This year, more than any other in recent memory, is a stock picker’s market. With volatility back in full force, finding the best stocks to buy (and ideally nailing down the timing) is as valuable a skill as ever.
Some market watchers worry that the rise of passive investing has driven correlations among stocks up to absurd levels. Since everyone owns indexes these days, investors simply buy and sell those funds, sending all the index holdings up or down simultaneously.
There’s a lot to be said for passive investing, and particularly low-cost index investing. But it’s unlikely the enterprising individual investor will lose the desire to beat the market anytime soon, and to do that, stock picking is necessary.
Without further ado, here are five of the best stocks to buy for May.
Facebook, Inc. (Nasdaq: FB)
It may seem counterintuitive to suggest FB as one of the best stocks to buy for May, in light of the Cambridge Analytica data breach that shined a bright light on privacy practices, data management and potential regulation.
But Facebook, which was also among the elite few selected as U.S. News’s best stocks to buy for 2018, is in a league of its own (or perhaps along with Google and Amazon).
This was reflected in FB stock’s extremely strong first-quarter numbers: The social media giant saw revenue growth of 49 percent, earnings per share growth of 63 percent and user growth of 13 percent to 2.2 billion.
There’s a lot for shareholders to “like” there. Use the pullback from the all-time highs to buy Facebook stock while you still can at these levels.
Match Group (MTCH)
Like social media, online dating is another massive cultural shift that’s occurred over the last 10 to 15 years. It’s in an unabashed secular growth phase right now, and that shows no sign of reversing in the near future.
MTCH is the owner of a large number of big-brand online and mobile dating sites and applications. Among them are Tinder, OkCupid, Match, PlentyOfFish and Meetic.
Match Group is a great long-term stock to buy – not just for the month of May. Tinder, its crown jewel, is growing like a weed, with the average number of subscribers roaring 90 percent higher year-over-year, from 1.6 million a year ago to 3.1 million in the last quarter. Total revenue grew 28 percent in Q4.
Over the last five years, earnings per share has grown at a compound rate of 33 percent annually, an exceptional clip. First-quarter earnings will be released May 8.
National Beverage Corp. (FIZZ)
Stepping away from tech for a moment, there’s also National Beverage Corp. This Fort Lauderdale, Florida-based consumer goods company, makes (you guessed it) beverages. It owns a wide portfolio of brands, including Shasta, the Rip It line of energy drinks, Faygo, Crystal Bay and – the moneymaker – LaCroix.
As an investor, you can essentially forget about the rest of the portfolio: LaCroix is to FIZZ what Tinder is to MTCH, the brand that is key to the entire company’s future.
Driven by the LaCroix brand of flavored sparkling water – an increasingly popular drink that some consumers buy as a substitute for less healthy soda options – FIZZ revenue grew 19 percent in the first nine months of the 2018 fiscal year, while EPS jumped 46 percent.
Shares go for 22 times forward earnings, and over the long run, there’s a chance a company like Coca-Cola (KO) or PepsiCo (PEP) will snap FIZZ up to boost their own growth.
Alphabet (GOOG, GOOGL)
There’s a reason GOOG and FB are not only some of the best stocks to buy for May but also have exceptional long-term historical returns and great outlooks.
Counterintuitively, it’s always good (for long-term shareholders) in the tech industry when there’s a discussion about possible regulation of the business. Why?
Because businesses don’t get regulated unless they’re absolutely dominant. Alphabet’s revenue, for instance, is expected to grow 20 percent – an exceptional rate even for a small business – in 2018, to more than $133 billion.
“Once the source of growth in digital advertising levels off, Google is aggressively to replace it with the next-generation cloud business,” says K C Ma, professor of finance at Stetson University.
Although GOOG stock didn’t soar after it’s April earnings report, Ma thinks shares deserve recognition for a good quarterly report.
“Google reported unambiguous beats on both revenue and earnings fronts. It’ll be a good investment at this point,” Ma says.
Global Net Lease, Inc. (GNL)
GNL, a real estate investment trust (REIT), specializes in commercial single-tenant real estate. While the rest of May’s best stocks to buy are rife with unabashed growth, GNL’s appeal is really its dividend, which, like many REITs, is sky-high.
Since REITs are forced to pay out at least 90 percent of their income to avoid corporate taxes, they tend to be the stock market’s equivalent of a passive income machine.
“Given our high-quality, growing, well-diversified global real estate portfolio and long-duration leases to primarily investment-grade tenants, we are confident about GNL’s future,” says James Nelson, CEO of Global Net Lease.
