5 Best Stocks to Buy in September 2021

After rising for seven consecutive months, US stock markets have looked weak in September and have closed in losses in all three weeks so far. The current week is looking no better and stocks tumbled yesterday amid the Evergrande crisis.

Fears of a tapering announcement at the Federal Reserve’s meeting is also spooking investors. Meanwhile, some of the stocks are looking attractive after the recent correction. Here are the five best stocks that look like good buys in September.

1. Amazon (NYSE: AMZN)

With a YTD (year-to-date) return of only about 5%, Amazon is the worst performing FAANG stock of 2021. The stock is also underperforming the markets by a wide margin. However, if you are looking at a stock that could deliver decent returns in the medium to long term, AMZN is among the best stocks to buy in September.

There have been concerns over Amazon’s growth and its second-quarter revenues fell short of estimates. It was the first time in three years when the company’s topline growth fell short of estimates. Also, its guidance was below estimates.

To be sure, the growth slowdown is for real as the “stay-at-home” trade is unwinding. As consumers are venturing out and spending on other things, demand growth for companies like Amazon is coming down. That said, Amazon is among those stocks that have a clear path to long-term secular growth. Growing e-commerce penetration and cloud adoption bode well for Amazon, given its market-leading position in both industries.

Analysts find AMZN as among the best stocks due to its growth outlook

Wall Street analysts have a near consensus view that AMZN is among the best stocks to buy. 47 of the 49 analysts polled by CNN Business rate it as a buy and the remaining two have a hold rating. The stock’s median target price of $4,105 is a premium of 22.3% over current prices.

Despite the company’s revenue miss, analysts maintained their ratings even as some of them lowered the target price. Earlier this month, Morgan Stanley reiterated AMZN stock as overweight expressing optimism over Amazon-branded TV.

Amazon stock looks attractive

“We detail 3 reasons an AMZN branded TV with Alexa could extend its retail and advertising leadership: 1) further AMZN’s reach into the connected home 2) attempt to change consumer behavior toward voice-based shopping and 3) more foundation for AMZN’s push into the budding CTV ad opportunity,” it said in its note.

Amazon’s valuations look quite attractive after its recent underperformance and it trades at an NTM (next-12 months) PE of around 60x which does not look high. The company could end up surprising on the profitability in the medium term amid the absence of COVID-19 related costs.

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2. Alibaba (NYSE: BABA)

Alibaba stock has shed a third of its market cap this year and has fallen to the lowest level since the third quarter of 2018. Now, on multiple occasions, this year BABA stock has looked like a buy. However, these turned out to be false hopes. Just when it seemed that The Chinese government is done with the crackdown, the Evergrande crisis in China pushed BABA stock to a new 52-week low.

Cathie Wood exited BABA stock

Meanwhile, the stock now looks quite attractive and its valuations are the lowest since the company was listed. There are several risks for the company including a possible delisting in the US. However, at current price levels, BABA looks among the best stocks to buy in September if you can withstand the short-term volatility.

Meanwhile, several star fund managers including Cathie Wood of ARK Invest have exited BABA stock. Consensus estimates suggest a massive upside of 72% over the next 12 months in BABA stock. Overall, if you want to bet on the Chinese economy and believe that the country’s economy will continue to expand at a brisk pace, BABA would be among the best stocks to play the theme.

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3. Uber (NYSE: UBER)

UBER stock is trading higher today amid hints that the company could become profitable in the current quarter. So far profitability has been elusive for the ride-hailing and food delivery company. However, it has been taking several measures to improve its profitability and had exited several loss-making businesses.

Uber is the best stock to play the reopening story

As the economies reopen and people start to commute again, Uber would be among the biggest beneficiaries. While there would be concerns of a growth slowdown in the food delivery business, it could be more than offset by the increase in revenues from the ride-hailing business.

The company has forecast that its gross bookings in the third quarter would be between $22.8-$23.2 billion which is narrower than the previous guidance of $22-$24 billion. “We’ve not only grown our global leadership across both mobility and delivery; we’ve done so more profitably than ever before… Uber is reaching an important milestone,” said Uber CEO Dara Khosrowshahi.

Analysts are bullish on UBER stock

Wall Street analysts are also bullish on Uber stock and consensus estimates call for an upside of 61% from these levels. 39 of the 43 analysts polled by CNN Business rate Uber stock as a buy.

All said Uber is among the best stocks to buy in September and bet on the reopening. While some of the tech companies would see growth rates taper down as the economy reopens, Uber could see a spike in demand. The current valuations are quite reasonable and provide a good entry point for investors.

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4. Ford (NYSE: F)

Ford stock has come down significantly from its 2021 highs but is still up almost 50% for the year which makes it among the top gainers in the S&P 500. The recent pullback in Ford stock looks like a good buying opportunity. The company is expanding its electric vehicle offerings and the upcoming launch of the all-electric Ford F-150 Lightning model would help gauge the demand for electric models from the company.

Ford is among the best stocks to play the vehicle electrification theme

The pivot towards electric vehicles is for real. After watching from the sidelines for a long, legacy automakers are now investing aggressively in electric vehicles and autonomous cars. Ford is among the turnaround stocks under the leadership of Jim Farley. If you are looking to play the vehicle electrification theme with a legacy automaker, Ford looks among the best stocks to buy.

Currently, the company is not paying a dividend but could restore them back once the chip shortage situation stabilizes. Like most other automakers Ford has also been hit by the chip shortage. However, if you are looking to take a long-term view, Ford looks among the best stocks to buy in September. The valuations look attractive too with an NTM PE of less than 8x.

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5. EVgo (NYSE: EVGO)

EVGO is an electric vehicle charging company that went public through a reverse merger with Climate Change Crisis Real Impact I Acquisition. The stock has fallen sharply from the highs amid the sell-off in green energy companies. However, the fall is a good opportunity to buy this stock.

The Biden administration has committed billions of dollars towards electric vehicle charging infrastructure. EVGO boasts of the largest direct current fast-charging infrastructure in the US. It has 800 fast-charging stations which it expects to triple by 2025. Notably, charging infrastructure would be crucial to increase the adoption of electric cars.

EVgo is among the best stocks in the EV charging industry

Overall, EVgo is among the best stocks to buy in September and play the electric vehicle story. Credit Suisse has similar views and initiated EVgo stock with an outperform rating. “EVGO is a U.S. market leader in building direct current (DC) fast chargers for passenger and commercial electric vehicles (EVs) that run on 100% renewable energy. EVgo benefits from rapidly growing EV adoption, supportive policies and potential incentives for the industry under the infrastructure bill, first move advantage with strategic partnerships, and an attractive valuation after recent pull back,” it said in its note.

Charging companies are among the best ways to play the electric vehicle story. Within the charging industry, EVGO looks among the best stocks to buy and the recent fall has only made the stock attractive.

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