The stock market has been on fire this year, with the S&P 500 returning a total of 21.5% and the Nasdaq Composite up 19.3%. It seems like every corner of the market has had a good year, which can be great for investors but also cause unease about the market potentially becoming overvalued. 

If you're looking for stocks to watch for great investment opportunities and for signs about the market's direction in general, I think Zillow Group (NASDAQ:Z) (NASDAQ:ZG), Square (NYSE:SQ), and MGM Resorts International (NYSE:MGM) are a great list to watch. Let's find out a bit more about these three stocks and why they might be a buy in September.

A dollar sign made of dollar bills.

Image source: Getty Images.

1. Zillow: Real estate technology in action

Zillow hits on a number of segments in the real estate market. The company is a key advertising platform for real estate agents, who use it to connect with clients looking to buy homes. It's also now a direct homebuyer through its Zillow Offers business. 

From a macro level, Zillow's research provides key indicators about the housing market. For example, current data from July shows that a "typical" home in the U.S. is worth $298,933, up 16.7% versus a year ago and typical rent is up 9.2% to $1,843 per month. This data is updated regularly and is based on data flowing through Zillow's system. If its data shows that the housing market is still rising, it would be bullish for real estate values and related stocks, but if these numbers start to stagnate, it could be a sign that real estate is overheating.

From a stock standpoint, Zillow has struggled this year. Share prices are down 25%, despite the market's rise, as investors weigh whether or not the company is going to make a profitable transition to buying and selling homes. I think the business is heading in the right direction and can give investors both valuable data about the real estate market and a view of whether or not investors think it can disrupt the traditional real estate brokerage industry. 

2. Square: Redefining how we use money

Speaking of disruption, Square has its eyes on changing everything from banking to cryptocurrency and investing. The Square app is a large digital payments platform used by food trucks, retail shops, and many other merchants. Over time, it has also added services like payroll, scheduling, and even small loans. This is the business-facing part of Square, and it continues to take market share as more businesses are looking to accept digital payments. 

The Cash App is the company's consumer-facing product that offers some banking services, money transfers to other Cash App users, Bitcoin trading, and limited stock trading. The app had 40 million monthly active customers in June and continues to add services like direct deposit of paychecks. In the long term, this could be the way that people bank in a digital world, rather than using a traditional bank.

Square is shaking up the way financial institutions work. The company could be a force in banking and investing, providing services to users that larger banks simply can't compete with because they're too slow to adapt or not agile enough to launch new products. And with tens of millions of active users, this is a disruptive digital finance company that will tell us a lot about how users are spending and investing in the digital world. 

3. MGM Resorts: Where is entertainment spending headed? 

The consumer discretionary stock on my list this month is MGM Resorts, and I think it's a great stock and a great bellwether for the entertainment economy overall. Las Vegas has proved to be one of the first regions to come roaring back from the depths of the pandemic, posting all-time record monthly gambling revenue this summer. But it's not fully back to pre-pandemic levels of activity off the casino floor. Hotel room rates are still down, and conventions and other events are still limited. Here's what to watch in September:

  • Monthly gambling revenue: Nevada reports gambling revenue each month, and the state had record revenue for July. In September, the state will report figures for August, and if the record performance continues, it will be a sign that entertainment spending is still on a road to a strong recovery, despite variants of COVID-19 continuing to spread. 
  • Room rates: Companies report revenue per available room (REVPAR) and average daily rates, which are still down significantly over the past two years.In the second quarter of 2021, the ADR was $149 and REVPAR was $115. In the second quarter of 2019, ADR was $163 and REVPAR was $154. Both room rates and occupancy clearly have space to improve, and those are key metrics I'll be watching. 
  • Events: We know that resort companies are expecting a recovery in events later this year and into 2022. We should get more signs over the next few months of how that process is going. ADR will be one indicator that mid-week demand is rising, but comments from management both this month and next will be crucial as well. 

MGM Resorts can be a bellwether for entertainment and consumer discretionary spending coming out of the pandemic. That's why I'll be watching it this month. 

Stocks built for today's market

Each of these companies has major tailwinds in today's market, and that makes them great investments and indicators of where the market is headed. Zillow is disrupting a booming real estate market, Square is the future of banking and digital payments, and MGM continues to be a leader in entertainment. If their businesses continue to do well and their stocks are strong in September, they could continue a strong run through the rest of the year. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.