In this edition of our monthly stock market analysis, we are going to look at the best shares to buy in October 2020 – with our analysis covering October 25th – November 1st.
Over in the US, much of the focus is still on the impending presidential election – with institutional investors somewhat reluctant to make big moves until the result is known. Closer to home, the FTSE 100 remains flat, finishing the week just over 1% down.
With the second wave apparently now in full swing in Europe – we had to remove EasyJet shares from our list of top picks. After all, there is every chance that continental travel will once again take a major hit as we approach further lockdown measures. In turn, we like the look of Canada-based cannabis grower Aphria, which replaced EasyJet.
Top 5 Shares to Buy Right Now
Before we take a closer look at October’s best shares, here are our top 5 picks:
You can buy all of these top shares, as well as many others, at eToro and pay 0% fees!
1. Amazon – Unbeatable Returns in 2020 (HOLD)
October 25th – November 1st 2020: Amazon’s upward momentum took like a slight hit last over the past days – with the shares finishing the week 2.82% in the red. This doesn’t concern us one bit – this stock is most definitely one for the long run. If anything, this offers a good chance to purchase the shares at a slight discount.
It will come as no surprise to learn that the vast majority of global stocks are down in 2020. However, this isn’t the case with Amazon – which continues to thrive. Crucially, not even a worldwide pandemic can stop the momentum with these shares.
Back at the start of the year, you would have paid just under $1,900 per Amazon stock. At the time of writing in October 2020, these very same shares are priced at just under $3,200. Put simply, had you made an investment at the start of the year and held on to the stocks throughout the pandemic, you would now be looking at gains of 68%.
It is somewhat difficult to envisage Amazon’s good fortunes ending any time soon. Not only is its core online retail business growing year-on-year, but it is involved in heaps of other innovative products and services. This includes its ever-growing Amazon Prime subscription model, as well as cutting-edge technologies like cloud computing and artificial intelligence.
2. Boohoo – Catch the Slump Before its LSE Listing (HOLD)
October 25th – November 1st 2020: Boohoo shares remain pretty much untouched since last week’s edition of our analysis. Starting the week at 280p, the shares closed on Friday evening at 279. Most importantly, it appears that the markets have finally moved on from the July 2020 Boohoo media scandal surrounding the shares capitulate in a matter of weeks.
There are very few AIM-listed success stories quite like Boohoo. The online retailer – which was only launched in 2006, joined the AIM as recently as 2014. Back then, its shares were priced at just 70p – putting it well within the remit of a high-risk penny shares investment.
However, it’s been up, up, and away ever since for Boohoo. In fact, the stocks hit highs of 443p back in June. This represents a 6-year increase of over 532%. On the one hand, it is true that you will likely not see sharp returns like this from the online retailer in such a short period of time.
After all, it already has a market capitalization of over £3.3 billion – which effectively puts it in FTSE 100 territory. However, as per the recent news scandal that Boohoo is behind factories with extremely poor working conditions, its shares took a substantial tumble in the wrong direction last month.
This downfall was so significant that you could purchase the shares at 262p as of August 2020. Before the scandal, Boohoo shares were on a firm upward trajectory, with rumours of an impending transition from the AIM to the primary London Stock Exchange. Ultimately, if you believe that the rapid decline of Boohoo shares will be short-lived, you now stand the chance of making an investment at a huge discount.
3. Apple – Superb Earnings Report for Q3 Fiscal Year (HOLD)
October 25th – November 1st 2020: Starting the week at $119, Apple shares closed on Friday evening at $115 – representing a loss of just over 3%. With that said, all eyes will be focused on Thursday of this week – with Apple set to release its fourth-quarter earnings report. Crucially, if you think that its results will be better than expected – then you’ll want to make a purchase now at a 3%-ish discount.
