The new month brings new opportunities to buy great stocks for your portfolio. We asked some of our top contributors covering stocks in the technology and consumer goods sectors to weigh in with their top stock pick for November. Read on to see what they had to say about Apple, Intel, Netflix, Activision-Blizzard, Facebook, Pandora, Priceline, and WhiteWave Foods.
Andres Cardenal: Apple (NASDAQ:AAPL) delivered a blowout earnings report for the September-ended quarter, confirming that consumers are as eager as ever for the company's products. The company sold 39.27 million iPhones during the period, a 16% increase versus the same quarter last year.
This indicates that demand for the new iPhone 6 and iPhone 6 Plus models is strong, which bodes well for Apple in terms of financial performance during the crucial holiday quarter. Not only are sales growing rapidly, but the average selling price for the iPhone is also on the rise. Most industry players need to aggressively compete on prices to sell their products, while Apple's brand differentiation generates superior pricing power and higher profit margins.
The company produces big and growing cash flows, and it allocates a big chunk of that money to share buybacks. Apple repurchased $17 billion in stock during the quarter, bringing the total buyback amount to a massive $45 billion in the past year.
Growing sales, healthy profit margins and a shrinking share count allowed Apple to deliver earnings-per-share growth of more than 20%, nothing short of impressive for one of the biggest corporations in the world.
Like Steve Jobs used to say, there is one more thing: Apple trades at a forward P/E ratio of less than 14, quite an attractive valuation versus a forward P/E ratio near 17 for companies in the S&P 500 index, according to data from Morningstar. All this helps make Apple my pick for a top stock to buy now.
Tamara Walsh: WhiteWave Foods (NYSE:WWAV) should be on the top of your buy list in November, despite the stock trading near its 52-week high lately. WhiteWave is dominating the niche market of plant-based foods and beverages today, yet it is still in the early stages of its growth story.
The company's leading portfolio of brands including Silk soy milk, International Delight coffee creamers, and Land O'Lakes brands put WhiteWave at the forefront of evolving consumer tastes. Additionally, the company's acquisition of Earthbound Farm for $600 million gives it an entry point into the lucrative organic produce market. Earthbound, after all, is currently the largest organic produce brand in North America. This means the trend toward organic and plant-based foods should only act as a tailwind for WhiteWave going forward.
International expansion into China is another catalyst for the stock. WhiteWave joined forces with one of China's largest dairy companies, Mengniu Dairy, recently in a joint venture in which WhiteWave holds a 49% stake. This creates a significant opportunity for the company to grow its international sales in a big way. Particularly because China is the world's largest consumer market with over 1.3 billion consumers and a rapidly growing middle class that is hungry for quality food and beverages -- much like the products sold by WhiteWave Foods.
Given these catalysts, WhiteWave stock should be an outperformer going forward.
Anders Bylund: It's only been a couple of weeks since Netflix (NASDAQ:NFLX) stock plunged as much as 23% overnight, driven off the edge by disappointing subscriber additions in the third quarter. But the buying window this created won't stay wide open for very long. The stock has already started bouncing back.
It's true that Netflix missed its own guidance figures in both domestic and international subscriber additions for the third quarter. It's also very true that the new guidance for the fourth quarter failed to impress investors.
If the period works out as CEO Reed Hastings expects, Netflix will only match the overall additions from last year's fourth quarter, with a marked slowdown on the domestic side. The company's raging growth is limited by increased subscription fees for new members. Moreover, overseas profit margins are taking a large step backward as Netflix invests heavily in further international growth.
These issues remind many investors of ghosts, goblins, and Halloween -- and not in a good way. Personally, I'm not terribly worried.
Guidance is always a tricky game to play. Netflix admitted as much in the third-quarter earnings report: "For the prior three quarters, we under-forecasted membership growth. This quarter we over-forecasted membership growth. We'll continue to give you our internal forecast for the current quarter, and it will be high some of the time and low other times."
More importantly, Netflix has not slowed down its content acquisition and overseas growth ambitions. This quarter and the next might disappoint, but the long-term story is still all about massive growth.
So enjoy the temporary discount, and you can thank me when Netflix owns a billion global subscribers and massive cash flows in 2020.
Tim Brugger: I've made the bullish case for Facebook (NASDAQ:FB) for over a year now, and based on its impressive year-to-date stock performance, it's clear a lot of investors feel much the same. But can it continue into November? You bet.
Facebook is such a sound investment in November because of its sound fundamentals, coupled with a future rife with growth opportunities. For each of the past several quarters, Facebook has continued to grow its already impressive monthly average user base, or MAUs, and increase its mobile usage, which in turn has boosted its mobile ad revenues to record heights.
As sound as CEO Mark Zuckerberg and team's results have been, what's truly impressive is that its accomplishments have come before tapping into several other revenue opportunities. Facebook's wildly popular Instagram has yet to be monetized, certainly not to any extent. Video ads, while still in "test" mode, are poised to make a substantial impact on Facebook revenues going forward.
Toss in drones that will eventually beam Internet access to the world, a growing small business advertising model, its Oculus Rift virtual reality headset, as well as monetizing the 600 million MAUs on WhatsApp, and Facebook's future is looking blindingly bright and is my pick for a stock to buy in November. [Editor's note: Tim's write-up was submitted before Facebook reported earnings.]
