Now that September is winding down, which is historically one of the weakest months of the year for financial markets, its time to start looking ahead to stocks that could outperform in the final months of the year. Although some will cite the “October effect” as a reason to be cautious next month, there are still quite a few attractive stocks that investors should keep an eye on in the coming weeks.
The recent market correction has created some interesting buying opportunities and given the savviest traders and investors clues into which stocks are showing relative strength. While the upcoming election will very likely present additional volatility for investors to navigate, that doesn’t necessarily mean that sitting on the sidelines is the best course of action. There are 3 stocks in particular that investors might want to consider buying in October. Let’s take a deeper look at them below.
DocuSign
One company in the tech space that could be a nice buy in October after the recent selloff is DocuSign (NASDAQ:DOCU). It’s the leader in e-signature solutions and has been expanding rapidly this year as a result of more companies moving their operations online due to the pandemic. Businesses of all different sizes have benefitted from the technology that DocuSign provides and it’s hard to imagine many of its subscribers wanting to go back to paper contracts and agreements anytime soon.
The stock has been consolidating for over 3 months and looks ready to break higher in the coming weeks. DocuSign had a very strong Q2 earnings report in early September which saw total revenue increase by 45% year-over-year and a billings increase of 61% year-over-year. The fact that billings are growing more quickly than revenue tells us that the growth story is real for this company. DocuSign also increased its forward guidance and continues to expand past e-signatures into all areas of contract management. While the tech sector has been showing weakness and there are concerns about the company’s valuation, DocuSign is still a stock worth watching in October.
Sea Limited
One of the biggest winners of 2020 is Sea Ltd (NYSE:SE), a stock that is up over 290% year-to-date. With this stock, you get exposure to three great industries that are all experiencing massive growth at this time. SE is a company that is based in Singapore and is seeing sharp revenue growth in its online gaming, digital payments, and e-commerce businesses. Adding shares of this business for the long-term could end up paying off in a big way, especially since Sea Limited is focused on the rapidly growing markets of Southeast Asia and Latin America.
Back in August, the company reported stellar Q2 earnings which saw total adjusted revenue increase by 93.4% year-over-year. The company has several successful hit games including Free Fire, which was the highest-grossing mobile game in Latin America and Southeast Asia in Q2. There’s also the strong growth in the company’s e-commerce platform Shopee, which saw a year-over-year revenue increase of 187.7% in Q2. Sea Limited’s digital payment offering SeaMoney is the icing on the cake here, as the mobile wallet saw over $1.6 billion in total payment volume in Q2. If this stock pulls back in October, it could offer a nice entry point into one of the hottest stocks of the year.
Proctor & Gamble
The last stock on our list offers less growth potential but lower risk, which could be a strong selling point for many investors if volatility rises in October. Procter & Gamble (NYSE:PG) is a leading consumer products company with over $65 billion in annual sales. Consumer staples stocks are always a strong pick for investors that are interested in reliable dividends and predictable earnings, which is why Proctor & Gamble should be on your radar.
There’s a lot to like about this company, including its strong balance sheet and low debt levels, a diversified product portfolio that holds up well in recessions, and stable earnings. With a 2.3% dividend yield and the fact that it is one of only 10 U.S. companies to pay a dividend for more than 120 consecutive years, P&G is a great choice for any dividend investor. It will be interesting to see how consumer habits have changed during the pandemic and how it has impacted each business segment for the company when its earnings are released later in the month on Oct. 20.