Roundtable: 1 Stock to Buy in September

As we do each month, we asked a handful of our top analysts across sectors for one stock that looks especially compelling right now. Here are the companies they singled out.

Jim Gillies:  Accenture (ACN +0.00%) is one of the world's largest management consulting, system integration, and outsourcing companies, with a client list comprised of most of the Fortune Global 500. A proven winner, Accenture has delivered 14.8% annualized returns (including reinvested dividends) over the past decade.

And yet, its most recent quarter was received so poorly that the stock price fell nearly 14% in a single trading session (it has since recovered about half its drop). This reaction baffled me. Even with somewhat slowed top-line growth and a marginal downward revision to full-year expectations, it was a perfectly fine quarter: Earnings rose 17%, margins expanded, and operating cash flow rose nearly 24% year-over-year. The balance sheet now sports nearly $6 billion in cash (against no debt), and the company continues to be awash in free cash flow.

This last part is particularly important because Accenture has a long history of deploying its copious cash generation in the service of shareholders. The company has aggressively repurchased its own shares over the past decade, reducing its diluted share count by over 27% (about 3.1% annually). It also established its dividend in 2005 and has raised it annually at a compounded 25% clip. Expect this shareholder friendliness to continue when the semiannual dividend is declared later this month. Accenture is truly a stock to buy and hold for long-term excellence.

Rick Munarriz: It's been a wild summer for LightInTheBox (LITB +0.01%) investors. The online retailer went public at $9.50 in June, traded as high as $23.38 by mid-August, but crashed 40% in a single day last month after posting disappointing quarterly results in its first outing as a public company.

Let's provide a little color before we dive into this seemingly disastrous quarter. LightInTheBox is based in China, but more than 80% of its sales are made outside of Asia. Americans and Europeans are taking to LightInTheBox's high-tech housewares and custom-tailored cocktail dresses that are sourced cheap enough in China to be shipped worldwide at no additional cost.

Revenue for its debut quarter climbed 53% to $72.2 million, shy of the $75.8 million that analysts were targeting. That's not awful, but then LightInTheBox warned of a sequential dip in revenue for the current quarter. Ouch!

However, LightInTheBox is still profitable. The model works. It's trading at a forward earnings multiple in the teens. A sell-off was warranted after last month's crummy report, but the pessimism is overdone. LightInTheBox will bounce back.

Tim Beyers: Between the billion-dollar box offices and a rich TV lineup from the likes of Time Warner and Walt Disney, there's rarely been a better time to be interested in media stocks. And not just the Big Two. For enterprising investors willing to take on a little added risk, Lions Gate Entertainment (LGF +0.00%) looks like an interesting bet. 

The studio's lineup includes not only three more entries in The Hunger Games series, but also joint production deals with AMC Networks for Mad Men and Netflix for the new original series Orange Is the New Black. Mix in a string of low-budget and ridiculously profitable horror films and you've got a Hollywood player whose outside-the-lines production sensibility resulted in 70% revenue growth last year and 56% growth over the trailing 12 months.

Importantly, that growth comes at what I consider to be a reasonable price: less than 2 times sales, and about 22 times next year's average earnings target.

Jim Mueller: Generac Holdings (GNRC +0.00%) sells backup power generators to both homes and businesses, as well as powering temporary lighting systems to folks like those working on our highways in the overnight hours. Its backup generators can connect to a home's natural gas supply and use that when the system automatically starts when the power goes out.

Since 2000, power outages affecting 50,000+ customers have become more common, growing from just 16 in 2000 to nearly 77 last year (and 139 in 2011). That's partly due to more storms like last fall's Hurricane Sandy, but it's also due to an aging power grid.

As a result, the 54-year-old company's been able to grow revenue by nearly 35% annually and net income by 47% annually for the past three years. It's the market leader, supplying 70% of the generators sold to residential customers. Plus, it's expanding internationally with recent purchases in Latin America and Europe and focusing more sales efforts on small businesses that cannot afford to lose power (think food storage at restaurants).

If you want to invest in the housing recovery and/or electrical industry, consider Generac.

Justin Loiseau: If you surf through Fool.com or dumpster dive in your spare time, chances are you've come across Waste Management (WM 0.01%). While the name implies otherwise, this company is far from a piece of trash.