Apple was a new addition to our portfolio of stock picks in September 2020 – and it remains a hold. Much like the rest of the US tech scene, the firm has enjoyed a fruitful 2020. Lockdown or no lockdown – there appears to be no stopping this NASDAQ giant. This because evident in the firm’s recent earnings report – where it smashed through market expectations by some distance.
For example, year-on-year revenues were up 11% to just under $60 billion. 60% of this figure came from international sales. Even more impressively, earnings per share increased to $2.58, representing growth of 18%. In turn, Apple announced a dividend of $0.82 per share. The biggest news of the quarter is that Apple executed a 4-for-1 stock split.
This means that shareholders are now in possession of four times the number of shares they had prior to the split. In terms of its stock price performance, Apple started the year at $75 per share (taking into account the split). On September 1st 2020, the shares were priced at just over $134. This represents a year-to-date increase of 78%. As per its recent earnings report, there is no reason to believe that the upward swing will end any time soon.
4. Tesla – Catch This Growing Company While you Still can (HOLD)
October 25th – November 1st 2020: We’re actually not too concerned with the short-term price action of Tesla – as the stock will likely remain in our portfolio for many years to come. Nevertheless, with the shares opening on Monday morning at $446 and closing on Friday evening at $420, the shares are just under 6% down for the week. Good opportunity to enter a new Tesla position? Absolutely!
This company is one for the long run. Tesla – the US-based manufacturer of electric cars, is arguably just at the start of its corporate journey. Had you bought Tesla shares five years prior to this article, you would have paid just $262 per share.
Fast forward to June 2020 and the same stocks were priced at $935. This translates to a market capitalization of just $173 billion. I say ‘just’ because many would argue that this is just a fraction of what Tesla could be worth in years to come.
This bullish sentiment is further amplified when you consider the other ventures that Tesla is behind – all of which centre of renewable, sustainable, and cutting-edge technologies. At the forefront of this is solar renewable solutions – which is likely to dominate the consumer energy industry in the very near future.
The firm did facilitate a 5-for-1 stock split earlier in September, meaning that the above share price action has been diluted by a factor of 5. As such, Tesla’s current stock price of $425 is effectively $2,125 when readjusting for the split.
5. ZOOM – Up 700% in 18 Months of Trading (HOLD)
October 25th – November 1st 2020: Early backers of Zoom are no doubt rubbing their hands – with an 18-month streak that has seen the shares explode by over 700% in value. With that said, those entering the market as recently as last week are actually looking at generous gains. Starting the week at $487, the shares finished 4.9% in the green at $511. Considering the number of years it would take to earn a yield of this magnitude through a traditional savings account, it’s been a great week for Zoom stockholders.
Much like in the case of Tesla, ZOOM is another up and coming stock that could be worth keeping an eye on. In fact, the firm only went public in April 2019, so you still have the chance to get in early. Those that were shrewd enough to buy ZOOM shares when they first hit the market would have paid around the $60-mark.
And today? Those very same shares are worth $480 – representing an 18-month increase of 700%.
If you hadn’t heard of ZOOM at the turn of the year, it’s all-but-certain that you would have come across its name during the coronavirus pandemic. This is because the company offers peer-to-peer software that allows people to video conference with one another.
As such, this was a hugely useful way for people to stay in touch during the lockdown – both in a professional and personal capacity. Crucially, if you are a firm believer that the future of employment is heading towards the ‘Gig Economy’ – ZOOM is likely to play a major role in this space.
6. Aphria – Undervalued Cannabis Stock Trading at 3 Times Earnings (NEW)
Aphria is a Canada-based cannabis grower that is active in 10 countries. This year, the firm is set to grow over 225,000 kg in annualized product. The shares are listed on the Toronto stock exchange with a current market capitalization of just over CA$1.7 billion.
Crucially, many would argue that at $5.97 each – these shares are heavily undervalued. For example, Aphria shares are trading at just over 3 times revenue and a price-to-book ratio of just one. To put that into perspective, market leader Canopy Growth – which has a valuation of over CA$9.6 billion on the same exchange, is trading at over 23 times revenue.
