Every month, I round up at least three of the best-priced stocks and post them along with justification for why these companies make great buys. This recurring column also discusses the previous month’s hot stocks and whether or not they are still attractively priced.
June was another solid month for the stock market, with the S&P 500 up 1.91% over the course of the month. With the steady climb of stock prices in the past month, is there any room for good buys?
Follow Up from June 2014’s Picks
|Stock Symbol||June 4th Close||June 30th Close||Price Per Share Change||Percent Change||Category|
|NYSE: LNKD||$156.40||$171.47||$15.07||9.64%||Long Term|
|NASDAQ: AMZN||$306.78||$324.78||$18.00||5.87%||Long Term|
|NYSE: HD||$80.54||$80.96||$0.42||0.52%||Short Term|
|NASDAQ: AAPL||$92.11||$94.00 (recommended to sell on June 12th early in the morning).||$1.88||2.04%||Short Term|
In June 2014, the picks for this column did very well. Compared to the S&P 500 average gain of 1.91% in June, LinkedIn and Amazon posted outsized gains. LinkedIn was particularly impressive, moving up nearly five times the S&P 500 average during this time. The only disappointment was Home Depot, which only inched up a half a percent in June. I did end up purchasing some Home Depot last month, and am hoping it will climb to $84 a share in the next month, at which point I will sell.
Best Stocks To Buy: July 2014′s Best Priced Stocks
Last month, I complained that there was not many great-priced stocks given that the market had run up so much over the course of the month. This month, things are not much better, as the S&P 500 posted another near 2% gain. Many of my favorite stocks are now running at all time highs.
As a result, I am going to issue a few repeats this month, once again favoring many of the stocks in last month’s column, despite the fact that two of these stocks posted large gains in June.
Long Term Picks for July 2014
Long term picks represent great picks over a period of time. These picks may not pan out over the next month, but the current prices of these stocks represent great entry points for establishing a position with the aim of making a long-term investment in these companies:
- Amazon (NASDAQ: AMZN): Despite running up over 5% last month, Amazon is still down nearly 20% from its January 2014 highs. Amazon as a company has performed very well this year; the drop in price had more to do with traders and less to do with investors. Amazon continues to grow revenue at an incredible clip and is becoming increasingly dominant in a growing space (eCommerce). I could care less about Amazon’s smartphone announcement; their improving logistics and expansions into wholesaling, grocery, and same-day delivery are far more exciting to me as an investor.
- LinkedIn (NYSE: LNKD): Despite running up nearly 10% from the June’s Best Stocks to Buy post (which used June 4th’s closing prices as a model), LinkedIn is still down over a whopping 30% from its all time highs from summer of 2013 and down nearly 25% from its January 2014 highs. LinkedIn has been performing wonderfully as a company, with consistently high revenue growth, increasing user count, and an improving on-site experience. I think that LinkedIn’s share price has been getting negatively impacted from Twitter’s (NYSE: TWTR) poor performance. Investors seem to think that since they are both social network stocks, TWTR performing poorly must mean social in general is performing poorly, whereas the reality is that Twitter and LinkedIn are completely different services and LinkedIn possesses a much more stable, healthy, useful, and sticky platform.
I believe strongly in both Amazon and LinkedIn; after all, I added both to the How to Invest HQ portfolio this month.
Short Term Picks
There are no great short-term investments for July of 2014 given the performance of the market over the past few months. My pick below represents a solid hybrid between a good short and long-term investment. It definitely has potential to rally over the next month, and if not, it is priced well enough to remain a solid long-term position.
- Whole Foods (NASDAQ: WFM): Whole Foods is very attractively priced for a short-term investment. Despite steady revenue growth, the stock is down 40% since October 2013 highs. The stock was not exactly being punished for poor performance; the company has performed well, but the stock was ridiculously priced and should have never been at those levels as per its historical revenue and earnings growth. Now that it has shed 40% of its value and had time to cool down over the last 8 months, it has become a much more attractive investment with a current P/E of ~25 and a forward P/E of ~22. At 15% revenue growth rates and a small dividend, this is a reasonable P/E to pay for a good company that is aligned with shifting tastes and trends in our society.
I will likely add shares of Whole Foods at current price levels at some point over the next few days.
Best Stocks to Buy: July 2014
Given the strong performance of the stock market over the last two months, it is difficult to find many values in the market. With that said, I think that LinkedIn, Amazon, and Whole Foods all make great investments at current prices. These stocks may take more than a month to pay off big, but they all have great long-term potential and are priced very reasonably compared to past valuations.