The Best Stocks to Invest in May

Tom Handy

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Investment imageImage by MayoFi from Pixabay

With the COVID vaccine getting distributed and stores slowly opening up, stocks are starting to see a rise. Many stocks are also seeing all-time highs.

Along with earnings updates, these stocks are ones to watch. Since many are at or near all-time highs, it’s best to wait for a dip in the market.

This month I discuss five stocks for you to consider. Two of these companies are headquartered in Santa Clara, California.

  • Nvidia (NVDA)
  • Cimarex Energy (XEC)
  • Lam Research (LRCX)
  • Okta (OKTA)
  • Shockwave Medical (SWAV)

The price for the stocks was recorded on April 30, 2021, at the close of the market.

We don’t prognosticate macroeconomic factors, we’re looking at our companies from a bottom-up perspective on their long-run prospects of returning.” — Mellody Hobson 

Nvidia Corporation (NVDA)

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Nvidia screenshotNvidia screenshot from Yahoo Finance

Company Profile.

Nvidia Corporation operates as a visual computing company worldwide in two segments, Computer & Networking, and Graphics. The Computer and Networking section offers Data Center systems for Artificial Intelligence and accelerated computing. The Graphics section offers GeForce GPUs for gaming, cryptocurrency mining, and PCs. The company was founded in 1993 and headquartered in Santa Clara, California.

Analysis.

The coronavirus accelerated the scale for high-performance computing. Analysts believe with the economy reopening and employees returning to work, will boost sales to large companies. Nvidia posted a record fourth quarter with revenue over $5 billion (up 61% from a year ago). Revenue rose 53% and gaming revenue rose 41% for 2020. Management believes revenue for Q1 should be very strong due to high product demand. Analysts see earnings up 35% this year.

52 week high.

$648.57

52 week low.

$280.88

Forward Dividend and Yield.

0.64 (11%)

Cimarex Energy Co. (XEC)

https://img.particlenews.com/image.php?url=0y2grZ_0ZaBEguD00
Cimarex Energy screenshotCimarex Energy screenshot from Yahoo Finance

Company Profile.

Cimarex Energy operates as an independent oil and gas company in New Mexico, Oklahoma, and Texas. As of December 2020, Cimarex has total reserves of 531 million barrels of oil, 1.36 trillion cubic feet of gas reserves, 144 million barrels of oil reserves, and 159.8 million barrels of natural gas reserves located in the Permian Basin (West Texas and South East New Mexico) and mid-continent regions. The company was founded in 2002 and headquartered in Denver, Colorado.

Analysis.

Cimarex has many years of drilling inventory and has cut drilling costs. They have cut debt and have an excellent balance sheet (no debt maturities until 2024). Cimarex aims to expand production after the weather-related shutdowns in Texas in Q1. With this, Cimarex will still be cash flow positive with oil at $35 and $2.50 natural gas, and a 1.8% annual dividend. At $55 oil and $3 natural gas, cash flow should reach $750 million or 12% of the company’s current market cap. If prices stay high, there is no reason supplemental dividends and increased drilling could occur. Earnings are due out this week on May 5. Recent results could lead to a positive reporting period for Cimarex.

52 week high.

$69.35

52 week low.

$21.65

Forward Dividend and Yield.

1.08 (1.63%)

Lam Research Corporation (LRCX)

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Lam Research CorporationLam Research Corporation screenshot from Yahoo Finance

Company Profile.

Lam Research designs, manufactures, markets, refurbishes, and services semiconductor processing equipment used in worldwide integrated circuits. Lam provides equipment to some of the biggest chipmakers. The company was founded in 1980 and headquartered in Fremont, California.

Analysis.

The coronavirus pandemic caused a global shortage of semiconductors and the shortfall is expected to run through 2022. This creates an enormous demand for chip conductor stocks. Lam’s products are in high demand led by the $200 billion video game market and growth of artificial intelligence. The company sees a demand for 5G boosting sales. In addition to equipment, Lam provides data-intensive services which account for 33% of its sales in 2020. Intel and Taiwan Semiconductor announced an expansion ($20 billion and $100 billion respectively) over the next three years which should support Lam Research. Financially, Q1 earnings showed sales up 54% and earnings up 88%. The stock reached new highs in April and likely to continue.

52 week high.

$669.00

52 week low.

$231.38

Forward Dividend and Yield.

5.20 (84%)

Okta (OKTA)

https://img.particlenews.com/image.php?url=1PJ9Ui_0ZaBEguD00
Okta screenshotOkta screenshot from Yahoo Finance

Company Profile.

Okta, Inc. offers an identity management system for enterprises, small and medium-sized businesses, universities, government agencies, and non-profits in the United States and internationally. Okta is one of the leaders of the cybersecurity group and offers a Single Sign-On for users and a Multi-Factor Authentication to access their company’s website. The company was formerly known as Saasure, Inc. Okta was founded in 2009 and headquartered in San Francisco, California.

Analysis.

More than 10,000 companies are users of Okta’s systems. Last year revenue was up 43% and customer revenue growth was up 22%. Free cash flow came in at 13% of revenue. Okta has a lot of room for expansion reaching new customers. The growth outlook is expected at 30% to 35% through 2023. Okta is expected to continue its growth in the near term.

52 week high.

$294.00

52 week low.

$148.31

Forward Dividend and Yield.

N/A (N/A)

Shockwave Medical, Inc. (SWAV)

https://img.particlenews.com/image.php?url=0oPhkU_0ZaBEguD00
SWAV screenshotSWAV screenshot from Yahoo Finance

Company Profile.

Shockwave Medical Inc. is a medical device company that treats calcified plaque in patients with coronary vascular, peripheral vascular, and heart valve diseases worldwide. The company serves interventional cardiologists, vascular surgeons, and interventional radiologists through sales representatives and sales distributors. The company was founded in 2009 and headquartered in Santa Clara, California.

Analysis.

This growth stock is small and set to get bigger as it starts to treat atherosclerosis (the hardening of arteries due to the buildup of plaque). Their treatment is more effective. Results have been great with success rates showing a 15% to 25% improvement. Shockwave believes its initial treatment (aortic valves, coronary arteries, femoral, below the knee, etc.) make up a $6 billion opportunity, with more potential procedures beyond that. Recently, management said Q1 revenues came in at $31 million which is up 110% from a year ago. Analysts see strong growth (108%) with approximately 50% growth in 2022. The quarterly report is expected on May 10 which is key.

52 week high.

$169.00

52 week low.

$37.25

Forward Dividend and Yield.

N/A (N/A)

References.

Cabot Wealth Network

Yahoo Finance

Note: The writer does not own any stocks mentioned in this article.

This article is for informational purposes only. It should not be considered Financial or Legal Advice. Not all information will be accurate. Consult a financial professional before making any significant financial decisions.

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