Ordinarily, with a price-to-sales ratio of just 3, this would indicate that the firm in question is facing tough times. However, in the case of Aphria, the financials suggest otherwise. Looking at the firm’s stock price action this year, the shares actually down 8.29% YTD.
With that said, the Horizons Marijuana Life Sciences Index – which is the best way to gauge the wider cannabis marketplace, is actually down 26% during the same period. As such, while Aphria stocks are down for the year, they are outperforming the wider markets by some distance. It is also important to note that legal recreational cannabis sales in Canada have been impacted by the wider COV-19 lockdown, so many would argue that these shares are heavily undervalued.
7. British American Tobacco – Best UK Dividend Stock to Buy (HOLD)
October 25th – November 1st 2020: Starting the week at 2,641p, British American Tobacco shares are down 2.61%. This strong and stable tobacco powerhouse is a good stock to hold during uncertain times – with demand for its products relatively untouched by the health of the wider economy. As such, British American Tobacco remains a strong hold despite its slight dropoff this week.
British American Tobacco (BAT) is a major player in the global tobacco industry – with brands such as Pall Mall, Dunhill, and Lucky Strike leading the way. Although the UK powerhouse has enjoyed a fruitful time on the London Stock Exchange – subsequently rewarding shareholders for many, many decades, its fortunes reversed in 2017.
With an all-time high of 5,383p being hit in June of the same year, the stocks tumbled to 2,541p in 2019. However, not only have the stocks since stabilized – but the company is paying one of the largest dividends in the UK shares space. In its most recent distribution, this worked out at a yield of 7.2%. In fact, BAT has increased its dividend payment for 20 years in a row – even during the somewhat bearish years of 2017-2019.
With that in mind, BAT could be a good addition to your stock portfolio for two reasons. Firstly, you have the chance to buy the shares on the cheap at current prices of sub-3,000p. Secondly, you will be buying shares in a company that has a long-standing track record of paying generous dividend yields.
8. Facebook – No Dividends, but Huge Upside Potential (HOLD)
October 25th – November 1st 2020: Facebook stockholders have enjoyed one of the best weeks of 2020 – with the shares going from $265 to $284 in the space of just 5 days. This represents weekly gains of 7.1%. The general consensus is that this rapid weekly upswing is in anticipation of Facebook’s quarterly earnings release – which is due this Thursday. Investors expect Facebook to smash through market expectations and if it does – we could see a return to $300+ levels. In fact, if the earnings report exceeds far expectations we would see a breach of $304.67 and thus – new all-time highs.
Although you have missed the boat on Facebook – at least in terms of its initial stock market price, it’s still not too late to obtain its shares at an attractive price.
The company has grown to exponential heights since its public launch in 2013 – and while the social media giant has had its fair share of privacy-related scandals, the future looks bright. Crucially, Facebook now boasts an impressive 2.6 billion monthly active users – which is up 11% from the prior 12 months.
With this in mind, its current market capitalization of $651 billion is potentially still just a fraction of what it could be worth in years to come. On the flip side, Facebook is yet to pay any dividends to shareholders, but this could something the company looks at in the near future.
9. Square – This Stock is up 185% in 2020 (HOLD)
October 25th – November 1st 2020: Square was only added to our list of best shares to buy last week. We noted that in 2020 alone the stocks are up 185% – which is huge. There isn’t much to report on Square in terms of the fundamentals. However, with the shares finishing the week at $176, this represents a decline of 6.3%. There is no reason to believe that Square’s strong upward momentum is coming to end. As such, this short-term market correction could present a good time to jump in.
Square Inc. has performed incredibly well not only throughout 2020 – but since its IPO of 2015. Back then, those that were fortunate enough to invest in the IPO would have paid just $9 per share. And today? The same shares are priced at $180 on the NASDAQ.
This means that a mere investment of £500 would now be worth £9,500. In terms of its 2020 performance, Square shares are up 185% as of October 8th. This is unprecedented when you consider the wider uncertainties of the pandemic.
