5 Best Performing Stocks to Buy in September 2021

There can be two approaches to investment. Some investors like to buy the dips and do bottom fishing in beaten-down names. Some others like to stay with the best-performing stocks.

Now, there is nothing right or wrong about either strategy as long as you are comfortable with the stock and the valuations. Here are the five best-performing stocks that you can buy in September 2021.

1. Nucor (NYSE: NUE)

Nucor is the largest US-based steel company. The stock is among the best-performing stocks of the S&P 500 and is in the top 10 S&P 500 gainers. Meanwhile, despite the surge, Nucor still looks like a good stock to buy. Since Nucor is a steel company, its fortunes are dependent on the steel price outlook. US steel prices are near all-time highs and US steel companies including Nucor are posting record profits.

Nucor has been among the best performing steel stocks in 2021

Nucor has outperformed steel stocks in 2021. The company has a rising production profile and is setting up new plants that would help it increase its shipments in the coming years. Nucor is among the most well-run steel companies and has a stable profitability record. The stock also pays a dividend which it has gradually increased over the years. Looking at the current uptrend in steel prices, it won’t be surprising if it also comes up with a special dividend this year.

Nucor has been among the best performing steel stocks over the long term and has given good returns across the steel cycle. The infrastructure investments promised by the Biden administration would help buoy demand for Nucor as it has high exposure to steel products used in non-residential construction.

The stock trades at an NTM (next-12 months) PE multiple of only about 4.1x which looks attractive. US steel prices might not crash as many expect even as we may see some pressure in the fourth quarter which is seasonally weak for US steel prices. All said, if you are looking to invest in a best-performing steel stock, Nucor would fit the bill perfectly.

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2. Ford (NYSE: F)

Ford stock has been among the best performing automotive stocks in 2021. The stock has seen a rerating even as pure-play EV (electric vehicle) stocks are struggling. The company has announced plans to invest $11.5 billion in electric vehicle and battery plants along with SK Innovation.

WallStreetBets also likes Ford stock

Ford is also a popular name on the Reddit group WallStreetBets. Meanwhile, if you are looking at investing in a best-performing automotive stock that can deliver strong returns over the long term, Ford looks like a good bet. F stock is up 66% so far in 2021 and consensus estimates call for an upside of 17.5% over the next 12 months.

Ford stock is a play on the company’s electric vehicle plans and the business transformation under the leadership of its CEO Jim Farley. The stock is up sharply over the last year since Farley took over as the CEO. There have been multiples CEO changes at Ford over the last five years but in Farley, the company has finally found its “turnaround man.”

Ford has been among the best-performing stocks of 2021 and it could deliver good returns over the long term also looking at its tepid valuations.

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3. Marathon Oil Corporation (NYSE: MRO)

Marathon Oil Corporation is among the best-performing energy stocks this year. Life has come full circle for energy prices as well as oil and gas producers. Last year, WTI prices turned negative for the first time in history. However, they have since rebounded and are currently at the highest level in three years.

Goldman Sachs has raised its year-end forecast for Brent prices from $80 to $90. “While we have long held a bullish oil view, the current global oil supply-demand deficit is larger than we expected, with the recovery in global demand from the delta impact even faster than our above consensus forecast and with global supply remaining short of our below consensus forecasts,” analysts led by Damien Courvalin in their note. Rising oil prices are good for energy companies as it helps lift their earnings.

MRO is among the best-performing energy stocks in 2021

MRO is among the top 10 gainers in the S&P 500 this year and is also among the best-performing energy stocks of the year. If the uptrend in energy prices continues, the stock might continue its good run. Wall Street analysts are mixed on the stock though and it has received 14 buys, 14 holds, and one sell rating. However, its median target price of $16 is a premium of 17.1% from these levels.

MRO has been among the best-performing energy stocks of this year and despite the rise, it still looks like a good buy. The stock trades at an NTM (next-12 months) EV (enterprise value)-to-EBITDA multiple of 4.4x which looks reasonable even as the multiples for cyclical companies is the lowest at the cyclical peaks.

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4. ExxonMobil (NYSE: XOM)

Staying within the energy industry, XOM looks like another best-performing stock that still looks like a good buy. The stock is up over 42% so far in the year and pays an attractive dividend yield of 5.9%. The yield is almost four times the S&P 500’s dividend yield.

Of the 30 analysts covering XOM stock, only 10 have a buy rating while 19 rate them as a hold. One analyst has a sell rating on XOM stock. Its median target price of $65.40 implies an upside of 10.3% over current prices. The stock’s street-high target price of $90 is a premium of 51.7%.

XOM stock valuation

XOM trades at an NTM EV-to-EBITDA multiple of 5.9x which is higher than many of the energy peers. However, Goldman Sachs which has a buy rating and a $68 target price, is not too perturbed. “We argue a premium valuation is justified by a strong asset base and historical trading patterns. We also see earnings beats continuing well into the future,” said Goldman Sachs analysts in their note.

If you are looking at a best-performing energy stock with a high dividend yield, XOM looks like a good yield. Looking at the uptrend in energy prices, names like XOM could deliver good returns in the fourth quarter of 2021.

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5. Applied Materials (NYSE: AMAT)

Applied Materials is another best-performing stock of the S&P 500. The company supplies equipment for semiconductor manufacturing and has been among the biggest beneficiaries as chipmakers are spending billions of dollars on new chip plants amid the global chip shortage situation.

Meanwhile, AMAT stock is trading lower today after New Street downgraded the stock from a buy to neutral. “Valuation vs. the SOXX is still very reasonable, but we don’t see a near-term catalyst for a rerating. We maintain our strong positive long-term conviction, but tactically downgrade to Neutral, $140 Target Price,” it said in its release.

Meanwhile, the consensus view is bullish on AMAT stock and it has eight buys and four hold ratings. None of the analysts polled by TipRanks rates the stock as a sell. Its average target price of $158.55 is a premium of 11% over current prices.

AMAT has been among the best-performing stocks of this year and looking at the chip shortage situation, it could continue to deliver good returns in the short to medium term.

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