7 Best Stocks and Shares to Buy Now – June 2021, Week 4

US stock markets are looking strong and have continued to trend upwards despite several headwinds including a sooner than expected tightening by the Federal Reserve. For those researching to buy stocks and shares, while there are concerns over the markets getting overheated, there are seven stocks that look like good buys now.

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1. Fisker (NYSE: FSR)

Fisker is a startup electric vehicle company that went public last year through a SPAC (special purpose acquisition company) merger and the stock has fallen sharply from its peak. However, Fisker has a positive outlook from a fundamental perspective. The company expects to begin production of its first vehicle, the Ocean SUV in Europe next year. It has partnered with Magna to produce the vehicle.

For its second vehicle named Project Pear, Fisker has partnered with Foxconn to produce the vehicle. The company has priced its vehicles competitively and can give a tough fight to other electric vehicle companies.

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Analysts see Fisker as a good stock to buy

Wall Street analysts are bullish on Fisker and its median target price of $24 implies a 34% upside over the next 12 months. Of the 11 analysts covering Fisker, seven rate them as a buy while three rates them as a hold. One analyst has rated Fisker as a sell.

Over the last month, several brokerages have taken a bullish view of Fisker stock. Earlier this month, RBC also joined the bullish camp and initiated coverage on Fisker with an outperform rating and a target price of $27.

Fisker stock technical analysis

“Fisker plans to bring BEVs to the market in a differentiated way, utilizing 3rd-party BEV platforms and contract manufacturing,” said RBC analyst Joseph Spak. He added, “Fisker has thus far partnered with Magna and Foxconn, which aside from saving money has also led to a faster time to market (first product Ocean SUV is slated for 4Q22). Because of this strategy, we see less risk than other BEV startups towards hitting SoP targets.”

Fisker stock has found strong support at the 100-day SMA (simple moving average). It is also trading above the 50-day SMA which is also a bullish indicator. Its 14-day RSI (relative strength index) of 59.8 is also a neutral indicator.

2. Freeport-McMoRan (NYSE: FCX)

Freeport-McMoRan is the largest publicly traded copper miner. The stock is down sharply from the peaks amid the sell-off in copper prices. That said, copper is among those metals for which almost all brokerages have a bullish forecast. Goldman Sachs expects copper prices to rise to $15,000 per metric ton by 2025.

The bullish thesis for FCX stock is built around both demand and supply-side dynamics. On the demand side, copper demand is expected to get a boost from the global pivot towards green energy and electric vehicles, both of which have a higher copper intensity.

On the supply side, years of underinvestment are expected to lead to a structural supply deficit in copper which will support prices. Freeport-McMoRan’s copper assets are in safer jurisdictions and almost 42% of its reserves are in North America. The company’s production is expected to rise over the next two years as it ramps up the Grasberg mine in Indonesia. The ramp-up will also lead to higher gold production and lower operating costs.

FCX stock looks undervalued

FCX currently trades at an NTM EV-EBITDA of 6.1x. The valuation multiples don’t seem high considering the expected increase in the company’s earnings over the next two years. Looking at the technicals, FCX has fallen below the 50-day SMA and 100-day SMA which s a bearish sign. However, the stock is getting near the oversold zone with a 14-day RSI of 34.9.

Given the scarcity of pure-play quality copper assets, FCX looks like a good way to play the uptrend in copper prices.

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3. Zomedica (NYSE: ZOM)

Zomedica stock is commercializing its Truforma product which is a pet care diagnostic devise. The company forecasts that the market opportunity for companion animal diagnostics is expected to reach $2.8 billion by 2024. Zomedica has also strengthened its balance sheet and capitalized on the steep rise in its stock price amid the Reddit-driven short squeeze.

ZOM stock technical analysis

ZOM stock looks somewhat bearish on the charts, however. It is trading in a narrow price channel between the 50-day SMA and 200-day SMA. While the 200-day SMA which is currently at $0.81 has been strong support for ZOM, the 50-day SMA that is at $0.90 currently has been acting as a resistance. The stock needs to break above the 50-day SMA for the uptrend to resume.

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4. General Motors (NYSE: GM)

Legacy automakers are outperforming the markets as well as their pure-play electric vehicle counterparts in 2021. General Motors stock is up 41% so far in 2021 and recently hit the all-time high since it emerged out of bankruptcy in 2009. General Motors has become the first Detroit automaker to commit to a zero-emission future and expects to sell only zero-emission vehicles by 2035. The company would invest $35 billion towards electric vehicles between 2020-2025. It has set itself a target of selling 1 million electric cars by 2025.

GM stock looks a good buy

While pure-play EV stocks trade at exorbitant valuations, legacy automakers like General Motors still trade at depressed valuations. It is valued at an NTM PE multiple of 10.6x which looks quite attractive. Wall Street analysts are also turning bullish on GM stock. Earlier this month, Citi raised its target price on GM stock to a street high of $90.

