Which company is the center of attention this week? It’s Nvidia (NASDAQ: NVDA), hands down. The chipmaker is set to announce its second-quarter earnings results any moment now.

I fully expect Nvidia’s numbers to delight investors again, enabling it to extend its already impressive gains this year. But there’s another stock-split stock that could also soar if Nvidia delivers a blowout Q2 update.

Joined at the hip

Super Micro Computer (NASDAQ: SMCI), also called Supermicro, is arguably joined at the hip with Nvidia. The company provides server and storage solutions that are especially popular in data centers.

The same artificial intelligence (AI) tailwind fueling Nvidia’s growth also helps Supermicro. Charles Liang, Supermicro’s president and CEO, said earlier this month that his company “continues to experience record demand of new AI infrastructures.” As a result, Supermicro’s revenue in the fourth quarter of its fiscal 2024 soared 110% year over year.

If Nvidia handily beats expectations with its Q2 results on Wednesday (and, more importantly, if the company’s guidance is strong), it will bode well for Supermicro’s fortunes over the near term. I look for Nvidia to also provide some clarity on the timing of when chips based on its new Blackwell architecture will begin shipping. This should also help Supermicro, which has liquid-cooled AI superclusters ready to support Blackwell.

Sure, Liang maintains that a delay for Blackwell won’t impact Supermicro much because it does business with other chipmakers. Make no mistake about it, though: Good news from Nvidia will translate to good news for Supermicro.

Will Supermicro’s stock split provide another catalyst?

I don’t think there’s much doubt that a blow-out Nvidia Q2 update would provide a catalyst for Supermicro. But what about the company’s 10-for-1 stock split scheduled for Oct. 1? It’s iffy, in my view.

For one thing, Supermicro’s stock split won’t change anything at all about the company’s underlying business or its growth prospects. On the other hand, spectacular guidance from Nvidia would likely mean stronger growth ahead for Supermicro.

Any investor who really wanted to buy shares of Supermicro could do so even with its share price trading in the ballpark of $600. Many online brokerages support buying fractional shares.

However, this will be Supermicro’s first stock split. I’ll admit that it’s possible some investors who have remained on the sidelines could view the split as a great opportunity to buy the stock. I suspect the allure to invest in Supermicro could be even greater if the stock indeed soars as I expect it will following Nvidia’s quarterly update this week.

Is Supermicro a better stock to buy than Nvidia?

Now for an even more important question: Is Supermicro a better stock to buy than Nvidia? Wall Street seems to think so.

The consensus 12-month price target for Supermicro of analysts surveyed by LSEG in August reflects an upside potential of over 50%. By comparison, the average price target for Nvidia is slightly lower than its current price.

I agree that Supermicro is a better pick than Nvidia. My primary reasoning is valuation. Supermicro’s shares trade at a much lower forward earnings multiple than Nvidia’s. But if Nvidia gives great news to investors on Wednesday, both of these stocks should be big winners.

The post This Stock-Split Stock Could Soar If Nvidia Delivers a Blowout Q2 Update appeared first on The Motley Fool Canada.

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Fool contributor Keith Speights has no position in any of the stocks mentioned. The Motley Fool recommends Nvidia. The Motley Fool has a disclosure policy.

We’ve had some major stock splits so far in 2024. Chipotle Mexican Grill conducted a 50-for-1 split. Nvidia had a 10-for-1 stock split. Walmart split its shares 3-for-1. And there have been more with others on the way.

Some investors might be leery of buying any stock right now, whether it’s conducted a split or not. The major indexes fell sharply earlier this week on worries about a potential recession and the Bank of Japan’s interest rate hike.

However, I think the pullback presents a great opportunity for forward-thinking investors. Here’s the hands-down best stock-split stock to buy in August despite the market sell-off.

Two-factor authentication

I won’t keep you in suspense. My pick for the best stock-split stock to buy this month is… Broadcom (NASDAQ: AVGO). Why Broadcom? I think two factors especially stand out. But they have nothing to do with the semiconductor maker’s 10-for-1 stock split conducted in July.

The first factor behind my choice of Broadcom is its growth prospects. Broadcom’s revenue soared 43% year over year in the second quarter of 2024, fueled by the demand for its artificial intelligence (AI) solutions and the company’s acquisition of VMware. I expect AI and VMware will remain key growth drivers going forward.

