5 Best Short Term Stocks to Buy in August 2021

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As we enter the second semester of the year, the dust is starting to settle and expectations are now clearer after hundreds of companies have reported their second-quarter results. That should open up opportunities to enter long positions with short-term upside potential that may have emerged on the back of positive quarterly results.

Companies that have reported good results made encouraging announcements, and shared upbeat guidance will probably experience short-term upticks and investors could make some bets based on these relatively fresh developments to profit from upcoming price swings.

In the following article, I’ll share five individual stocks that could be poised to deliver interesting short-term gains.

#1 – Square (SQ)

square stock
Square (SQ) price chart – 1-day candles with multiple indicators – Source: TradingView

Square reported its second-quarter financial results alongside an important announcement that the company will be acquiring the Australian fintech AfterPay in an all-stock deal valued at $29 billion.

The stock surged 10% on the day that followed the announcement during a high-volume trading session that saw 46 million shares exchanging hands – more than 7 times the 10-day average.

Even though the single-day price action rejected a move above the trend line resistance shown in the chart, the combination of higher volumes, a series of higher lows, and increased momentum could lead to a break above this threshold at some point in the following days.

If the stock moves above $280, Square could enter a whole new bullish cycle, with a plausible target set at $341 based on Fibonacci levels that results in a 22% potential gain if such scenario unfolds as expected.

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#2 – Zoom Video Communications (ZM)

zoom stock
Zoom Video Comm (ZM) price chart – 1-day candles with multiple indicators – Source: TradingView

The price of Zoom shares surged nearly 7% yesterday as the severity of the Delta variant is serving as a short-term positive catalyst for the stock with market participants now expecting that companies might delay their decisions to bring people back to the offices.

Moreover, the company recently settled a lawsuit for $85 million concerning the so-called “Zoombombing” issue and it also announced the acquisition of Five9, a cloud-based call center, for $14.7 billion to expand its revenue streams beyond video conferencing.

Zoom could use the deal to enlarge its portfolio of enterprise products, leveraging on its huge user base to cross-sell and upsell existing customers by offering deals on call-center solutions.

The combination of these positive catalysts could propel the share price only weeks before the company is scheduled to report its earnings covering the second quarter of its 2022 fiscal year and the current technical setup seems to reinforce that view as momentum is picking up for the tech stock.

The chart above shows that the price action has already broken above the 0.618 Fibonacci retracement level – an indication of accelerated momentum – during a high-volume trading session while yesterday’s pronounced uptick may have “sealed the deal” for what could be a full-blown jump toward the $456 level.

Based on these readings, Zoom is currently offering a 14% potential gain in the short term as long as that target is hit.

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#3 – Qualcomm (QCOM)

qualcomm stock
Qualcomm (QCOM) price chart – 1-day candles with multiple indicators – Source: TradingView

The price of Qualcomm shares managed to break above its long-dated resistance of $145 per share on the back of an upbeat quarterly report as the company topped both revenue and earnings estimates from analysts for the period.

Adjusted EPS came in at $1.92 or 24 cents higher than the consensus, as compiled by Capital IQ, while revenues landed at $8.06 billion or $500 million above the consensus for the quarter as well.

Multiple investment banks raised their price targets for the chipmaker following this positive quarterly report while the ongoing chip shortage continues to serve as a tailwind for companies in QCOM’s sector.

For now, as long as the stock can hold above that $145 threshold, the outlook for QCOM remains bullish and that could lead to a jump toward the next resistance found at $162 per share for a 12% upside potential.

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#4 – Micron Technology (MU)

micron technology stock
Micron Technology (MU) price chart – 1-day candles with multiple indicators – Source: TradingView

Micron Technology declared its first dividend on record at 10 cents per share a few days ago, which will be paid to shareholders on 1 October this year.

The announcement pushed the stock higher as it speaks loudly about the strength of the business earnings and cash-flow generating capacity. Shares of the chipmaker surged 4% on the day that the news came out and 1.4% the day after during two high-volume trading sessions.

Meanwhile, Micron stock has been posting gains in 6 of the last 8 trading sessions with momentum readings surging to positive territory already.

Based on these readings, a first target could be set at $86 per share for MU stock, resulting in a 5% short-term upside potential while these latest developments could lead to a break of that resistance, in which case the potential gains could be even higher than that.

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#5 – Trex Company (TREX)

trex company stock
Trex Company (TREX) price chart – 1-day candles with multiple indicators – Source: TradingView

Trex shares have gone up for three days in a row following a positive quarterly report where the firm beat both revenue and earnings estimates from analysts. The company’s second-quarter sales landed at $311.6 million or $9 million above the Street’s forecast while quarterly EPS landed at $0.53 – in line with the consensus.

Volumes have been quite high in the past two sessions and the post-earnings jump is already reversing the downtrend seen by the stock in the past couple of months. The fact that such a reversal is occurring on the back of a positive quarterly earnings report reinforces a bullish outlook for the stock and could lead to a jump toward the next resistance seen in the chart at $111 per share for a 6.7% potential upside based on this morning price of $104 per share.

Momentum readings are also supporting this view as the MACD is climbing to positive territory already while the Relative Strength Index (RSI) surging to its highest level since May – back when the downtrend started.

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About Alejandro Arrieche PRO INVESTOR

Alejandro is a freelance financial analyst with 7 years of experience in the industry. He writes technical content about economics, finance, investments, and real estate and have also assisted financial businesses in building their digital marketing strategy. His favorite topics are value investing, macro analysis, and technical analysis. Other publications Alejandro has written for include The Modest Wallet, and Capital.com.