stocks continue higher, it’s likely that Exxon Mobil (NYSE:XOM) is going to go along for the ride.
The stock makes up more than 20% of the Energy Select Sector SPDR Fund (NYSEARCA:XLE) and is the largest energy firm in the U.S.
On Wednesday, August 9th, the stock closed above last month’s high, giving bulls a monthly-up rotation. That doesn’t necessarily mean higher prices are guaranteed to be on the way, but it’s a good start that could eventually open the door up to the $120 area.
The stock pays a 3.30% dividend yield and while the firm is forecast to have a revenue and earnings decline this year, shares currently trade at a 9 P/E ratio.
On the date of publication, Bret Kenwell held a long position in TTD and XOM. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
