Volatility returned to the stock market in May, as trade war fears, which had been ebbing for much of 2019, began to flow once more. The S&P 500 fell more than 6% in the month as talks between the U.S. and China took a marked turn for the worse and President Donald Trump ramped up protectionist rhetoric on Twitter.
Several of the best stocks to buy for June have pulled back to levels too cheap to ignore, while others have been performing pretty well despite the recent bearish mood.
Here are five of the best stocks to buy for June:
— Alibaba Group Holding (ticker: BABA)
— Cognizant Technology Solutions Corp. (CTSH)
— Synchrony Financial (SYF)
— Pfizer (PFE)
Alibaba Group Holding (BABA)
It may seem like poor timing to buy the stereotypical Chinese stock just as tensions between the world’s two largest economies begin to cause global market turmoil once again, but it’s frankly quite tough to find Alibaba-level growth at comparable valuations.
BABA shares go for just 17 times forward earnings, despite revenue growth above 50% in its most recent quarter. Earnings growth was even more impressive; 240% isn’t bad for any company, but for a multinational online retailer with sales exceeding $50 billion a year, that sort of hyper-growth is even more impressive.
While Alibaba shares could certainly rebound in June after a tough month like May, BABA should be viewed moreso as a prime long-term buying opportunity for any patient growth-oriented investors. The company is currently mulling a $20 billion Hong Kong IPO to further boost its cash coffers and continue investing in growth.
JPMorgan recently upgraded Under Armour, giving it a price target of $29 per share. At the close of May, that implies upside of more than 25%.
The athletic apparel company has been in recovery mode for a while now, but Wall Street is starting to gain more confidence that the turnaround is in earnest.
After speaking with management and Under Armour CEO Kevin Plank, JPMorgan discerned the C-suite’s “controlled confidence about the brand direction heading into fiscal 2020.” While it’d be nice to have strong domestic sales growth, most of the current growth opportunities appear to be overseas.
It doesn’t hurt to have NBA star Steph Curry on full display in the NBA finals for a fifth consecutive year, donning his own line of Under Armour shoes.
With UAA’s progress more qualitative than quantitative at this stage in the game, Under Armour is arguably the most speculative of the stocks to buy for June, although shares held up well during the market sell-off in May.
Cognizant Technology Solutions Corp. (CTSH)
Unlike Under Armour, Cognizant, the consulting and information technology company, had a horrendous May. So why buy for June?
The answer is that sometimes the best times to buy can be “when there’s blood in the streets,” as the old stock market saying goes. Cognizant’s May 2 earnings call disappointed the Street, as the company both missed on earnings and cut its full-year outlook.
That said, the subsequent two-day, 18% fall was clearly overdone, as shares slowly climbed from those depths for the rest of the month.
CTSH is one of those rare stocks to buy that exhibits buy signals for both technical analysts and value investors alike. It boasts a modest 1.3% dividend and low forward P/E ratio of 14.5; moreover, one recent insider transaction — a May 23 purchase of over $1.1 million in shares by its CEO — bodes well for shares in the short to medium term.
Synchrony Financial (SYF)
Financial services firm Synchrony Financial also has a rare confluence of factors making it an attractive stock to buy for June: it seems to have both momentum and serious value characteristics on its side. While shares are essentially flat year-over-year, SYF stock is up over 45% year-to-date.
Its fundamentals are moving in the right direction as the credit card provider both boosted its dividend in May and announced a $4 billion share buyback plan. It trades at less than 8 times trailing and forward earnings, and yields 2.5%.
Last but not least, Pfizer goes down as probably the most stable of all the best stocks to buy for June, a longtime Dow blue-chip dividend stock.
Every portfolio needs a bedrock name that can hold up in rocky financial times and rocky markets alike; it’s tough to beat a $230 billion global pharmaceutical powerhouse.
Trading for under 14 times forward earnings and paying a 3.5% dividend, Pfizer essentially keeps revenue steady over time, with only modest earnings growth. A portfolio of leading drugs like Lyrica, Enbrel, Ibrance and a handful of other billion-dollar-plus franchises have helped give PFE stock its staying power for over a century.
The company, founded in 1849, spends more than $8 billion on research and development annually, which keeps it in the game against upstart competitors, while its cash hoard can always finance acquisitions should the need arise.
Pfizer shares aren’t likely to make anyone rich anytime soon, but they’re perfect for preservation of capital, income generation and slow but steady gains over time.