Nobody handles networking AI accelerators better than Broadcom. It’s not surprising that seven of the eight largest AI superclusters in the world rely on the company’s networking technology. Broadcom projects that its AI networking revenue growth will accelerate.

Since closing the acquisition of VMware, Broadcom has signed up around 3,000 of its 10,000 biggest customers to build an on-premises self-service virtual private cloud. Most of these are multi-year contracts, so the revenue will flow for a long time to come. Broadcom will no doubt focus on getting more of these large customers on board with VMware as well.

The second factor that’s key to my case for Broadcom is valuation. Broadcom’s shares trade at 23.9 times forward earnings. That multiple is relatively low for a premiere AI stock. The stock’s valuation looks even more attractive with growth projections included. Its price-to-earnings-to-growth (PEG) ratio with five-year growth projections is only 1.06, according to LSEG.

Wall Street is also bullish about Broadcom’s prospects

I’m not alone in my optimism about Broadcom. Wall Street is bullish about the stock, too.

Of the 29 analysts surveyed by LSEG in August who cover Broadcom, 10 rate the stock as a “strong buy.” Another 17 analysts recommend it as a “buy.” The remaining two analysts rate Broadcom as a “hold.”

The average 12-month price target for Broadcom is more than 36% above the current share price. The most pessimistic analyst surveyed by LSEG thinks the stock can rise 9%.

Sure, many Wall Street analysts are also bullish about Nvidia, Chipotle, and Walmart. However, analysts’ price targets for these other stock-split stocks don’t reflect as much upside potential as the average price target for Broadcom does.

Short term vs. long term

Broadcom’s share price is down more than 20% below its high set in June. It’s possible that the macroeconomic concerns weighing on the broader stock market could hold Broadcom back too over the short term.

However, I think the long-term prospects for Broadcom look bright. The current sell-off offers an opportunity to buy a great stock on sale.

The post Here’s the Hands-Down Best Stock-Split Stock to Buy in August Despite the Market Sell-Off appeared first on The Motley Fool Canada.

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The Motley Fool recommends Chipotle Mexican Grill, Nvidia, and Walmart. The Motley Fool has a disclosure policy.

This article first appeared on our U.S. website.

What does up can come down. Investors are getting a taste of that adage right now.

The Nasdaq Composite Index began picking up momentum in the fourth quarter of 2022 that carried over into last year and throughout the first half of 2024. However, the Nasdaq entered into a correction as of the end of last week and is now down 12% in the past 30 days.

Should investors be concerned? I don’t think so. Instead, I view the Nasdaq correction as a great buying opportunity. Here are three no-brainer stocks to buy on the pullback.

1. Alphabet

The bad news for Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) is that its stock has fallen about 17% below the high set in early July. The good news is that the Google parent’s shares are still up almost 22% year to date. But the great news is that the best is yet to come for Alphabet.

Google Search remains Alphabet’s top growth engine. Revenue for the company’s search business increased nearly $5.9 billion year over year (13.8%) in the second quarter of 2024. Fears that generative AI would present an existential threat to Google Search appear to be misguided. Google’s testing of its new AI Overviews indicates that usage and user satisfaction are increasing with the new functionality.

Google Cloud, once unprofitable, raked in $1.2 billion in operating profit in Q2. It’s Alphabet’s fastest-growing segment, with revenue soaring 29% year over year to $10.3 billion. The artificial intelligence (AI) tailwind for Google Cloud won’t wane just because the Nasdaq has retreated. I agree with Alphabet CEO Sundar Pichai’s proclamation in the Q2 earnings call that the company is “in a strong position to control [its] destiny as the technology [AI] continues to evolve.”

YouTube and Google subscriptions, platforms, and devices provide additional growth drivers for Alphabet. Don’t forget the company’s famous “Other Bets,” either. I think Waymo alone could make Alphabet worth much more by the end of the decade as the robotaxi market explodes.

2. Meta Platforms

Meta Platforms (NASDAQ: META) stock ended last week down nearly 10% below its recent high. However, this decline doesn’t look so scary considering Meta’s share price has soared almost 40% so far in 2024 and nearly tripled last year.

More importantly, Meta’s underlying business is booming. Revenue jumped 22% year over year in Q2 to $39.1 billion. Earnings skyrocketed 73% to $13.5 billion. Critics who slammed Facebook as only being for older people are having to eat their words. Meta CFO Susan Li reported in the Q2 earnings call, “We’ve seen healthy growth in young adult app usage in the U.S. and Canada for the past several quarters.” Facebook Marketplace has been a key driver of this growth.

