5 Best Stocks to Invest in During September 2021

US stock markets are trading near their all-time highs. While September hasn’t been a good month historically, there are the five best stocks that you can invest in the month and hold for the long term.

Despite record-high markets, there are several stocks that are trading at a discount to their 52-week highs. However, while these companies face short term headwinds, their long-term forecast looks positive.

1. General Motors (NYSE: GM)

Earlier this year, General Motors stock hit the highest level since it emerged out of bankruptcy. While the stock is still up around 21% for the year which is in line with the S&P 500, it is down almost 24% from its 52-week highs. After the sharp drawdown from the peaks, GM looks among the best stocks to buy in September 2021.

Wall Street is bullish on GM stock

Wall Street analysts are bullish on GM stock and its average target price of $73.86 is a premium of 51.3% over current prices. Of the 14 analysts polled by TipRanks, 13 rate GM stock as a buy while one analyst has a hold rating. The stock had fallen last month after its second-quarter earnings had disappointed markets. However, most analysts saw the post-earnings dip as a buying opportunity.

“While 2Q results and 2021 guide came in soft, we think 2Q was impacted by one-time warranty charges that will reverse and management set an easy bar for 2H assuming lower volume sequentially as a result of chip shortage,” said Deutsche Bank analyst Emmanuel Rosner. He added, the stock to the short-term Catalyst Call Buy List and maintained a target price of $68.

Chip supply situation

The chip supply situation has taken a toll on GM’s production plans this year. The automotive industry is severely impacted due to the supply of chips and would end up losing over $100 billion in revenues this year due to production cuts.

RBC Capital Markets also reiterated their outperform rating on GM stock. “We believe GM is laying the groundwork for transforming the company’s structural profitability, which will be expounded upon at its analyst day,” it said in the note.

GM bets on vehicle electrification

GM became the first Detroit automaker to commit to selling only zero-emission vehicles. America’s largest automaker has said that it won’t sell ICE (internal combustion engine) cars beyond 2035. It trades at an NTM (next-12 months) PE of only 8.4x.

Overall, looking at GM’s pivot towards electric cars, and the reasonable valuations. It looks like the best stocks to invest in in September 2021.

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2. Amazon (NYSE: AMZN)

Amazon stock is up only about 11% in 2021 and is the worst-performing FAANG stock. The stock is currently trading at a discount of 6.6% over its 52-week highs. The recent underperformance of Amazon stock as compared to the broader markets as well as FAANG peers is an opportunity to buy the stock.

Amazon entered into a new epoch this year when its long time CEO and founder Jeff Bezos quit as the CEO and handed the baton to Andy Jassy. Jassy was heading the company’s cloud operations which have been its most profitable business segment. From a business perspective, Amazon is the leader in both cloud and e-commerce markets which makes it among the best stocks to buy.

Amazon stock trades at reasonable valuations now

Amazon’s valuation multiples look attractive now and it trades at an NTM PE of 63.2x which look low considering the growth outlook. To be sure, there are concerns over the company not being able to repeat last year’s growth. However, the negatives seem baked in the prices.

Analysts see Amazon as a good stock to buy

Of the 49 analysts covering Amazon, 47 rate them as a buy while two rate them as a hold. That’s quite a high percentage of buy recommendations for any stock. Amazon’s median target price of $4,105 is a premium of 16.4% over current prices. Last month, Amazon had announced a partnership with buy-now-pay-later (BNPL) company Affirm to extend the service to select customers. The partnership would be expanded to more buyers in the future.

Amazon has partnered with BNPL company Affirm

After the announcement, Credit Suisse reiterated its outperform rating on Amazon stock. “We consider the announcement to be broadly positive for the BNPL (buy now pay later) industry as a whole, given this is the second ‘stamp of approval’ from a leading technology company in just a few weeks,” it said in its release. Credit Suisse added, “For Amazon to add Affirm’s BNPL offering, particularly given Amazon’s already high levels of conversion on its US site (in part due to Prime membership, one-click checkout, stored payment credentials, etc.) suggests the category is perceived to add value.”

Amazon is among the best stocks to invest in September. The stock can be a part of your core portfolio considering the strong secular growth in both the e-commerce and cloud markets.