With 43,000 employees and $23 billion in assets at its disposal (pun intended), this corporation is the player in the waste management sector. The global recession resulted in stagnating sales over the past five years, and near misses on quarterly earnings over most of the last three years caused the share price to underperform. For the long-term investor, that spells v-a-l-u-e.

With housing markets picking up and an American recovery well under way, waste volume is set to soar in the next few years. But Waste Management takes the second word in its name seriously, and is innovating to find interesting (and profitable) ways to deal with America's trashiness. From new recycling methods to methane capture systems, your trash is this company's treasure.

I've picked up shares myself three separate times in 2013, and believe that my 13.5% gains have only just begun to scratch the surface of this stock's sustainable soar. With above-average margins, an envious return on equity, and a delectable 3.6% dividend yield to boot, it's high time you dump some shares of Waste Management straight into your portfolio.

Dan Caplinger: My stock for the month is student-loan financing company SLM (SLM 0.01%), which is the company behind the Sallie Mae brand name. Sallie Mae bills itself as the No. 1 financial services company specializing in education, and the company manages and services hundreds of billions of dollars in student loans. Even as American households have been reducing their overall debt levels substantially in the years since the financial crisis, student-loan debt levels have continued to rise, and that puts Sallie Mae squarely in a high-growth industry.

But the reason Sallie Mae is interesting now is that the company said recently that it would split itself into two separate publicly traded companies. One will focus on its current education-loan management business and will take on the lion's share of the existing company's assets, reaping income from servicing fees and other management-related revenue.

The other will offer consumer-banking services, including its online banking service, and will also originate student loans to serve borrowers directly as well as managing the company's Upromise Rewards college-savings program. With expectations that the spinoff will be complete by mid-2014, owning shares now could give investors two ways to benefit well into the future.

Paul Chi: Looking for the next Berkshire Hathaway? Loews Corp. (L +0.00%) fits the bill. This company boasts diversified business lines such as hotels, oil and gas production, natural gas pipelines, offshore drilling, and property and casualty insurance. Best of all, it's led by CEO Jim Tisch, who works tirelessly to allocate capital to the best growth opportunities within its portfolio of businesses.

Loews has been a long-term compounding machine, beating the market over the past 10, 20, and even 50 years. Despite this long history of outperformance, it still trades at a discount to its book value of $49.36 because of the still-ongoing turnaround situation at CNA Financial, its publicly traded insurance subsidiary. The company likely also suffers from a case of the conglomerate discount, in which a company with many parts is undervalued by the market.

Discount or no, businesses with superior capital allocators are tough to find, and Loews has proved itself trustworthy as a steward of shareholder capital for many decades. With its wealth of reinvestment opportunities (as well as a conglomerate discount letting management buy back shares on the cheap time and again), Loews represents an interesting investment opportunity for the value-minded investor.

Sean Williams: It's not a name that many investors would think of when it comes to a big growth opportunity, but as September rolls around I feel everyone should have their eyes on Xerox (XRX +0.00%).

I know what you're probably thinking, "Isn't Xerox still a stodgy printing company?" In actuality, it isn't. As of Xerox's most recent quarter, the bulk of Xerox's revenue -- 55%, to be exact -- now comes from its services segment which includes printing services, as well electronic toll booth operation and Medicaid processing.

The emphasis here would be on Xerox's Medicaid processing services which on Oct. 1 could see a gigantic ramp-up in volume. The reasoning behind the volume boost is the Patient Protection and Affordable Care Act -- you may know it better as Obamacare -- which will expand government-sponsored Medicaid to some 16 million new people through the remainder of the decade. In California alone, 1.4 million new persons are expected to qualify. With Xerox processing all of California's Medicaid claims, it could be in for a dramatic growth surge that few are anticipating. At less than nine times forward earnings you don't have to pay much to own Xerox and you also get a 2.3% yield to boot. Do you copy that? Over!

More stock ideas
If you'd like a few additional stock ideas, Motley Fool co-founder and CEO Tom Gardner has identified three "double down" candidates to consider. To learn more about Tom's favorite stocks, click here. 

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