5 Top Stocks to Buy in September

Top stocks buy

Author: Tim Phillips

September 1, 2021

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The words “all-time high” have begun to appear with striking regularity in the financial press over the past month when referencing the US stock market.

Obviously, that has delighted investors. The benchmark S&P 500 Index was up just over 5% in August alone, while so far in 2021 it’s notched up an impressive 22.2% return.

Meanwhile, the tech-heavy Nasdaq Index was back in favour as a resurgence in the Delta variant of Covid-19 (as well as a dovish Federal Reserve) saw a partial rotation back into growth stocks.

As a result, the Nasdaq Index was up just over 7% in August along, while it has now surpassed the year-to-date returns of the S&P 500 Index by posting a 22.8% positive return so far in 2021.

With that, here are five stocks on the US stock markets that long-term investors can consider buying in September for the rest of 2021 and beyond.

1. Mastercard

If anyone has a credit card, then it’s likely they have a piece of plastic issued by Mastercard Inc (NYSE: MA).

The company has been a solid performer over the long term given its dominant presence in the contactless payments space.

Furthermore, Mastercard is set to be one of the key beneficiaries when economies finally fully re-open following Covid-19.

Even with restricted travel, Mastercard’s business performed well in its latest second-quarter 2021 earnings.

Net revenue was up 36% year-on-year to US$4.52 billion while adjusted operating income got a 39% year-on-year boost to US$2.4 billion.

Perhaps one of the best signs of continued improvement is that cross-border volume fees – which are traditionally high margin for Mastercard – saw a 69% year-on-year jump to US$1.07 billion.

That suggests that as countries come to accept Covid-19 as endemic, and populations get vaccinated, that international travel may start to pick up again.

2. Moderna

Think of Covid-19 vaccines and Moderna Inc (NASDAQ: MRNA) immediately comes to mind. The biotechnology firm has had an extraordinary rise on the back of demand for its mRNA vaccine.

As it looks likely that global populations will have to receive booster shots of Covid-19 vaccines, the share prices of companies producing the vaccines have done well.

However, Moderna’s future runway for growth is much more than just Covid-19. It currently is running a phase-2 study on using mRNA technology to come up with a vaccine for the mosquito-borne Zika virus.

It also has plans to apply mRNA technology to immune-oncology and rare diseases solutions in future. Having hit an all-time high of over US$480 in early August, Moderna shares have fallen back over 20%.

With a robust pipeline of drugs across different phases of development, Moderna looks likely to continue being successful for years to come.

3. Adobe

When talking about the emerging “Big Tech” giants, Adobe Inc (NASDAQ: ADSK) and its design software businesses tend to get overlooked.

Yet, the company that is perhaps known best for its PDFs, Photoshop and InDesign applications, actually runs a comprehensive “Creative Cloud” that offers all sorts of design solutions.

The company has moved to a recurring subscription revenue business model over time and its latest earnings (Q2 FY 2021) that were released in mid-June were solid.

Adobe saw revenue of US$3.84 billion, up 23% year-on-year – an impressive number for such a large business. Meanwhile its operating cash flow hit a record high of US$1.99 billion.

With shares up nearly 37% so far in 2021, easily beating the market, Adobe’s cloud software design and digital media tools are likely to continue to see strong demand.

4. Corning

The screen of your iPhone is actually called Gorilla Glass and that glass is made by a company called Corning Inc (NYSE: GLW).

The company has partnered with Apple Inc (NASDAQ: AAPL) ever since the very first iPhone was released back in 2007.

With several divisions that specialise in everything from glass screens to automotive displays and dashboards, Corning has a key role to play in the production of durable glass products.

The company has recovered strongly from the pandemic-induced slowdown and in its latest Q2 2021 earnings, Corning saw strong core sales of US$3.5 billion, up 35% year-on-year.

Even better was that core earnings per share (EPS) exploded 112% year-on-year to US$0.53 on higher margins.

While shares are only up 14.5% so far in 2021, Corning has a long runway for growth as the demand for displays, in everything from phones to autonomous vehicles should only increase over time.

5. Upstart

Upstart Holdings Inc (NASDAQ: UPST) operates an artificial intelligence (AI) platform that allows banking partners to better assess risk when making loans.

The firm has had a tremendous track record since first going public in December 2020. Having first floated shares at US$20 when it carried out its IPO, Upstart now trades at over US$220.

However, the growth in its business has been as phenomenal as its share price action. Revenue in Upstart’s latest second-quarter 2021 results hit US$194 million, up a whopping 1,018% year-on-year.

Meanwhile, the number of loans originated on Upstart’s platform by bank partners was 286,864 during the period, up 1,605% from the same period a year ago.

While certainly not cheap, the opportunity ahead of Upstart looks sizeable and with a market cap just shy of US$18 billion, in a decade’s time that number could be much bigger.

Continuously innovating

For long-term investors, it’s important to look at buying the stocks of companies that continue to innovate and improve their product offering.

That’s because it will allow these companies to grow their earnings over time and that is what ultimately drives share prices.

Given that, Mastercard, Moderna, Adobe, Corning and Upstart look like great stocks to buy and hold for the long term in September of 2021.

 

Disclaimer: ProsperUs Head of Content Tim Phillips doesn’t own shares of any companies mentioned.

About the Author: Tim Phillips

Tim, based in Singapore but from Hong Kong, caught the investing bug as a teenager and is a passionate advocate of responsible long-term investing as a great way to build wealth. He has worked in various content roles at Schroders and the Motley Fool, with a focus on Asian stocks, but believes in buying great businesses – wherever they may be. In his spare time, Tim enjoys running after his two year-old son, playing football and practicing yoga.