Meta is getting better at monetizing its apps, too. The company has an especially attractive growth opportunity in increasing ad supply on videos. It’s also improving the technology that determines which ads to show which users and when on both Facebook and Instagram.

AI plays a key role in these efforts. It should also drive growth in other ways for Meta. For example, CEO Mark Zuckerberg thinks that AI-powered agents will be as ubiquitous for businesses in the future as websites are today.

3. MercadoLibre

MercadoLibre (NASDAQ: MELI) is an outlier in this group. Its shares are only around 2% below the high reached earlier this year. The e-commerce and fintech stock jumped last week while many Nasdaq stocks sank.

How did MercadoLibre defy the downward pull? The company reported fantastic Q2 results. Net revenue soared 42% year over year to $5.1 billion. Earnings more than doubled to $531 million. Adjusted free cash flow skyrocketed 368% to $678 million.

I think MercadoLibre’s growth story has many more chapters. The company’s continual innovation is a key reason why. As a case in point, MercadoLibre is deploying 300 robots in its new Texas fulfillment center that supports its Mexican operations. These robots help reduce processing time by 20%.

MercadoLibre’s fintech business still has tremendous growth potential too. Its credit card business soared 146% year over year in Q2 with total payment volume more than tripling.

The post Nasdaq Market Correction: 3 No-Brainer Stocks to Buy on the Pullback appeared first on The Motley Fool Canada.

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Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. The Motley Fool recommends Alphabet, MercadoLibre, and Meta Platforms. The Motley Fool has a disclosure policy.

This article first appeared on our U.S. website.

If you’ve been wanting to buy Nvidia at a cheaper price, you now have the opportunity. The tech giant conducted a 10-for-1 stock split after the market close on June 7, 2024. Nvidia’s share price is the lowest it’s been in years.

Which AI leaders could have monster stock splits on the way after Nvidia? Here are two top candidates and one definite pick.

1. Broadcom

In one sense, Broadcom (NASDAQ: AVGO) has never split its stock. Avago acquired the “old” Broadcom in 2016 and retained its name. The “old” Broadcom had conducted three stock splits before being acquired. However, Avago had never split its shares — and neither has the “new” Broadcom.

Broadcom’s share price currently hovers around $1,600. That’s well above Nvidia’s share price when it split its stock. Although the company’s management team hasn’t hinted at a stock split so far, the timing could be right for one — perhaps a 10-for-1 split along the lines of what Nvidia did.

Broadcom’s networking products are enjoying strong demand in AI data centers. The company isn’t resting on its laurels, though. It recently announced a new portfolio of ethernet adapters specifically designed for AI infrastructure. Broadcom believes its latest product launch “revolutionizes the AI networking landscape.”

2. ASML Holding

ASML Holding (NASDAQ: ASML) has conducted five stock splits in its history. This number includes two reverse stock splits, one in September 2007 and another in November 2012.

There’s a good case that another conventional stock split is due. ASML’s share price tops $1,000 and has remained above $800 throughout most of 2024 so far. However, the company has given no indications that a stock split is in the works.

ASML stands as the only manufacturer of extreme ultraviolet (EUV) lithography machines used to make the most advanced chips. How important is this advantage? Goldman Sachs believes that chips made using EUV “will enable the next wave of AI.”

3. Lam Research

Lam Research (NASDAQ: LRCX) has had two stock splits. However, the most recent one — a 3-for-1 split — came way back in March 2000.

Unlike Broadcom and ASML, Lam definitely has a stock split on the way. Last month, the company announced a 10-for-1 stock split scheduled for after the market close on Oct. 2, 2024. This split makes a lot of sense considering Lam’s shares are trading above $1,000.

Lam is a leading provider of wafer fabrication equipment used in making semiconductors. The company’s AI edge is in storage. AI apps require fast, high-density storage. Lam’s technology enables manufacturing enterprise solid-state drives that are 50 times faster and up to five times more power efficient than hard disk drives, which currently store over 80% of enterprise data.

Are these potential stock-split candidates buys?

I wouldn’t buy any of these stocks solely because of their scheduled (for Lam Research) and possible (for Broadcom and ASML) future stock splits. Stock splits have zero effect on companies’ underlying businesses or growth prospects.

