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The Top 3 Best Stocks to Buy Now

By Zhiyuan Sun – Updated Oct 25, 2020 at 12:56PM

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These stocks can add long-term wealth to your portfolio.

From an early retirement, to buying a new home, to realizing a dream vacation, picking great stocks can have rippling effects on an investor's financial goals. All that most people have to do is wait patiently to reap the seeds they sow, and pay a little attention to market fluctuations.  

A business with sound financials and excellent management will help an investor's principal compound more quickly, without causing anxiety as to where the stock will go next. Today, let's take a look at why a cannabis company, an e-commerce giant, and a reputable conglomerate are among the best stocks to buy now.

Man analyzing stock price action at his work station.

Image source: Getty Images.

1. Aphria

Canadian cannabis grower Aphria (APHA) is arguably best stock in the marijuana sector in terms of current value. The company's valuation stands at just three times sales (P/S ratio) and at a price-to-book value (P/B ratio) of one. In comparison, Canopy Growth (CGC -1.52%), Aphria's biggest competitor, trades at 23 times sales and two times book value.

When businesses are trading for rock-bottom prices, it often means that investors have found something gone awry in its operations. That's not the case with Aphria. During first quarter 2021, the company's revenue grew to CA$145.7 from CA$126.1 million in the year prior. At the same time, Aphria's operating income increased more than five-fold to CA$20.7 million.

Aphria now commands the largest market share among all cannabis producers in Canada, at 14%. Since the fourth quarter of 2020, Aphria has nearly doubled the amount of dried cannabis sold to 17,303 kg. While investors flee the marijuana bear market, Aphria continues to make a name for itself as an oversold stock trading for a bargain.

2. Amazon

The COVID-19 pandemic has been a test of companies in the e-commerce industry. As many brick-and-mortar businesses have been forced to close in the face of stay-at-home orders, consumers have turned to online shopping. One of the biggest beneficiaries of this transformation is Amazon (AMZN -0.72%). In its second quarter of 2020, ended June 30, the company's free cash flow soared to $31.85 billion, representing a 27% increase from second quarter of 2019.

Since March, the company created more than 175,000 new jobs as subscribers skyrocketed, and online grocery sales via its platform increased over 200%. That amount of growth is incredible for mega-cap companies, and investors can still buy the stock at a reasonable price of five times sales.  

Amazon reports earnings on Oct. 29. This could be a significant catalyst for the stock; there are many reasons to expect its business growth to exceed analyst estimates. 

3. Berkshire Hathaway 

When it comes to investing, no one has done it better than Warren Buffett and his company Berkshire Hathway (BRK.A 0.09%) (BRK.B 0.07%). Over the past 30 years, Buffett has grown his multinational conglomerate's net worth from $362 million in 1990 to $424.8 billion in 2020. Berkshire now derives its earnings from many sources, from investment income to insurance underwriting, to railroad, energy, and utility services. 

After a devastating investment loss in the first quarter of 2020, Berkshire made back $31 billion in second quarter 2020, compared to investing profits of $7.8 billion back in Q2 2019. With major indices such as the S&P 500 back to achieving all-time highs, it is reasonable to assume that Berkshire could return to its usual profits by the end of the year.

At two times sales and 1.3 times book value, Berkshire is trading at a great price considering its net worth compounded by an average of 26.6% per year in the last three decades. The company reports third quarter 2020 earnings on Oct. 31.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Zhiyuan Sun owns shares of Aphria Inc. The Motley Fool owns shares of and recommends Amazon and Berkshire Hathaway (B shares) and recommends the following options: long January 2022 $1920 calls on Amazon, short January 2021 $200 puts on Berkshire Hathaway (B shares), long January 2021 $200 calls on Berkshire Hathaway (B shares), short December 2020 $210 calls on Berkshire Hathaway (B shares), and short January 2022 $1940 calls on Amazon. The Motley Fool has a disclosure policy.

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