Shares rose in August, with the S&P 500 rising about 2.6% in the month through August 27. Despite an increase in COVID-19 cases in the US with the emergence of the Delta variant — the seven-day moving average of new cases crossed 156,000 at the end of the month, the highest level since January — markets nevertheless cheered a recovering economy.
late in the month, Federal Reserve Chairman Jerome Powell said the central bank could begin phasing out asset purchases later in 2021, assuming the labor market continues to recover. At the same time, he assured the public and markets that the Fed will not raise interest rates preemptively.
With all these factors in mind, here are five of the best stocks to buy for September:
— Fiverr International Ltd. (ticker: FVRR)
— Taiwan Semiconductor Manufacturing Co. (TSM)
— Amazon.com Inc. (AMZN)
— Bank of America Corp. (BAC)
— FedEx Corp. (FDX)
Fiverr International Ltd. (FVRR)
In July, the US economy added 943,000 jobs, the highest monthly amount in nearly a year. That said, labor markets are still tight, with companies struggling to find workers to fill vacant positions. In fact, the trend of employees leaving their jobs to pursue better opportunities has led some to call this period “the big layoff.”
Enter Fiverr, a marketplace that connects freelancers with employers. Specializing largely in digital service providers, the site is a go-to for those with skills in digital marketing, design, sound mixing, writing and editing, coding, and much more.
With a market cap of $6.6 billion, FVRR is easily the smallest company on this list, and it’s the biggest growth game, with sales up 60% in the past quarter. As such, it’s also the riskiest on this list, probably only worth considering by long-term growth investors with a strong stomach.
Following Fiverr’s most recent earnings report in early August, stocks fell due to a deteriorating outlook for the remainder of the year as people reacquaint themselves with society and move out of their homes. It could be the perfect starting point for a long-term position.
Taiwan Semiconductor Manufacturing Co. Ltd. (TSM)
As the world’s largest chip maker, TSM is a different animal than Fiverr: At $550 billion, the company is worth nearly 100 times the gig economy startup.
That scale is part of what makes TSM one of the best stocks to buy for September. According to recent reports from The Wall Street Journal, the chip foundry plans to leverage its mammoth size to raise prices by about 10% for high-end chips and 20% for less advanced semiconductors.
Making chips is a technical, capital-intensive business, so many tech companies will simply design their own chips and outsource manufacturing to giants like TSM. Apple Inc. ( AAPL) famously does this, and it is one of Taiwan Semiconductor Manufacturing’s largest customers.
Given the global chip shortage, TSM is capitalizing on the market and benefiting shareholders. At 31 times earnings, the stock isn’t trading at an extreme discount, but it’s reasonable given the company’s dominance. TSM also has a dividend yield of 1.5%.
Amazon.com Inc. (AMZN)
Another giant in its industry, Amazon is one of the few billion dollar companies in the world. Now headed by CEO Andy Jassy, the former head of the cash cow Amazon Web Services, or AWS, the company hasn’t done much in the market this year, up just 2.8% as of August 27.
Like Fiverr, Amazon was on the list of the best stocks to buy for September, in part because of a recent drop in earnings, which is why stocks are trading at attractive levels. While earnings per share beat expectations, earnings fell short of Wall Street’s forecast for the first time in three years.
As Amazon sees some of the pandemic-driven momentum in its business slowing, the company has just amassed its third straight quarter of $100 billion. It’s a behemoth, and its relentless focus on the long term should continue to benefit shareholders for years to come. The company is in the middle of a multi-year investment phase aimed at increasing the square footage of its warehouse.
In addition, Amazon’s “growth slowdown” is still causing the company to put together numbers that competitors will no doubt envy: AWS turnover grew by 37% in the past quarter, while ‘other’ turnover, including advertising sales, increased by 87%.
Bank of America Corp. (BAC)
Even after rallying 40% so far in 2021, the Charlotte, North Carolina-based Bank of America looks like an attractive buy, with just 14 times its profit. With a market cap of $350 billion, the bank is one of the safest financial stocks, with a decent 2% dividend that it uses only 24% of its profits to pay out, leaving plenty of room for shareholders to remain in adverse conditions. pay or the payout if the economy continues to improve.
If interest rates rise – and they should eventually if the economy and inflation continue to warm – the financial sector will benefit, and there is nothing wrong with owning the best companies like Bank of America. Just ask the greatest investor of all time, Warren Buffett, whose Berkshire Hathaway Inc.‘s ( BRK.B, BRK.A) the second largest stock is BAC.
FedEx Corp. (FDX)
Into the wave e-commerce the demand from the pandemic has been great for FedEx’s operations. The stock, meanwhile, underperformed its larger, closest competitor, United Parcel Service Inc. ( UPS), 2021.
The cautious investor will note several things that stand out for FedEx. First, with a market cap of about $70 billion, FedEx has more room to grow than the $167 billion UPS. Second, the valuation for FDX is much more favorable than that of UPS, which trades at about 14 times earnings relative to UPS’s 28 price-to-earnings ratio. If you compare the price-to-sales ratio, the stat is also roughly halved, at 0.85 to UPS’s 1.81. And while FedEx’s dividend is just 1.1% over UPS’s 2.1%, FDX has a lot more room to increase its dividend payout, using just 13% of its profits to pay that allowance to shareholders. times, compared to a 58% payout ratio for UPS.
It comes down to? FedEx reported record results for the fourth quarter and fiscal year 2021, surpassing last quarter earnings and revenue expectations and has room to grow. The e-commerce trend may have peaked last year in the throes of the pandemic, but digital commerce is here to stay, and FedEx should be a beneficiary. Its relative cheapness compared to its rival makes it all the more attractive.