That said, I think all three of these stocks could deliver fantastic gains over the long term as AI continues to drive demand for high-powered chips and the equipment required to make these chips. Broadcom, ASML, and Lam Research should remain at the forefront of the AI chip market.

To be sure, all three of these stocks trade at premium valuations. It’s possible that they could be more volatile than most stocks. However, Broadcom, ASML, and Lam should be good picks for aggressive growth investors.

The post These Could Be the Next Monster AI Stock Splits After Nvidia appeared first on The Motley Fool Canada.

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The Motley Fool recommends ASML and Lam Research. The Motley Fool has a disclosure policy.

This article first appeared on our U.S. website.

We can probably all agree that the world will look different in 2034. However, much will likely remain more or less the same as it is today.

For example, I expect Nvidia (NASDAQ: NVDA) will still be one of the world’s biggest and most influential companies. Despite my optimism about the AI chip leader, though, I don’t think it will be the biggest company in the world. I predict these three tech stocks will be worth more than Nvidia 10 years from now.

1. Apple

Apple (NASDAQ: AAPL) ranked as the world’s largest company based on market cap throughout most of the last decade. It lost the top spot for a while and even fell into third place behind Nvidia for a brief period. However, Apple is again neck and neck in vying for the No. 1 position. I predict it will firmly hold this perch in 2034.

You might say Apple was a sleeping giant for a while with generative AI. The company didn’t jump on the bandwagon like several other technology leaders did after OpenAI released its wildly popular ChatGPT. That’s no longer the case.

Some viewed Apple’s new AI functionality that was revealed at its Worldwide Developers Conference (WWDC) earlier this week as underwhelming. On the other hand, many investors seemed to see Apple Intelligence (the name the company gave to its generative AI products and services) as a likely catalyst for a new iPhone upgrade super cycle.

One thing is certain: Apple is no longer asleep at the wheel with anything AI-related. I fully expect that the company will dominate edge AI (running AI on devices rather than in the cloud). I would also bet that its services business will continue to grow rapidly.

2. Microsoft

Microsoft (NASDAQ: MSFT) has gone back and forth with Apple as the world’s largest company. Although I don’t think Microsoft will ultimately hang on to the top spot, I expect the company to remain larger than Nvidia 10 years from now.

Probably the biggest reason for my prediction about Microsoft is its relationship with OpenAI. The huge tech company’s impressive gains since early last year have been largely due to its integration of OpenAI’s large language model (LLM) throughout its product lineup. I expect OpenAI to remain one of the leading innovators in AI. As a result, I think Microsoft will continue to profit from its relationship with the AI pioneer.

I also look for Microsoft’s cloud unit to have more sources for AI chips in the future, including its own custom silicon. If I’m right, this should boost the company’s profitability as the laws of supply and demand work their magic on lowering chip prices. As Microsoft’s earnings go, so go its stock price and market cap — at least over the long term. In addition, increased competition could prevent Nvidia from dethroning Microsoft and Apple.

3. Alphabet

Alphabet‘s (NASDAQ: GOOG) (NASDAQ: GOOGL) market cap lags well behind Nvidia’s right now. Since I’ve included the stock on this list, I obviously anticipate that will change. Why?

For one thing, Alphabet’s Google DeepMind rivals OpenAI. I think the two leaders will remain neck and neck in advancing AI over the coming years. While some see AI as an existential threat to Google Search, I predict Alphabet will be successful in blending search with generative AI. Its Google Cloud business should also benefit from new sources of AI chips, just as Microsoft will.

I like the prospects for Alphabet’s Waymo self-driving car unit. By 2034, Waymo could be a significant growth driver for the company with the rising adoption of robotaxis.

Alphabet could also achieve major breakthroughs in quantum computing over the next 10 years. Google Quantum Computing believes it could achieve its goal of developing a “useful, error-corrected quantum computer” within this decade.

This could make Alphabet an even more formidable player in AI because of the ability of quantum computers to process data much faster than traditional computers.

Don’t count Nvidia out, though

Although I predict Apple, Microsoft, and Alphabet will be bigger than Nvidia 10 years from now, I wouldn’t count Nvidia out. My assumption is that other chipmakers will be in a better position to challenge it over the coming years. If the company continues to out-innovate all of its rivals, though, that might not happen.

I think Apple, Microsoft, and Alphabet are great stocks for long-term investors. But Nvidia is, too.

