With the recent bull run among stocks (especially among riskier, more speculative plays), you may be looking to deploy more capital into the market. Yet while the “hottest” stocks out there today may look like tempting stocks to buy, you may want to set your sights on higher-quality plays instead.
Why? For starters, it’s unclear whether the market’s performance over the past month means the bull market has returned, or if this is a near-term “relief rally,” to be followed by additional volatility.
If there’s another sell-off, top-shelf stocks are likely to remain fairly resilient, while more questionable opportunities zooming higher today could easily give back their recent gains.
More importantly, on a longer timeframe, stocks with strong fundamentals tend to outperform stocks supported mainly by hope and hype. If you’re looking to grow your capital in a risk-aware yet fruitful way, focusing on these types of stocks is the best way to go.
So, what are some of the best high-quality stocks to buy today this month? Consider these seven. Each one currently earns an A rating in Portfolio Grader.
Ardelyx (ARDX)
Compared to other growth stocks, Ardelyx (NASDAQ:ARDX) has made only a moderate move higher since January. However, as I discussed this month, shares in this biotech firm have been on a tear since late last year, thanks to promising regulatory news with its main drug candidate.
Following this development, the company’s tenapanor (branded as Xphozah) drug now has a very high chance of obtaining approval for use as a treatment for chronic kidney disease, which explains why ARDX stock has nearly tripled in price since November.
Fortunately, while shares are up substantially if you’re only learning about this A-rated stock today, you haven’t missed the boat. With analyst estimates calling for peak annual sales of this treatment to run in the hundreds of millions of dollars, ARDX has the potential to make another triple-digit percentage move higher, if Ardelyx continues making progress in bringing Xphozah to market.
DCP Midstream LP (DCP)
DCP Midstream LP (NYSE:DCP) is a master limited partnership (or MLP) that owns midstream energy assets. Specifically, assets used in the processing of natural gas liquids (or NGLs).
DCP stock has charged higher since January, however, this jump in price is due almost entirely to a recent corporate event rather than due to the broad market rally. At the start of last month, large energy company Phillips 66 (NYSE:PSX) upped its offer to acquire all publicly-held units, from $34.75 to $41.75 per share.
Admittedly, as DCP’s majority unitholder has approved the deal, shares may have little room to run from here. That said, the transaction is not set to close for at least a few months. In the meantime, you can collect one or two more of this A-rated stock’s steady quarterly distributions (forward yield of 4.13%).
Enphase Energy (ENPH)
If you’re looking to add exposure to the global transition towards renewable energy, buying Enphase Energy (NASDAQ:ENPH) is one of the best ways to do so. Sure, this solar stock may look pricey, as its shares change hands for around 107.2 times trailing twelve-month earnings.
But unlike many other richly-priced growth stocks, where today’s valuation prices-in a future that may ultimately never arrive, that’s not a big risk here. In a recent article, I argued the long-term bull case for ENPH stock. Here it is in a nutshell.
As the U.S. and other governments provide financial and tax incentives to accelerate the adoption of solar energy, Enphase Energy is poised to benefit from the continued growing demand for its microinverter-based solar storage systems. Even after climbing nearly 68% in the past year, this A-rated stock is far from being at risk of topping out.
Geron (GERN)
Geron (NASDAQ:GERN) is another biotech that’s one of the best stocks to buy, thanks to strong prospects with one of its drug candidates. Following the results of a phase 3 clinical trial, Geron’s candidate Imetelstat is on track to obtain regulatory approval for use as a treatment for lower-risk myelodysplastic syndromes.
Don’t assume that GERN stock has minimal upside at this point. Far from it, even after the stock’s strong run in recent months, and despite a recent secondary capital raise, which may be initially dilutive to shareholders. There’s a lot more runway for this A-rated biotech stock.
This biotech firm is also conducting clinical trials to study Imetelstat’s effectiveness in treating related disorders, such as refractory myelofibrosis. Taking into account all of its many potential use cases, the company believes this drug could hit peak annual sales of $3 billion in 2030.
Eli Lilly (LLY)
Last year, Eli Lilly (NYSE:LLY) outperformed the market by a wide margin. Yet even with stocks charging higher. So far this year, this A-rated pharma stock has delivered a middling performance.
Chalk this up to a regulatory setback with its latest Alzheimer’s disease candidate, donanemab, as well as the fact that sales of Mounjaro (as a treatment for Type 2 Diabetes) have fallen short of expectations.
However, sentiment for LLY stock could shift back in a big way. Assuming, of course, the company obtains approval to market Mounjaro as an obesity treatment.
According to UBS analyst Colin Bristow, an expanded label for Mounjaro could mean up to $25 billion in peak annual sales. Add in the potential from some of the other candidates in its pipeline, and LLY has more than enough in play to enable shares to bounce back and make their way to new highs.
Pinduoduo (PDD)
As I argued late last month, Pinduoduo (NASDAQ:PDD) performed well in 2022, despite many challenges, and changing conditions point to solid results for shares in the China-based e-commerce company in 2023.
The situation for PDD stock continues to improve. First off, there are signs that China is easing its past “crackdown” on the tech sector.
Second, China has exited from the Covid-19 lockdowns that negatively affected growth in what is the world’s second-largest economy. Third, the much-publicized “delisting threat” has eased, after the Chinese government agreed to provide audit data to U.S. regulators.
With these issues out of the way, the focus has now shifted towards the underlying “story” with A-rated Pinduoduo. Overall revenue growth has reaccelerated, and the company is expanding into the U.S. market, through its Temu platform. Fading headwinds and emerging tailwinds make this one of the top stocks to buy.
Exxon Mobil (XOM)
Exxon Mobil (NYSE:XOM) produced strong returns for investors in 2022, despite the pullback in crude oil prices during the second half of this year.
At first, this may sound counterintuitive, but if you understand the full situation, this isn’t a mystery why Exxon is on this list of the best stocks to buy.
For starters, Exxon Mobil has a catalyst that can fully play, irrespective of oil prices. That would be Exxon’s aggressive cost reduction plan.
The integrated oil and gas company is on track to double earnings relative to 2019 by 2027. Increased profitability, coupled with reduced capital spend on new projects, will produce ample cash flow for use on return-of-capital efforts like dividends and share repurchases.
Besides this strong near-term catalyst, this A-rated stock has a solid longer-term catalyst as well. Investing into renewable and “net zero carbon” endeavors, the company is pursuing opportunities that could be beneficial to not only the planet but to XOM investors as well.
— Louis Navellier and the Investor Place Research Staff
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Source: Investor Place