If anyone had told you in January what this year would have in store, you would have worried about their mental condition. Now, we’re all worrying about our own.
A crazy market. The terrible toll of the novel coronavirus. A brutal election campaign. Lockdowns. Huge unemployment. The race for a vaccine.
And that’s just the tip of the iceberg.
So far, September has been more about profit taking as the third quarter winds down rather than extending the rally. The challenge is, since the stock market is forward looking, seeing six months down the road is getting a bit tougher to see.
Will there be a vaccine? Who will win the elections? Will there be a second wave along with the regular flu season?
Investors are taking some profits off the table. But there are still some stocks you can buy now that will continue to run thanks to more fundamental trends. These are the seven best stocks to buy for the fourth quarter and beyond:
- Salesforce (NYSE:CRM)
- Etsy (NASDAQ:ETSY)
- PennyMac Financial Services (NYSE:PFSI)
- Shenandoah Telecommunications (NASDAQ:SHEN)
- Shutterstock (NYSE:SSTK)
- Stamps.com (NASDAQ:STMP)
- Zoom Video Communications (NASDAQ:ZM)
Stocks to Buy: Salesforce (CRM)
One of the pioneers in enterprise management software for customer resource management (CRM), it now is the dominant player in this space and has been expanding its base and capabilities for nearly two decades now.
Basically, CRM allows companies to manage and analyze its interactions with past, current and potential customers. Within an enterprise level customer base, this can be very complicated. And if different sales and customer service teams are working with these customers, bringing everyone in the loop has also been challenging.
And this doesn’t take into account access to marketing research and senior management access.
Salesforce is now cloud-driven and remains the top player in the sector. And given the work from home transition we’ve seen, that means a growing amount of new opportunities for sales.
CRM stock is up 54% in the past year, with some recent profit taking. But that makes it an even better buy.
Etsy (ETSY)
When there’s 30 million people out of work, and many more waiting to see if their jobs (or businesses) will be returning in coming months, this online marketplace is one of the biggest beneficiaries.
ETSY has built its business on helping individuals sell unique items in its online marketplace. Whether it’s about building a side gig out of a hobby or launching a home business, ETSY is built for people looking to work outside of the typical 9 to 5.
And the pandemic has really boosted its business, both from the supply and demand side. With local shops closed and people sitting around looking to decorate their surroundings, ETSY has become the new shopping mall.
What’s more, it’s differentiated enough from competition like eBay (NASDAQ:EBAY), since EBAY focuses on a broad swath of branded and discount new consumer goods, rather than handmade boutique products.
The stock is up 160% year to date, but revenue is rising and there are strong signs ETSY is now big enough to keep this momentum going as e-commerce takes hold. That’s what makes it one of the best stocks to buy now … it’s also what makes it similar to the investments in Growth Investor.
PennyMac Financial Services (PFSI)
You may not have heard the name, but PFSI is the No. 4 home mortgage lender in the US. And it’s the No. 1 government loan lender.
The crazy thing is, the stock is up 83% in the past year but it only has a $4 billion market cap and a P/E below 5x. And it has a 1% dividend.
And it’s not like being in the mortgage business is a bad place to be. We have record low mortgage rates that will likely extend for years to come, certainly well beyond the pandemic. Home sales are already very strong, even in this economy.
The point is, PFSI is a bargain now and has plenty of headroom moving forward.
Shenandoah Telecommunications (SHEN)
This Virginia-based telecom has been around for nearly 120 years at this point. And given all the advances as well as the growth of massive telecoms like AT&T (NYSE:T) and Verizon (NYSE:VZ), the latter is even a major player in its service area, SHEN remains a strong company.
Now with a $2 billion market cap, it’s not going to take on the big guys. It has a niche market that runs along the Appalachian Mountains from Maryland to Kentucky. But this broadly rural swath of its service area has come to rely on this provider for mobile, broadband and landline service for quite a while.
Given its size and longstanding regional business, it remains a solid standalone as well as an interesting takeover target. All of these aspects are what make getting in at the right time the key to long-term success in investing.
The stock is up 33% in the past year, even after some recent selling. It provides a 0.7% dividend, which is at least competitive with CDs.
Shutterstock (SSTK)
This licensed content company started in 2003 in the aftermath of the dotcom bubble. The founder, Jon Oringer, saw the possibilities of digital photography and the growing need for digital images to put on websites and other online media.
Stock footage, as it’s called in the industry, is about creating libraries of visual content and making those libraries available to designers and publishers for a fee. The fees can be subscription based or per piece.
Oringer started with a library of 30,000 of his own stock photos. As the business grew, the company added new tools and a variety of packaging options for amateur photographers as well, like processing digital photos or building custom packaging (photo albums, Christmas cards, etc.).
Now, SSTK has more than 340 million images and over 1 million contributors in more than 150 countries.
With a market cap just under $2 billion, it’s still a niche player in this space, but that can be a good thing when you’re looking for unique images.
The stock is up 48% in the past year and still delivers a 1.3% dividend. Like many of the stocks in Growth Investor, it has a strong growth story on its own and also would make a tasty takeover target.
Stamps.com (STMP)
In a home-based world, digital solutions become increasingly important. And the belief is, now that people and businesses have converted to this new digital, remote normal, many business models will benefit.
One of those is buying postage online through STMP.
Stamps and postage used to be a pretty simple process; you could even buy them at the grocery store from the cashier. But now, even grocery shopping has become a risky activity. And standing in a line at the post office is certainly not on the top of anyone’s hit parade.
STMP has been around since 1996 but is finally coming into its own. The company also provides more than postage for individuals. It also has shipping software and services for high-volume shippers. Our new normal is very bullish for STMP services. Identifying oddball scenarios like this where a company is bound to thrive is one of the main ways you might enjoy enduring success as an investor. While it’s hard to stay ahead of the curve, Project Mastermind takes much of the hard work out of the equation with a tried and true predictive model for trading.
STMP stock is up more than 200% in the past 12 months, yet it’s trading at a P/E of 48x and has a $4 billion market cap. It has found its stride.
Zoom Video Communications (ZM)
Talk about a unicorn company. Just three years ago, ZM was a video conferencing startup that promised more user-friendly video conferencing for individuals and small businesses, as well as academic institutions. It had a $1 billion valuation.
ZM stock went public in 2019 with about a $11 billion market cap. Then the pandemic hit.
ZM is now at a $142 billion market cap and the stock is up 512% in the past year.
The important thing to bear in mind in this tech space is when something gains popularity on this scale, it’s tough for anyone to compete. The tech, in this case ZM’s videoconferencing, has been adopted and is now the default for millions of people around the world. The same thing happened with Twitter (NYSE:TWTR) and Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL). It wasn’t as much the tech as the speed of adoption and ease of use.
It has caught lightning in a bottle.
And now that it’s a serious large-cap tech stock, it has money and visibility to grow for years to come.
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On the date of publication, Louis Navellier had long positions in ETSY, PFSI and ZM. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article.
The InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.
Louis Navellier had an unconventional start, as a grad student who accidentally built a market-beating stock system — with returns rivaling even Warren Buffett. In his latest feat, Louis discovered the “Master Key” to profiting from the biggest tech revolution of this (or any) generation. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.