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3. Virgin Galactic (NYSE: SPCE)

Virgin Galactic looks like another good stock to buy in September. The space travel company trades at a significant discount to its 52-week highs. However, if you are looking at a stock to invest in for the long term, SPCE looks among the best bets.

The long-term outlook for space travel looks positive. Virgin Galactic has already taken the first-mover advantage and its association with Branson, which has expertise in the aviation industry, is another added advantage. Virgin Galactic believes that the space travel market is worth $900 billion. It intends to focus on the top end of the market which it predicts is about a third of the total market.

Analysts see more upside in SPCE stock

Forecast estimates call for a 30% upside in SPCE stock over the next 12 months. Analyst opinion is quite divided though over the stock and it has four buys, five hold, and two sell ratings.

That said if you are looking at a way to play the expected boom in space travel, SPCE stock looks like among the best stocks to invest in September. While there would be near term hiccups and volatility, the stock could be a multibagger if the space travel market gains traction.

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4. NIO (NYSE: NIO)

NIO was among the best performing electric vehicle stocks of 2021 and the stock rose over 1,100% in the year. However, it is among the worst-performing electric vehicle stock of 2021 and has lost almost 30% this year. The company’s production has taken a hit due to chip shortage and for the last two months, it has sold fewer cars than both Xpeng and Li Auto. It also lowered the guidance for the third quarter amid supply-side bottlenecks.

Just when things were stabilizing for the stock, it announced a $2 billion stock sale. The news took the markets by surprise as the company had liquidity of $7.5 billion at the end of the second quarter.

China’s tech crackdown has been another factor weighing on NIO stock. That said, while the stock is looking weak in the short term, it looks among the best stock to invest in now and hold for the long term.

NIO is among the best EV stock to buy

NIO is among the best EV stocks to buy. The company is targeting the premium EV market and is also looking at international expansion beginning with Norway. The company also offers a battery swapping service which helps it lower car prices. The service also makes NIO cars eligible for the subsidy in China. Based on the vehicle prices, it does not qualify for the subsidy.

Analysts are bullish on NIO stock

Analysts are bullish on NIO stock and 17 out of the 20 analysts covering it rate it as a buy. Two analysts rate it as a hold while one analyst has a sell rating. Its median target price is $61.15 which is a premium of 60.3% over current prices.

While NIO reported mixed second-quarter earnings, Citi reiterated its buy rating on the stock. “We expect NIO to benefit from the overall China NEV (New Energy Vehicle) Passenger Vehicle sector upgrade, as well as accelerating orders as the sector’s beta proxy. We expect NIO to further gain market share from JV brands while the sector bottoms out,” said Citi in its note.

NIO’s valuations now look much more reasonable than they were earlier this year. NIO is among the best stocks to buy now considering the pivot from ICE cars to electric cars.

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5. Freeport-McMoRan (NYSE: FCX)

Freeport-McMoRan is the largest US-based copper miner and is among the largest copper miners globally. The stock is up around 27% in 2021 but is down over a quarter from its 52-week highs. The fall in FCX is not hard to decipher. Copper prices have come off their 2021 highs. The earnings of mining companies are sensitive to the underlying commodity prices so lower copper prices would mean lower earnings for Freeport.

Copper’s long-term outlook is bullish

Copper is one metal where most analysts have a bullish view. Goldman Sachs which correctly predicted prices hitting $10,000 per metric ton now sees copper prices hitting $15,000 per metric ton. Bank of America is also very bullish on copper and cites the current supply deficit and low inventories to support its bullish thesis.

“If our expectation of increased supply in secondary material, a non-transparent market, did not materialize, inventories could deplete within the next three years, giving rise to even more violent price swings that could take the red metal above $20,000/t ($9.07/lb),” said Bank of America in its note.

Green energy play

Copper intensity is higher in renewable energy and electric vehicles. As the global economy transitions towards a greener future, copper demand would get a boost. Also, the copper supply is widely expected to fall short after years of underinvestment in new mines.

FCX would see a rebound in its revenues over the next couple of years as it ramps up the operations at its Grasberg mine, which is its largest mine. Overall, given copper’s positive long-term outlook, FCX looks among the best stocks to buy in September.

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