The most important thing is that Square continues to smash through revenue and operating profits, and it continuously just bringing out new and innovative products and services. This now includes a short-term lending facility, Bitcoin exchange services, and credit card processing for merchants.
10. Upwork – Buy Shares in the Future of Employment (HOLD)
October 25th – November 1st 2020: As we have noted repeatedly in our previous editions, Upwork is most definitely a long-term buy and hold. While the freelance revolution is still finding its feet, Upwork’s market capitalization of just over $2.3 billion is minute when you look at its true potential. Over the past week, the shares are 3% down.
Upwork is an online freelancing platform that matches talented ‘digital nomads’ with clients. This includes everything from writers, web designers, developers, artists, accountants, and more. The reason Upwork originally made our list of the best shares to buy in June 2020 is that the freelance economy is on the rise.
In fact, the coronavirus lockdown illustrated that the days of needing to work in a bricks and mortar office are slowly but surely coming to an end. As such, Upwork could be worth a closer look. When we first added to the stock to our portfolio, it was worth just over $11. At today’s price of $19.54 – the stocks have yielded great returns to date.
Best Shares October 25th – November 1st 2020 Update
As we are once again in the midst of election season, large-scale investors are holding back slightly to see how things unfold. Crucially, most would argue that Wall Street is hoping for a Trump win, not least because the Republican is extremely pro-markets. Since Trump took the reigns, the S&P 500 Index is up over 50%.
This is particularly interesting when you consider that wider impact of the global pandemic. Closer to home, the UK markets are still struggling to get anyway near pre-pandemic levels. It remains to be seen whether this is largely due to the ever-growing uncertainties of Brexit. Only time will tell.
Nevertheless, let’s recap as to how to markets have performed over the past 7 days.
- FTSE 100: -1.13%
- FTSE AIM All-Share Index: -0.10%
- S&P 500: -0.80%
- NASDAQ 100: -1.86%
- Dow Jones: -1.02%
Shares to Watch – October 25th – November 1st 2020
The following shares didn’t quite make the cut this week – but are most definitely worth keeping an eye on over the next 7 days.
- Intel Corp: Shares down over 10% last week due to worse-than-expected earnings. Is this a major overaction from the markets are justified?
- American Express: Another major US stock that failed to meet market expectations its most recent earnings report. With the shares dropping 3.6% last week, does this represent a good time to buy?
- SVB Financial Group: SVB Financial Group is a commercial bank that specializes in tech-related financing. With another great quarterly performance as per its Q3 earnings report, the shares are up 3.9% over the past week. We’re not too sure yet whether or not this upward swing will be short-lived or if its a sign for greater things to come. As such, this is one to keep an eye on.
How to Buy the Best Shares Now
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Step 4: Buy Shares
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How to Analyse Which Shares to Buy
If you are just starting out in the world of stocks and shares, it’s super-important that you learn the ins and outs of how to perform your own research – as opposed to choosing companies on the back of somebody else’s advice. In doing so, you stand the best chance possible of ascertaining whether or not the shares represent a viable long-term investment.
You can read more on How to Pick Stocks and Shares here.
Best Shares to Buy Today – The Verdict?
As you’ll see from our list of the best shares to buy in October 2020 – most of our portfolio consists of US stocks. This is for good reason – with the likes of Tesla, Apple, Amazon, Upwork, and Square smashing through the uncertainties of the coronavirus pandemic.
Over in the UK, very few FTSE 100 shares are worth more than pre-pandemic levels. In fact, the FTSE 100 Index itself is still down for the year. Nevertheless, we are still super-keen on British American Tobacco for its strong and stable characteristics.
Additionally, EasyJet shares remain a hold – albeit, stakes should be kept to an absolute minimum on this one as it represents a high risk/reward ratio. As always, just make sure that you perform your own research and crucially – never buy shares on the back of somebody else’s viewpoints.
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