Ashraf Eassa: Intel (NASDAQ:INTC) is my stock pick for November. The company reported record revenue of $14.6 billion for its third quarter and turned in an impressive $4.5 billion in operating income. Further, the company's core businesses continued to show significant strength, with its PC Client Group revenue up 9% year-over-year and Data Center Group revenue up a solid 16%.
Intel also guided to $14.7 billion in revenue for its fourth quarter. If Intel can hit this number, then this would be yet another record quarter.
However, following earnings in mid-October, the stock actually sold off. One potential reason for the decline could have been the note from Morgan Stanley's Joseph Moore, who, according to Barron's, raised concerns of "overbuild in the second half of this year," which would lead to a "tougher 1h [of 2015] comparison."
That said, Intel CFO Stacy Smith did point out a key reason to not be so worried about overbuild on the call. He noted that last year, PC OEMs were "managing inventory levels very low in anticipation of a very muted fourth quarter." In other words, it's not that inventory levels at customers this year are bloated, but that this year they're just returning back to normal.
I'm inclined to believe Smith's explanation. If he's proved correct when Intel reports fourth-quarter earnings and issues first-quarter guidance, then I think the stock could head back toward its 52-week high -- and beyond.
Dylan Lewis: Yes, when Pandora (NYSE:P) reported Q3 results, YOY active listener growth was 5.2%, down from 7.5% in Q2, and 8% in Q1. But lost in the concern over decelerating active listener growth were encouraging numbers in other parts of the business.
Pandora is seeing nice returns on its mobile efforts, with Q3 revenue in the segment totaling $118 million -- up 52% over the same quarter last year. Like other major online platforms, it's successfully leveraging its ability to offer advertisers hyper-targeted ads. This past quarter, local advertising revenue was $42 million, up 118% year over year.
Although the streaming service is slowly maturing, the company is optimizing business operations as it marches toward profitability. Gross margin was 47.1%, up from 42.7% in Q2 and 36.6% in Q1, according to data from S&P Capital IQ.
Yes, Spotify and the iTunes/Beats combination remain looming threats, but the services are all fundamentally different enough that they can coexist. iTunes/Beats isn't a consideration for users that want to avoid paying for music – either through monthly subscription or digital download. Roughly a quarter of Spotify's users are paid subscribers with the rest making use of its free ad-supported on-demand listening.
Pandora's listeners, on the other hand, use the service for music discovery and because they can "set it and forget it." Users trust the carefully curated music genome, and so do I. Pandora is my stock pick for November.
Sean O'Reilly: It's hard to find a market leader in any industry that still happens to have strong growth prospects in the future. Fortunately for Foolish investors, that is exactly the case with The Priceline Group, (NASDAQ:PCLN). Priceline owns numerous top-performing travel sites including Kayak.com, booking.com, rentalcars.com and agoda.com, as well as online restaurant reservation site OpenTable. It wouldn't be a stretch to say that Priceline doesn't own just one strong franchise that generates healthy profits – but dozens of them. In all, Priceline owns 425,000 properties in 190 countries that translate into 42 different languages.
The company's global dominance in Internet travel bookings, an industry that will only grow with time as we become more and more interconnected, has led to fantastic returns for shareholders. The stock is up over 5,500% over the last decade and, despite these astronomical returns, the company still seems to offer a lot to long-term Foolish investors.
At its current share price Priceline trades for approximately 25 times current earnings and 20 times FY 2015 estimated earnings. This is more than fair for a business that's expected to grow EPS by over 20% per year all the way out to FY 2018, according to S&P Capital IQ data. For all of these reasons The Priceline Group is definitely worth purchasing this November.
Why invest in this stock now, when business is looking bleak? Because growth is neither symmetric nor predictable and Activision still has one of gaming's most enduring franchises in Call of Duty. The newest entry -- Call of Duty: Advanced Warfare -- is scheduled to be released on Monday, Nov. 3. If history serves, the title will sell at least 14 million units and possibly much more. (The series average is 13.96 million units per title.)
Leaked footage is generating buzz for Advanced Warfare while the marketing team at Activision plays up its partnership with developer Sledgehammer and an in-game appearance by Oscar-winning actor Kevin Spacey. A trailer released in late September has just under 1.6 million YouTube iews of this writing. Roughly 81% of those rating the gameplay on YouTube give it a thumbs-up.
Whether the enthusiasm translates into sales is hard to say at this point. If I'm unconcerned it's because, at 14.4 times estimated earnings, Activision trades for a discount to analysts' long-range projections for profit growth. Failure is already priced in. Mix in a dividend yielding 1.00% and you've the makings of a stock poised to pay investors who buy now.
Anders Bylund owns shares of Intel and Netflix. Andrés Cardenal owns shares of Apple, Netflix, and Priceline Group. Ashraf Eassa owns shares of Intel. Dylan Lewis has no position in any stocks mentioned. Sean O'Reilly owns shares of Facebook. Tamara Rutter owns shares of Activision Blizzard, Apple, Netflix, and WhiteWave Foods. Tim Beyers owns shares of Apple and Netflix. Tim Brugger has no position in any stocks mentioned. The Motley Fool recommends Activision Blizzard, Apple, Facebook, Intel, Morningstar, Netflix, Pandora Media, Priceline Group, and WhiteWave Foods. The Motley Fool owns shares of Activision Blizzard, Apple, Facebook, Intel, Netflix, Pandora Media, Priceline Group, and WhiteWave Foods.
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