While global equity markets have had a great run this year, I’m still seeing plenty of buying opportunities. Here are three stocks I’d buy as we begin August.
Apple
One stock that strikes me as a buy as we begin August is Apple (NASDAQ: AAPL). The tech giant has a huge amount of momentum right now. Last week, the company posted its third-quarter results for the period ended 26 June and the numbers were very strong.
For the quarter, the company generated record revenue of $81.4bn, up 36% year-on-year, along with earnings per diluted share of $1.30, up from $0.65 in Q3 2020. When you consider that Apple is a $2.4trn company, that level of growth is pretty incredible.
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In my view, Apple’s valuation is very reasonable at present. Currently, the consensus earnings forecast for the year ending 30 September is $5.54. That means Apple’s forward-looking P/E ratio is about 26. As such, see a lot of value on the table right now.
One risk here is regulatory intervention. Currently, Apple makes huge profits from its App store. Regulators could step in and force the company to lower its fees.
But I’m comfortable with the risks though. Overall, I think Apple is a great stock to buy right now.
Diageo
Another stock I like for August is Diageo (LSE: DGE). It’s one of the world’s leading alcoholic beverage companies. Its brands include Smirnoff, Tanqueray, and Guinness.
Diageo posted a strong set of half-year results last week. For the six months ended 30 June, the group generated organic net sales growth of 16%, with growth across all regions, along with a 7.4% increase in adjusted earnings per share. On the back of this growth, the company raised its dividend by 5%.
And in an upbeat message investors, CEO Ivan Menezes said: “I remain optimistic about the growth prospects for our industry, with spirits continuing to gain share of total beverage alcohol globally and premiumisation trends remaining strong. I believe Diageo is very well positioned to capture these exciting opportunities to drive long-term sustainable growth and shareholder value.”
Diageo currently trades on a forward-looking P/E of about 27. That valuation doesn’t leave much room for error. If sales growth slows, the stock could underperform.
I think DGE is a good stock to own in the current environment however. It’s worth noting that analysts at Credit Suisse just raised their price target to 3,950p.
Upwork
Finally, I see Upwork (NASDAQ: UPWK) as a strong buy as we begin August. It operates the world’s largest freelance employment platform.
Businesses across the world are embracing freelance workers at the moment and Upwork is benefitting from this trend. In its second-quarter 2021 results, published last week, the group reported year-on-year gross services volume (GSV) growth of 50% and revenue growth of 42%.
Meanwhile, non-GAAP net income came in at $4.6m compared to a non-GAAP net loss of $3m in Q2 2020. Looking ahead, Upwork said it expects revenue growth of around 30% for the full year.
Investors should be aware that Upwork’s a highly volatile stock. This is illustrated by the fact that after these great results, the stock actually fell about 15%.
Overall however, I think the long-term risk/reward proposition here’s very attractive. I think this stock has a lot of growth potential.
