5 Best Stocks to Buy in December 2021

While US stock markets looked set for a Santa Claus rally towards the end of 2021, the emergence of the Omicron variant of the coronavirus has somewhat complicated the picture.

Countries across the world are responding with restrictions on international travel. However, none of the major economies are currently considering a full-scale lockdown. President Joe Biden has also ruled out a lockdown for now. What’re the best stocks that you can buy in December amid the changing macroeconomic environment?

1. NIO (NYSE: NIO)

Electric vehicle stocks are long-term growth plays and are not much impacted by the coronavirus threat. While the lockdowns could amplify the chip shortage situation that automakers are facing, the long-term growth story would stay intact. Within the EV industry, NIO looks like a good stock to buy in December. There are three main reasons why NIO looks like a good buy in December.

NIO looks like a good stock to buy in December

NIO has underperformed fellow electric vehicle companies in 2021 and could see a catchup trade as 2021 draws to a close. Secondly, NIO’s valuations look reasonable now as compared to other EV names like Tesla. Finally, NIO is expected to hold its NIO Day in December. The company is expected to make big announcements at the event that could take the stock higher.

In 2021, NIO’s deliveries were negatively impacted due to the chip shortage situation. As the situation gets gradually better in 2022, the stock could also see some upward momentum.

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2. Alphabet (NYSE: GOOG)

Alphabet is the best-performing FAANG stock this year by a wide margin. However, despite the outperformance, it looks like a good buy in December. The company’s business is largely immune from the coronavirus situation and if anything, the increasing pace of digitization due to the COVID-19 pandemic is a long-term positive for GOOG stock.

UBS finds GOOG a good stock to buy

Today only, UBS issued a bullish note on GOOG and raised its target price from $3,190 to $3,925 which represents a potential upside of 40%. “We think Alphabet shares can see positive estimate revisions and multiple expansion on the back of faster than expected top line growth and margin inflection at Google Cloud. We think investors are overly dismissive of Cloud’s ability to move the needle based on the relative size of its potential EBIT contribution,” said UBS in its note.

The consensus forecast is also bullish on GOOG and its median target price of $3,350 is a premium of 18.3% over current prices. UBS’ target price is the new street high target price for the search giant.

Meanwhile, GOOG stock has seen an expansion of valuation multiples amid its pivot towards emerging industries like the cloud. The company’s market cap had briefly topped $2 trillion but has since come down.

That said, GOOG is among the best stocks that you can buy in December. It looks good from both a short-term as well as a long-term perspective.

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3. Meta (NYSE: MVRS)

After winning in the social media industry, Facebook has rebranded itself as Meta and has begun trading under the ticker symbol MVRS. The company has a strong moat in the social media industry with brands like Facebook, WhatsApp, and Instagram. The company is now focusing on metaverse and has also changed the name to reflect the new business strategy. Facebook and WhatsApps have a strong network effect which is tough to emulate for competitors. While Facebook faces allegations that its platform is used to spread hate, and is also facing scrutiny over the whistleblower leak, it nonetheless looks like an attractive stock at these prices.

Meta looks an attractively valued FAANG

With an NTM (next-12 months) PE multiple of just under 23x, Meta is the cheapest FAANG stock. The stock should see valuation multiple expansion as its metaverse plans take shape. Controversies over its business practices are not something new for Facebook, and the company should emerge stronger from the current turmoil also.

If you are looking to buy quality tech stocks at attractive valuations, Facebook looks among the best bets in December.

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4. Okta (NYSE: OKTA)

San Francisco-based identity management company Okta has underperformed this year and trades near its 52-week lows. However, the stock now looks like a good buy and could see some upward momentum. Today, Piper Sandler upgraded the stock from a neutral to overweight and sees the stock bouncing back from the lows.

Okta posted better than expected revenues in the fiscal third quarter while its losses were narrower than expected. The company also gave better-than-expected guidance for the fiscal fourth quarter. Wall Street analysts are also bullish on the stock and it has 22 buys and six hold ratings. None of the analyst rates Okta as a sell. It has a median target price of $300 which is a premium of over 50% from these price levels. If you are looking to buy a beaten-down quality stock at reasonable prices, OKTA would fit the bill.

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5. Uber (NYSE: UBER)

Uber stock has disappointed in 2021 and is down almost 30% for the year and trades near its 52-week lows. The company has been negatively impacted by the uncertainty over Didi, where it holds a significant stake. Reportedly, China would delist Didi from the US markets, and the uncertainty has taken a toll on Didi shares, as well as SoftBank and Uber that hold a stake in the Chinese ride-hailing company. The emergence of the Omicron variant of the coronavirus has also put pressure on companies like Uber. That said, the company’s food delivery business should do well if we see lockdowns again.

UBS sees massive upside in Uber stock

UBS has set a target price of $80 on Uber which is a premium of almost 120%. The brokerage sees the possibility of a catchup trade in Uber after its underperformance against Lyft and DoorDash. Notably, Uber has been working on its profitability and has exited several loss-making markets as well as businesses. It is now focused mainly on the ride-hailing and food delivery business in markets where it has good competitive positioning.

After the massive underperformance this year, Uber looks among the best stocks to buy in December. The stock could deliver good returns in the medium to long-term considering its current depressed valuations.

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