The post Prediction: 3 Stocks That Will Be Worth More Than Nvidia 10 Years From Now appeared first on The Motley Fool Canada.

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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Keith Speights has positions in Alphabet, Apple, and Microsoft. The Motley Fool recommends Alphabet, Apple, Microsoft, and Nvidia. The Motley Fool has a disclosure policy.

This article first appeared on our U.S. website.

When key insiders buy shares of their company, they’re probably confident about its future. Sure, that confidence could be misplaced. However, most investors see insider buying as a positive sign.

But it can be a much different story when key insiders sell shares. In some cases, such moves could hint that they aren’t optimistic about the stock’s future — at least over the near term.

That leads me to Nvidia (NASDAQ: NVDA). The stock has been on a roll, skyrocketing more than 7 times over the last three years. However, insiders are selling their shares of Nvidia. Should you?

Selling away

Since the beginning of May, 10 Form 144 filings have been reported by Nvidia to the U.S. Securities and Exchange Commission (SEC). There are two important things to know about Form 144. First, it’s a notice of the proposed sale of securities. Second, it’s only used when there’s a planned sale of 5,000 or more shares or an aggregate amount of over $50,000.

The most prominent person selling Nvidia stock is the company’s CEO, Jensen Huang. Nvidia notified the SEC that Huang planned to sell 120,000 shares on June 13, 2024. At the market close on that date, this transaction would have been worth around $15.5 million.

Huang wasn’t the only Nvidia executive selling shares. Executive vice president of operations Deborah Shoquist sold 41,140 shares worth more than $45 million on June 3, 2024.

Several members of Nvidia’s board of directors also got in on the action. Dawn Hudson sold a total of 25,000 shares on three separate occasions since May 29, 2024. Board members Tench Coxe, John Dabiri, Michael McCaffery, Brooke Seawell, and Mark Stevens also sold some of their Nvidia shares in recent weeks.

More to the story

These insider sales could be alarming to some investors. To use an old saying: Are the rats fleeing a sinking ship? Nope. There’s more to the story.

The shares Huang sold were part of his executive compensation package. Specifically, they were restricted stock units (RSU) and performance stock units (PSU). Company CEOs frequently sell such shares when they’re allowed to do so.

Importantly, Huang owned nearly 93.5 million shares of Nvidia as of March 25, 2024. That’s almost 3.8% of the company’s outstanding shares. His recent sales were only a drop in the bucket compared to his total holdings. Huang still has plenty of skin in the game.

Most of the other sales (including the ones by Shoquist and several board members) were also of restricted stock units. Investors shouldn’t be too concerned about these transactions.

Should you sell Nvidia stock?

I don’t think the recent insider sales of Nvidia are a reason for outsiders to sell the stock. However, there could be some reasons for you to consider selling.

Nvidia’s jaw-dropping gains might have caused the stock to make up a worrisome percentage of your overall portfolio. Some investors might want to trim their positions as a result.

However, Nvidia’s underlying business remains strong. The company continues to execute exceptionally well. The demand for its graphics processing units isn’t waning. Those are great reasons to hang on to a stock.

The post Insiders Are Selling Nvidia Stock. Should You? appeared first on The Motley Fool Canada.

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The Motley Fool recommends Nvidia. The Motley Fool has a disclosure policy.

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If there’s one person investors should listen to during a market correction, it’s Warren Buffett. At age 89, Buffett has lived through quite a few downturns. And he’s made out pretty well: His net worth is in the ballpark of $85 billion.

Through the years, the Oracle of Omaha has given a lot of great advice in his annual letters to Berkshire Hathaway shareholders. He has even written about a specific approach for how investors should handle a “super-contagious” disease.

It’s not what you think

Warren Buffett has been interviewed in recent days about his thoughts about what investors should do in response to the global coronavirus outbreak. His take was that it wasn’t a good idea to buy or sell stocks based on daily headlines. But that’s not the advice I’m referring to.

In early 1987, Buffett wrote to Berkshire Hathaway shareholders about what to do in the face of an epidemic. This was, of course, way before the outbreak of the novel coronavirus that’s causing worldwide concerns today. It was even before the avian flu, Ebola, SARS, or MERS made the news.

But more than 30 years ago, Buffett addressed two “super-contagious diseases.” He told readers that there are “occasional outbreaks” of these diseases and that they will “forever occur.” Buffett admitted, though, that “the timing of these epidemics will be unpredictable,” cautioning to “never try to anticipate the arrival or departure of either disease.”

