Through the end of August, markets were having a stellar year, with the S&P 500 adding 20.4% in the first eight months of 2021.
That trajectory changed in September — historically the stock market’s worst month — as the benchmark index lost nearly 5%. The growing likelihood of rising interest rates and tighter monetary policy, alongside debt ceiling jitters, Chinese real estate troubles and valuation concerns, combined to send markets lower.
Keeping these developments in mind but still looking to the future, here are five of the best stocks to buy for October:
— Ford Motor Co. (ticker: F)
— Stitch Fix Inc. (SFIX)
— Amazon.com Inc. (AMZN)
— Lennar Corp. (LEN)
— Berkshire Hathaway Inc. (BRK.A, BRK.B)
[Sign up for stock news with our Invested newsletter.]Ford Motor Co. (ticker: F)
Often when companies announce major investments — the mergers and acquisitions space comes to mind — shares of those companies fall. Ford, however, announced the single-largest manufacturing investment in its history in September, and the stock immediately rose on the news.
Investors applauded the scale and focus of Ford’s newly unveiled $7 billion plan to build three U.S. battery factories, as well as its first U.S. assembly plant in multiple decades. The plant will crank out Ford’s iconic F-series pickup trucks — except they’ll be electric.
Electric vehicles are the future of the automotive industry, so old-school Ford’s aggressive push into the space is being welcomed by long-term investors. After unveiling the all-electric F-150 Lightning in May, shares gained 17% through the end of September.
And even after rallying more than 60% in 2021, the stock still trades for less than 7 times forward earnings, compared to the S&P 500 average of more than 20. With sales growth expected to clock in at about 10% in 2021 and roughly 20% in 2022, the fairly priced Ford looks like one of the best stocks to buy for October.
Stitch Fix Inc. (SFIX)
Next up is Stitch Fix, the subscription e-commerce clothing company that sends custom-picked clothes to its customers on a recurring basis. At just over $4 billion, SFIX is a mid-cap stock, and by far the least valuable company on this list.
Admittedly volatile and still unprofitable, SFIX may carry more risk than its peers on the October buy list, but it’s coming off an impressive quarterly report in September and deserves some credit.
Revenue rose 29% in the July quarter, more than the company’s 21% forecast. The company also touted the August launch of its direct buying feature, called Stitch Fix Freestyle, its first foray into e-commerce that is not exclusively for subscribers.
With anyone now able to go on its website and shop for clothes, Stitch Fix is opening itself up to a much larger market, and the company also has enviable long-term growth opportunities that it plans to exploit in areas like accessories, footwear and international markets.
The road to profitability is likely a multiyear path, but that’s often the case with less mature companies.
[Read: 7 Best Esports Stocks to Buy]Amazon.com Inc. (AMZN)
Another e-commerce company that took its time becoming profitable was Amazon, which turned in its first profitable year in 2003, nine years after its founding.
Amazon earned its spot among the top stocks to buy for October for a few reasons. First, it continues to execute, innovate and grow rapidly quarter after quarter. Second, shares have barely budged over the past year despite this, rising a paltry 4% next to a 1-year gain of 28% from the S&P 500.
This is, plain and simple, a chance to get in on a world-class name at a decent price. Markets may be hesitant to reward AMZN under the new leadership of CEO Andy Jassy, but in truth he proved his capabilities over years at the helm of cash cow and cloud computing powerhouse Amazon Web Services — plus, founder Jeff Bezos is still chairman of the board.
Amazon’s latest product unveiling, which included new Ring and Alexa offerings, also introduced the company’s first smart robot, Astro, which can roam around the home, play music, act as a security lookout, offer video conferencing and do everything Alexa-enabled devices can.
The $999 bot is the first in a series of such robots Amazon has planned, and represents why even at a valuation of $1.7 trillion, Amazon continues to place value on innovation.
Lennar Corp. (LEN)
Homebuilder Lennar also looks like an attractive portfolio addition, for both macroeconomic and company-specific reasons.
Zooming out, LEN stock should benefit from a red-hot housing market, which saw the fourth consecutive month of record-setting growth in home prices in July, as the S&P CoreLogic Case-Shiller National Home Price Index surged 19.7% year over year.
Not only are home prices skyrocketing, but a big reason is a paucity of supply, ensuring that homebuilders like Lennar stay busy for the foreseeable future. Secular trends like relocation and millennials buying homes aren’t going away, and Lennar also has a leading position in hot markets like Charlotte, North Carolina; Phoenix; Orlando, Florida; Raleigh, North Carolina; and Miami, among others.
And while revenue rose 21.6% last quarter and earnings per share surged 60.2%, Lennar still trades for a modest 8 times forward earnings, making it a value stock on its face.
[SEE: 7 Best Water Stocks and ETFs to Buy.]Berkshire Hathaway Inc. (BRK.A, BRK.B)
Last and certainly not least by market cap is Berkshire Hathaway, the $630 billion diversified holding company and financial conglomerate.
A perennial contender for one of the best conservative stocks to buy, Berkshire is run by perhaps the greatest investor of the 20th century, Warren Buffett.
While famous for its market-walloping stock portfolio, Berkshire’s extensive ownership of insurance companies and energy businesses make it look particularly compelling in today’s inflationary — and soon to be rising-rate — environment.
Buffett famously adores insurers, which can profit by investing the premiums paid by customers before they have to pay them out as claims. Insurers can generate more income from those investments as rates rise. Rising rates are also good for banks and financials generally, a sector where Berkshire has large interests.
And the energy sector is famously resilient in inflationary times (rising commodity prices don’t hurt), shielding the company from the pain that sectors such as tech can feel when the dollar starts losing more of its value.
Berkshire, although it doesn’t pay a dividend, has aggressively bought back its own stock in recent years, reducing its share count by about 5.2% in 2020.
