3 Stocks That Are On My “Buy Now” List

Over the past two years, I’ve been doing my level best to Moneyball my own investing results.  Both my retirement and growth portfolios are already in place, and handily beating the market.

But for investors who are still earning a living, Roth IRAs are the best option to building long-term, tax-advantaged wealth. Each month, I pick one stock that I’ll be putting my money behind.  Below are the three stocks that look like great buys for your money right now.  Read to the end, and I’ll also offer access to a special report on three more stocks that’ll help you retire rich.

Baidu (Nasdaq: BIDU  )
Baidu is the leading Internet search engine in China. Last quarter, revenue and earnings grew by 75%, but the stock is down since then, as investors have worried about a potential slow-down in China.  A recent analyst also noted that the company only commands 35% of the mobile market share in China.

These are legitimate concerns, especially because mobile is tougher to monetize. But, as fellow Fool Rick Munarriz points out, mobile users are likely surfing the Internet much more, and this increases volume to the site, even if market share isn’t huge. The company also won a major coup earlier this year, when Apple (Nasdaq: AAPL  ) announced that Baidu would be the default search engine in the Safari browser.

Currently, the stock trades for just 18 times future earnings, and has a PEG ratio of only 0.64.  Hundreds of millions of Chinese residents will be coming online within the next ten years -- a huge boon to Baidu’s business. With numbers like that, I see Baidu as a steal at today’s prices.

SodaStream (Nasdaq: SODA  )
Count me among the SodaStream converts. Once my wife and I were convinced this was just a fad, but now we now can’t imagine going without the product. We use it at least three times daily.

SodaStream essentially makes a machine that requires no electricity at all to carbonate water. It also sells flavors that can turn your carbonated water into anything from a root beer to an energy drink.

One of the biggest advantages of SodaStream, beyond its convenience, is how it cuts down on pollution.  Recently, Coca-Cola (NYSE: KO  ) has taken issue with the company’s publicly-placed “cages” that show how much pollution a SodaStream can save. (Click here to see a picture of one of the cages.) Coke wants SodaStream to cease and desist from using the cages as a marketing tool.

SodaStream CEO Daniel Birnbaum shot back at Coca-Cola in truly awesome fashion:

We think it is absolutely ridiculous. If [Coke] claims to have rights to [its] garbage, then [Coke] should truly own [its] garbage, and clean it up. Instead of getting a thank you for cleaning up, we’re getting a lawyer’s letter.

On the business end, the company operates on a razors and blades model: flavor additives are high-margin, but they’re also very open to competition. Instead, it’s the company’s refillable carbonators,  combined with sales of additives, that could provide the revenue stability investors are hoping for.

Currently, the company trades for just 14 times future earnings, even though earnings per share grew by 56% last quarter. The company’s PEG is at a miniscule 0.53.

Lululemon athletica (Nasdaq: LULU  )
Finally, we have the hottest yoga retailer out there.  Lululemon disappointed investors when guidance for 2012 came in below expectations. The stock is down 20% since reaching highs in early May.  Listening to the conference call, I think there are three major story lines to follow here.

First, the company continues to execute on its plans. Revenue was up 53%, and earnings per share grew 39%. More importantly, same store sales increased an astounding 25% during the first quarter of 2012.  The company also saw its direct-to-customer line jump 180%. This is important, as margins are generally higher for this line, as it requires less capital infrastructure.

Second, lulu management is focusing more on the long-term. Instead of chasing short-term profit gains, CFO John Currie told analysts that he’s instructed his team on coming up with innovative new products for the fourth quarter and beyond, rather than on meeting short-term demand. Management has shown similar prescience in the past in handling inventory issues, and those moves paid off nicely for the company.

Finally, there are some legitimate concerns to keep in mind. Gross margins contracted from 58.7% to 55%, primarily because of higher raw material costs. The company can’t change these costs, as the quality of the material lulu uses is essential to its brand. While cyclicality is normal, any long-term increase in input costs could hurt the company’s bottom line.

Which will be the winner?
Tune in next Thursday to find out which of these three companies I’ll be picking. In the mean time, you can get three buy recommendations for your retirement portfolio right now in our special free report:3 Stocks That Will Help You Retire Rich. Get your copy of the report today, absolutely free.

Fool contributor Brian Stoffel owns shares of all the companies mentioned except for SodaStream. You can follow him on Twitter, where he goes by TMFStoffel.

The Motley Fool owns shares of Apple, Baidu, lululemon athletica, Coca-Cola, and SodaStream. Motley Fool newsletter services have recommended buying shares of lululemon athletica, Baidu, Apple, Coca-Cola, and SodaStream, as well as creating a bull call spread position in Apple. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.


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