What were these two diseases? Fear and greed among investors. Buffett stated that his goal to deal with these “epidemics” was “to be fearful when others are greedy and to be greedy only when others are fearful.”

Time to be greedy

There’s no question that plenty of investors are fearful right now. The so-called fear index — the CBOE Volatility Index (VIX) — has skyrocketed over the past couple of weeks. When the VIX goes up a lot, it’s a clear sign that many investors are scared. If you think that Warren Buffett was right in 1987, though, that means it’s time to be greedy.

Gordon Gekko, the fictional character in the 1987 movie Wall Street played by actor Michael Douglas, famously stated that “greed is good.” The line has been slammed through the years as being representative of an unhealthy fixation on making money.

But I think that Buffett’s definition of greed is different than Gordon Gekko’s. When Buffett wrote about being greedy when others are fearful, he was referring to buying stocks at an opportunistic time. A time like now.

The reality is that the market correction has left quite a few stocks valued at very attractive levels. My Motley Fool colleague Jeremy Bowman recently wrote that Walt Disney stock “may never be this low again.” I don’t know if Jeremy will be proved right or not, but I think he’s absolutely correct that Disney is a great stock to buy with its share price hammered by coronavirus worries.

When Buffett wrote to Berkshire shareholders in 1987, the stock market was soaring. Instead of fear, there was euphoria. He somewhat sarcastically noted, “What could be more exhilarating than to participate in a bull market in which the rewards to owners of businesses become gloriously uncoupled from the plodding performances of the businesses themselves.”

Now, though, the opposite scenario is taking place for stocks like Disney. To paraphrase Buffett, Disney’s share price has become gloriously uncoupled from the great performance of the business itself. There are other stocks for which this is true as well. Buy them. Be greedy in the Warren Buffett way.

What Warren Buffett doesn’t know

There’s one other thing Buffett wrote in 1987 that I think is especially relevant right now. He stated, “We have no idea — and never have had — whether the market is going to go up, down, or sideways in the near- or intermediate-term future.” Amen to that.

Keep that in mind as you contemplate whether you should buy now or wait to see if the stock market will fall even more before scooping up shares of wonderful businesses like Disney. Buffett doesn’t know what’s going to happen next with the stock market, and neither do you.

What we can all know, though, is that there’s a lot of fear right now. And it’s causing stocks with tremendous growth prospects to be priced more attractively than they’ve been in quite a while. Don’t let this “epidemic” be wasted.

The post Warren Buffett’s Advice on How Investors Should Respond to a Super-Contagious Disease appeared first on The Motley Fool Canada.

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And this stock is one that I think growth investors should seriously consider buying. Meet the new CBD stock that should deliver fantastic returns over the long run: Square (NYSE: SQ).

New to CBD

Square is already a top player in the payment processing industry. But the company completely stayed away from the cannabis market, including CBD products, for a long time. Square’s stance, as articulated on its website, was that “we do not allow sellers to sell marijuana or related items on our platform.”

The company still doesn’t allow merchants to sell marijuana-related products using its services. Although 33 states allow the legal use of medical marijuana and 11 states allow recreational marijuana, marijuana remains illegal at the federal level in the United States.

It’s a different story for CBD, though, thanks to the passage of the 2018 Farm Bill last December that legalized hemp-derived CBD products. This legislative milestone prompted Square to dip its toes into the CBD waters earlier this year, with the company launching a limited invitation-only CBD beta program.

That pilot apparently went very well. Square announced in early October that it was officially making its platform available to merchants who sell CBD products. The company now allows retailers to accept payments for CBD products online, through its card readers, or through mobile apps.

CBD could be a lucrative business for Square. The company charges between 3.9% and 4.8% of the total sale plus from $0.10 to $0.30 per transaction, depending on the type of payment processed. The most aggressive projection is that CBD could be a $22 billion market. Most analysts aren’t that optimistic, but the consensus is that a large, multibillion-dollar market for CBD is on the way.

Beyond CBD

I expect that CBD merchants will flock to Square like lots of other retailers have. The company’s products and services make it easier to do business. But while CBD presents a great growth opportunity for Square, there are even greater opportunities beyond CBD.

Square offers an entire ecosystem for sellers of all kinds of products and services. The company is best known for its small credit card readers you see nearly everywhere. But it also provides applications to help organizations manage their businesses, including payroll, point of sale, and marketing systems.