Looking at the charts, GM stock has strong support near the 50-day SMA which is currently at $58.72. The 100-day SMA, currently at $55.74 could be the next support for the stock. Overall, GM looks bullish on the charts. From a fundamental perspective also, legacy automakers are candidates for further valuation rerating as their electric vehicle plans unfold.

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5. Cleveland-Cliffs (NYSE: CLF)

Cleveland-Cliffs was an iron ore miner but went for vertical integration by acquiring AK Steel in 2019. Last year, it also acquired the US operations of ArcelorMittal. Last week it raised its earnings guidance and said that it expects to post an adjusted EBITDA of $5 billion in 2021 and $1.3 billion in the second quarter. The company’s guidance was ahead of what Wall Street was expecting.

CLF stock was targeted by Reddit traders

CLF stock is down 15.7% from the 52-week highs that it reached during the Reddit-driven short squeeze. However, while Reddit traders have moved on to other stocks, CLF still looks like a good stock to buy for the long term. The commodity supercycle looks here to stay despite concerns over inflation.

Cleveland-Cliffs’ product portfolio is tilted towards value-add steel products which will support the margins in the medium to long term. Also, the company’s HBI (hot-briquetted iron) plant will add shareholder value in the medium to long term.

CLF trades at an NTM EV-to-EBITDA of only 3x which looks very attractive. While there are concerns over the longevity of the steel supercycle, higher steel prices look here to stay for some time even as they might come down somewhat from the peaks.

Looking at the charts, CLF stock found support near the 100-day SMA amid the fall. Now, the stock is finding strong support at the 50-day SMA which is currently at $19.81. The 14-day RSI is 50.6 which is a neutral indicator. Overall, CLF stock looks a good way to play the steel industry supercycle.

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6. Opendoor (NYSE: OPEN)

Opendoor went public last year through a reverse merger with Social Capital Hedosophia Holdings II (IPOB), a SPAC sponsored by Chamath Palihapitiya who has built his reputation as the “king of SPACs.” Meanwhile, Opendoor stock has fallen sharply from the peaks amid the sell-off in growth names. The company is a home-flipping platform working to digitize the real estate market which is quite fragmented.

While the e-commerce industry has been able to penetrate several aspects of our lives, home buying and selling has been a tough nut to crack so far. This is where companies like Opendoor are trying to create a niche for themselves. The real estate market is the US is estimated to be over $1.6 trillion annually. Only about 1% of the transactions however happen online.

Cathie Wood invested in OPEN stock

OPEN stock has a positive long-term outlook and is a way to play the digitization of the US real estate market. Cathie Wood of ARK Invest is also bullish on Opendoor stock and added to her positions after the crash. Currently, Opendoor stock trades at an NTM EV-to-revenue multiple of 1.3x. The multiple has averaged 4.1x since it went public.

Also, the valuation gap between Opendoor stock and Zillow has widened. Zillow’s NTM EV-to-sales multiple 4.3x is over thrice that of Opendoor which looks unwarranted.

However, OPEN stock looks somewhat bearish on the charts. It has failed to cross above the 50-day SMA which has been a resistance channel. However, the stock trades above the 30-day SMA. Its 14-day RSI of 46.4 signals neither overbought nor oversold positions.

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7. Alibaba (NYSE: BABA)

Alibaba stock is down 9.3% so far in 2021 and is underperforming the markets. The stock peaked in the third quarter of 2020 and has since traded on a weak note. The company’s co-founder Jack Ma lashed out against the country’s financial regulators which did not go well with the authorities. China stalled the IPO of Ant Financial where Alibaba holds a third of the stake. The IPO would have helped Alibaba unlock value but Chinese regulators had different plans. China also imposed a massive fine on Alibaba over antitrust issues.

BABA stock might have bottomed

Meanwhile, Alibaba stock might have bottomed and looks strong fundamentally. The company is growing fast and its revenues are expected to rise 30% in the fiscal year 2022 and 21% in the fiscal year 2023. While the core e-commerce business has been doing well, the cloud operations have also turned positive on the EBITDA level. For Amazon, the cloud is the most profitable business operation accounting for over 41% of the operating income. In the long term, cloud operations will drive value for BABA investors.

BABA stock trades an NTM PE multiple of 21x which is almost a third of what Amazon trades at. While there are concerns over BABA the company looks undervalued at these levels especially given the strong growth outlook.

BABA stock technical analysis

Meanwhile, BABA stock is looking bearish on the charts. It trades below the 50-day, 100-day, and 200-day SMA. Also, earlier this year there was a death cross formation in the stock after its 50-day SMA crossed below the 200-day SMA. A death cross is seen as a bearish technical indicator and often signals a long-term bear market.

BABA looks like a good stock to buy now

That said, the stock looks quite attractive at current prices and if it can sort out the issues with the Chinese regulators, it can be a multibagger from these levels. Wall Street analysts are also bullish on BABA and its median target price of $288.30 is a 36.6% premium over current prices. The stock trades almost 8% above the lowest target price while its highest target price of $350.93 implies an upside of 66% over current levels. Of the 57 analysts covering BABA stock, 54 rates them as a buy while two rates them as a hold. One analyst has a sell rating on BABA stock.

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