Do you have some idle cash you want to put to work, but aren't sure how? This is a tricky market environment, to be sure. Earnings have been hit-and-miss of late, and while stocks as a whole have been roaring, the rally effort somehow feels a bit hollow.
There are a handful of tickers out there, however, begging to be bought up. Their underlying companies are enjoying trends that can defy any brewing economic headwinds. One of these prospective picks is hiding in plain sight, while a couple of others are down for no good reason.
Here's a rundown of three of these stocks you may want to add to your portfolio sooner than later.
1. Alphabet
The rhetoric surrounding Google parent Alphabet (GOOG 9.96%) (GOOGL 10.22%) has been anything but encouraging of late. Not only are investors waiting to hear the court's decision on the antitrust lawsuit levied by the U.S. Department of Justice (DOJ) against the company, but the release of its AI-powered ChatGPT rival has just been delayed until next year.
There's a reason Alphabet shares are still holding up, however: This seemingly alarming news just doesn't matter much.
That's not to say investors don't have reason to be concerned or frustrated. Neither of these developments rattle the company's core business, though. That's advertising. It's still doing just fine on this front.
Ad revenue was up more than 9% year over year for the quarter ending in September, while its cloud computing revenue jumped 22%. Operating income grew accordingly. And all of this growth extends well-established (even if occasionally erratic) trends.
GOOG Revenue (TTM) data by YCharts
Don't misread the message: Alphabet needs to establish a better presence than Microsoft's Bard in the budding artificial intelligence space. Its legal battle with the DOJ could change the way Google ensures it remains the United States' most-used search engine.
Legal headaches are nothing new for the company, however; it's survived plenty of them in the past. In the meantime, although Google's next-generation conversational AI platform isn't quite ready for prime time, the market isn't exactly ready for these tools either -- at least not in a meaningful way.
Many consumers and corporations alike are still trying to figure out exactly how commercial versions of these tools are of benefit. It could take years to establish a marketable level of trust and understanding of artificial intelligence technologies, by which time Alphabet's entries in the AI race will be ready.
Until then, the world's need to search the web still leaves Google in the enviable position of its gatekeeper -- with or without the promotional strategies the Department of Justice dislikes. GlobalStats reports the search engine still fields more than 90% of worldwide search queries.
2. DexCom
If you keep regular tabs on glucose monitor maker DexCom (DXCM -9.90%), you likely already know why the stock stumbled so much in the middle of the year. If the company's not on your watch list though, know that it's not so much market-wide weakness as it's been the growing excitement surrounding weight-loss drugs like Novo Nordisk's Wegovy and Eli Lilly's Zepbound, the latter of which was just recently approved by the U.S. Food and Drug Administration. Investors are assuming weight loss will reduce the growing prevalence of type 2 diabetes, thus crimping the need for DexCom's glucose monitors.
Investors are increasingly realizing, however, that the theory doesn't hold quite as much water as first presumed.
Oh, there's something to the idea, to be sure. The Cleveland Clinic reports that obese individuals are six times more likely to develop diabetes than people at a healthier weight are. But while losing weight can reduce or even eliminate diabetic conditions, it isn't necessarily the only cause of diabetes.
Then there's the update from Novo Nordisk on the matter posted earlier this month. As it turns out, while there's clear benefit from its Wegovy (and presumably Lilly's comparable Zepbound), such drugs don't dramatically negate the need for glucose monitors. Leerink Partners' analysts also point out that "discontinuation rates [of weight loss drugs] remain high in a real-world setting," meaning the advent of Zepbound and the continued growth of Wegovy should have only a "limited impact" on DexCom's business. That's why Leerink initiated coverage of DexCom with an "outperform" rating.
And most of the rest of the analyst community agrees. Still well down from July's peak, 18 of the 24 analysts following this stock rate it as bullishly as they can, sporting a consensus price target of $124.65. That's nearly 20% above the stock's present price. You might want to take the hint.
3. HubSpot
Finally, add HubSpot (HUBS -0.78%) to your list of stocks to buy if you've got an extra $1,000 lying around.
With a market cap of $24 billion, HubSpot is possibly one of the biggest companies you've never heard of. Give it time, though. This software company's growing like a weed, with this year's projected top-line growth of 24% expected to be followed by nearly 19% worth of improvement next fiscal year. Earnings are growing accordingly.
HubSpot's specialty is customer relationship management (or CRM) software. It's a category dominated by its much bigger rival, Salesforce. As is so often the case, however, Salesforce's sheer size makes it a difficult big boat to steer. HubSpot is smaller and therefore nimbler, allowing it to win contracts bigger competitors look past.
The company's doing a great deal on the artificial intelligence front, too, helping its clients solve problems they didn't even realize they had. The impending acquisition of ClearBit will bolster HubSpot's customers' ability to turn customer data into actionable information.
In the meantime, the company's keeping its clients abreast of all the potential advantages and disadvantages of AI tools they may be interested in using. Website assessments, content creation guides, and marketing campaign managers are all also in its wheelhouse, further adding value to its software packages.
This value and the customer interest it's causing isn't going unnoticed either. For a third year in a row, technology market research outfit Gartner rates HubSpot as a leader of the B2B (business to business) marketing automation software market, highlighting the company's capacity to help marketers adapt in a quickly changing business environment.
HubSpot may never be as big as Salesforce. It doesn't have to become that big, however, to become a tremendous growth investment.