That ecosystem has also expanded to incorporate individuals. Square Cash App enables peer-to-peer mobile payments. This app has become more popular than similar offerings from PayPal and is now a $500 million business for Square.

The company is targeting growth in other ways as well. Square has historically enjoyed tremendous growth with small businesses. It’s now going after larger businesses, too. In addition, the company thinks it will be able to achieve strong growth in international markets, with the global opportunity six times bigger than the U.S. market.

Worth serious consideration

Square posted 44% year-over-year revenue growth in its latest quarter. Its adjusted revenue, which subtracts out bitcoin costs, transaction-based costs, and deferred revenue adjustments related to purchase accounting, jumped 46%. Keep in mind that this tremendous growth was achieved before Square announced that it’s opening up its platform to CBD retailers.

Investing in growth stocks typically requires paying a higher price tag. That’s the case with Square, which currently trades at a whopping 56 times expected earnings. But I think the company’s tremendous growth prospects make the stock worthy of serious consideration for long-term investors. And my view is that Square’s decision to support CBD merchants makes the stock an even better choice.

The post Meet the New CBD Stock You Should Seriously Consider Buying appeared first on The Motley Fool Canada.

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However, October isn’t the worst month for stock performance over the past 50 years; September is. More important, though, investors shouldn’t focus on the short-term gyrations of a stock over only one month. When you focus on the long term, buying stocks in October is as smart of a move as buying at any other time during the year.

Some could prefer to target stocks that have been beaten down to try to buy at a bargain price. My view is that an even better approach is to invest in winning stocks that could get soar even higher. Here’s why I think Dollar General (NYSE: DG), MongoDB (NASDAQ: MDB) and The Trade Desk (NASDAQ: TTD) are hot stocks you can buy in October and hold for a long time.

1. Dollar General

You might not think that Dollar General would belong in a discussion of hot stocks. But the discount retailer’s share price has jumped over 50% year to date. I think the reasons behind this strong performance point to continued growth for Dollar General.

The company has set itself apart from the rest of the industry in 2019. While many U.S. retailers were shutting down stores, Dollar General opened more new stores than any other company. And even though many of these new stores are relatively close to existing stores, sames-store sales are rising — indicating that the company’s expansion isn’t cannibalizing sales from its current stores.

Dollar General’s strategy involves more than just adding new stores. The company is remodeling many of its existing stores, including newer and bigger coolers to offer more types of refrigerated products. Its DG Fresh strategic initiative involves shifting to internal distribution of frozen and refrigerated goods to improve margins. Dollar General’s Fast Track initiative is streamlining the stocking process in stores and enabling self-checkout by customers.

The company has performed very well in the midst of a relatively strong economy. But when the next downturn comes, Dollar General should continue to rock along as customers turn even more to discount retailers. The stock ranks as one of the best alternatives to recession-proof your portfolio.

2. MongoDB

MongoDB stock has soared over 60% so far this year. This impressive gain was a direct result of the database company’s fantastic revenue growth.

The primary secret behind MongoDB’s success is that its database was designed from the ground up to support the storage and analysis of unstructured data. Most of the biggest databases used across the world by businesses were originally created decades ago for only structured data organized in rows and columns.

Software-as-a-Service (SaaS) stocks like MongoDB make their money by getting customers to pay regular subscriptions for using their products and services. MongoDB now has more than 15,000 paying customers — roughly double the number from a year ago. Well over 600 of those customers generate more than $100,000 in annual recurring revenue for Mongo.

With the amount of data — particularly unstructured data — growing every second, MongoDB’s database should enjoy even higher demand in the future. I look for more high-dollar accounts to accelerate the company’s path to profitability.

3. The Trade Desk

The biggest year-to-date winner among these three hot stocks is The Trade Desk, with its shares skyrocketing close to 70%. And that tremendous performance reflects a recent pullback resulting from a general sell-off of high-growth technology stocks.

For decades, conducting advertising campaigns involved negotiations between advertisers and media companies. It was a slow process without a lot of data to know how well the advertising campaign actually worked. The Trade Desk changed this paradigm, enabling programmatic advertising where customers can target specific customer groups on a wide variety of digital outlets and do so immediately in a way to maximize their return on investment.

The Trade Desk continues to deliver impressive growth. Several key metrics from its latest quarter tell the tale: 42% year-over-year revenue growth, a 250% jump in connected TV (CTV) ad spend, a 270% increase in audio ad spend, and 80% more revenue from selling data to customers.

