There’s no doubt that October was a crazy month. After a decent run through the third quarter, the markets decided it was time to re-evaluate valuations across the board.
This happens sometimes. But it doesn’t mean that the markets are heading toward a bear market or a significant reckoning. There are still good stocks to buy.
As you have seen in the first couple of days in November, there is a lot of talk from politicians to get the market back in the headlines for good reasons. And the economy is also delivering good numbers on employment and wage growth.
The latter has been a sticking point up to now, as low-end service jobs have been growing but employers haven’t been raising their wages. That is starting to change now.
The seven straight-A stocks to buy to build a portfolio around that are featured below have come down in price but not possibilities. They are less expensive now, yet promise outsized long-term growth.
What’s more, each stock here has received A ratings across three categories (quantitative, sales growth and earnings growth) by Portfolio Grader.
Amazon (AMZN)
Amazon (NASDAQ:AMZN) can’t be ignored for an article like this. It is about as disruptive a company as is out there today. That’s true not only for its ever-growing expansion into new markets, but it’s true for its sheer size and impact on everything it does.
For example, after getting sustained criticism for its low-wage warehouse jobs, AMZN announced that it was raising minimum wages to $15 an hour. This was as much good business as good press.
It now pays more than top retailers like Walmart and Target for its warehouse workers. That makes it a bigger draw for the best talent. And it pressures its competitors to raise their wages without hurting their margins.
AMZN is just getting started. This is a long-term foundation play that is a bit cheaper now.
Netflix (NFLX)
Netflix Inc (NASDAQ:NFLX) is another one of those disruptive companies spawned from simple beginnings that is now developing into a global force that is challenging legacy entertainment companies at every turn.
Just five years ago, NFLX launched its first original series, House of Cards. Later that year, it launched its second, Hemlock Grove and then Orange Is the New Black. Today, just five years later, NFLX is looking at 700 original TV series and 80 movies, just in 2018.
From a mail-delivery DVD movie rental company to one of the largest and most powerful global entertainment companies in the world is some serious growth. And the fact is, NFLX has yet to tap into two of the most significant entertainment markets around – India and China.
Even when NFLX missed its subscriber numbers in Q2 analysts stayed bullish. And that paid off in Q3 when the numbers came in well above estimates yet again.
IAC/InterActiveCorp (IAC)
IAC/InterActiveCorp (NASDAQ:IAC) is one of the top internet and media services companies around. While its name doesn’t usually ring many bells, its subsidiaries usually do: Match.com, Tinder, PlentyOfFish, OKCupid, as well as Home Advisor and Angie’s List. It also has a video division that features Vimeo and a publications sector that runs The Daily Beast, Dictionary.com and CityGrid, to name a few.
This is a vertically integrated media services company built especially for Gen Xers and millennials. There are few companies that have diversified their holding like IAC, which makes it a unique and compelling investment.
Plus, the way it is structured, it can cross-sell to its subscribers and derives revenue from a variety of sources, not just advertising. For example, Match Group Inc (NASDAQ:MTCH) is a separately traded company that specializes in dating apps and online educational services of which IAC owns a controlling share.
MTCH is up 73% year to date and its parent is up 68% year to date.
Abiomed (ABMD)
Abiomed Inc (NASDAQ:ABMD) is a medical equipment company with a $17 billion market cap. It’s not usually put into articles that talk about stocks to build your portfolio around.
However, there are two important things about ABMD that make it different. First is the sector. The medical equipment sector is going through the kind of tech revolution that is going on in every other sector of the economy.
And as the US healthcare system (as well as others around the globe) looks to bring down costs without raising problems for patients, better equipment is becoming an of great interest from healthcare providers and insurance companies.
Second, ABMD is fundamentally a 1-product company. It makes heart pumps to help an ailing or failing heart. This kind of equipment will be in greater demand as baby boomers begin to age and average ages rise across the developed world.
This is a one-trick pony that has a very unique and important trick that has a decade of growth ahead of it.
DexCom (DXCM)
DexCom Inc (NASDAQ:DXCM) is a medical device maker that specializes in continuous glucose monitoring (CGM) equipment. As increasing numbers of Americans test positive for diabetes, there has been a boom in the cottage industry of glucose monitoring. Part of the reason for this is the new drugs on the market, while generally effective, are not available as generics yet and are very expensive.
While losing weight and getting exercise can help manage diabetes, diet is important. And as diabetics continue to live with the disease, glucose levels can become increasingly erratic. CGM is very helpful in allowing diabetics to keep an eye on their levels using a smartwatch or smartphone.
What’s more, even non-diabetics are starting to track their glucose levels to see if there are any correlations to their energy levels, athletic performance, etc. App-based health information is transformative to allowing people to manage their conditions on a regular basis, so they don’t have to spend so much time at the doctor or hospital.
Up 136% year to date, DXCM has plenty of headroom.
Paycom (PAYC)
Paycom Software Inc (NASDAQ:PAYC) is part of the decentralization that going on in small and medium-sized businesses. It used to be that someone with a skill set and a good idea would start a business, hire people to grow the business and hire staff to manage the business.
Generally speaking, most business owners are skilled in the building or managing a product or project, but don’t have much experience running payroll, managing hiring and keeping up with taxes, personnel balancing receivables with liabilities.
And until recently, that meant having to hire more than couple people to pull all this together. But now, this whole part of the operation can be outsourced to a company like PAYC.
This allows the principal to do what she or he does best – grow the business. PAYC has a $7 billion market cap, so it’s big enough to be a player in the new HR space, but it is small enough to be flexible and see real benefits from its growth.
Up 57% year to date, PAYC has plenty of opportunities to grow and is also the ideal size for a bigger firm to snap it up a healthy premium.
Medifast (MED)
Medifast Inc (NYSE:MED) is a weight loss diet company that was founded by a physician in Baltimore, Maryland, in 1980. Initially, the meal plans were sold through doctors’ offices to patients that needed special diets for chronic diseases or to lose weight. To this day, Medifast is sold directly by physicians.
But it is also now part of the huge dietetic meal industry and people can buy products off the website or join its wholly owned subsidiary Optavia. Optavia is the new face of the program Take Shape for Life, which offers specialized programs, counseling and support for customers looking for a more intensive experience on their road to healthy eating.
And the Optavia division has been the big growth engine for MED in recent quarters. MED is logging huge numbers – up 203% year to date – compared to its more famous competitors.
With rising income and a recovering economy, MED has a lot of potential to continue this growth for years to come.
— Louis Navellier
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Source: Investor Place