I think the story for The Trade Desk will only get better. There will be more digital advertising opportunities, especially with the growth in CTV. My view is that the proliferation of TV streaming services will lead to more ad-supported options, expanding the market for The Trade Desk. This hot stock, like Dollar General and MongoDB, is likely to get even hotter.

The post 3 Hot Stocks to Buy in October appeared first on The Motley Fool Canada.

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October is absolutely the right time to buy a Warren Buffett stock. Of course, any other month is a great time as well. The legendary investor might not beat the overall market every year, but his long-term track record is phenomenal.

But which Buffett stocks are the best picks to buy right now? Here’s why you should put Amazon.com (NASDAQ: AMZN), Apple (NASDAQ: AAPL), and Mastercard (NYSE: MA) at the top of your list.

1. Amazon

Although Berkshire Hathaway (NYSE: BRK-A) (NYSE: BRK-B) revealed in May that it had begun to buy shares of Amazon in the first quarter of 2019, the internet giant really wasn’t Buffett’s personal pick. Instead, Berkshire investment managers Todd Combs and Ted Weschler opted to take the plunge into Amazon. Buffett is probably glad they did: Amazon has handily outperformed Berkshire Hathaway stock so far this year.

Amazon is still a great pick for investors who aren’t anywhere close to being billionaires. The company’s e-commerce business continues to absolutely dominate the marketplace, thanks in no small part to its super-sticky Amazon Prime service. Its Amazon Web Services (AWS) has become an absolute juggernaut in the cloud computing space. These operations churn out gobs of cash for Amazon every day.

The company is using that cash to invest in fueling even more growth. Amazon’s wide array of new gadgets is solidifying its place in the smart home technology arena. Twitch, a video-streaming company that Amazon acquired five years ago, just might mount a credible challenge to YouTube. And it won’t be too long before the company begins delivering packages via drones, at least to suburban areas.

2. Apple

Berkshire took a bite out of Apple several years ago. Earlier in 2019, Buffett stated in an interview that he thought the stock was too expensive. But even the Oracle of Omaha isn’t always right. Apple has jumped more than 35% since Buffett’s interview comments.

Is Apple too expensive for regular investors to buy now? Nope. For one thing, Apple’s shares are trading at a discount to the overall market and at a lower forward earnings multiple than Berkshire itself. Even better, the company claims a cash stockpile of close to $95 billion. If you back that figure out, Apple’s valuation is even more attractive.

More importantly, though, Apple could be set to deliver even more impressive growth in the near future. Orders for the new iPhone 11 appear to be strong. The company plans to launch a 5G version of its smartphone in 2020, a move that could really juice sales. Apple also reportedly intends to launch its first augmented reality glasses early next year, potentially ushering in a sizable new market.

3. Mastercard

Mastercard is another stock for which Buffett led the charge years ago. It’s been one of the biggest winners in Berkshire’s portfolio so far this year, with shares soaring more than 45%.

Apple has played a role in Mastercard’s success in 2019, with the companies teaming up to offer the Apple Card branded credit card. Investors have also been excited about Mastercard’s major move into cryptocurrency. More than anything, though, the company simply continues to generate strong revenue and earnings growth.

Mastercard possesses two things that Buffett really likes: a strong moat and great growth prospects. The company enjoys an oligopoly with three other big players in the credit card market. It also is poised for sustained growth as consumers continue to move away from using cash.

Buffett’s favorite

It’s pretty clear which of these three stocks is Buffett’s favorite. The size of Berkshire’s position in Apple is more than 37 times greater than its position size in either Amazon or Mastercard.

However, Buffett has always been a big fan of financial services stocks. He certainly has to like the contribution that Mastercard has made to the performance for Berkshire’s portfolio over the last several years. And even though Buffett didn’t personally pick Amazon, he has acknowledged in the past his “stupidity” in not buying the technology stock years ago.

All three of these stocks meet most of the investing principles that Warren Buffett follows. In particular, they all have good management teams and have business models that will stand the test of time. Perhaps the most important of these principles for investors who buy Amazon, Apple, and/or Mastercard in October, though, is to have a long-term mindset. That’s been the biggest secret to Buffett’s success. And it can help you achieve investing success, too.

The post 3 Warren Buffett Stocks to Buy in October appeared first on The Motley Fool Canada.

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