There are plenty of questions that investors are pondering as we head into March. Are we at the beginning of a corrective phase in the market or is it time to buy the dip? Will the sell-off in bonds stabilize or should we anticipate more downside? Can the government get a stimulus bill passed before the expanded unemployment benefits run out on Mar. 14?
All of these things set the backdrop for March to be a fascinating month in financial markets.
While keeping these questions in mind is important, that shouldn’t stop investors from seeking out high-quality stocks that can deliver strong alpha during March and over the long-term.
Many companies have pulled back from their highs or are exhibiting relative strength in a weak market, which means there are some good buying opportunities to consider.
Let’s take a look at the top 3 stocks to buy in March 2021.
1. Starbucks
It was impressive to see Starbucks (NASDAQ:SBUX) make new all-time highs during a volatile period in the market, and there are several reasons why investors should consider adding shares of the company in March.
As the world’s leading retailer of high-quality coffee products, this might be one of the best 'reopening' trades to consider. While Starbucks continues to deal with uncertainties related to the impact of the pandemic, the company has steadily opened new stores including 278 net new stores during the most recent quarter.
This puts the company in a strong position to hit the ground running once the vaccine has been widely distributed, especially since a lot of the smaller coffee shops around the U.S. have had to close during the pandemic.
In the most recent quarter, Starbucks management reiterated its fiscal year 2021 guidance which includes 2,250 new store openings and global comparable sales growth of 18% to 23%. This should help to reassure investors who are concerned about the company’s recovery in 2021.
Also, it’s worth noting that Starbucks continues to adapt to changes in consumer habits including things like a mobile ordering app, remodeled stores, and a loyalty rewards membership program. Keep in mind that the company’s digital partnership with Alibaba (NYSE:BABA) and a global licensing pact with Nestle (OTC:NSRGY) could provide international upside as well.
2. Mastercard
Another stock that looks primed for a strong March is Mastercard (NYSE:MA), a company that could have two catalysts working in its favor this month. First, you have news that the leading global payment provider plans to increase its swipe fees for some credit-card purchases in April. This is important because even a small rise in the interchange fees per transaction could potentially mean billions of dollars of revenue for the company.
You also have the prospect of a stimulus package being passed that could lead to $1400 checks sent out to millions of Americans, which would certainly be a plus for Mastercard’s payment volumes.
We know that there’s secular growth in the digital payments space, which tells us that a company like Mastercard has a strong chance to reward shareholders over the long-term. This is particularly true when you consider the company’s potential in emerging markets.
Although the company reported a year-over-year net revenue decline of 7% in Q4 to $4.12 billion, the long-term story is too good to pass up here. You also have to like the fact that the company generates revenue from fees regardless of whether a payment is credit, debit, or mobile.
Mastercard stock was up 12% in February and could continue to rally on any positive news related to the catalysts mentioned above.
3. DraftKings
DraftKings' (NASDAQ:DKNG) impressive Q4 earnings report might have gone unnoticed by many investors that were overwhelmed by the volatility in the market during the final week of February. The company delivered year-over-year revenue growth of 146% to $322 million in Q4 and saw Monthly Unique Payers increase by 44% year-over-year.
The digital sports entertainment and gaming company is growing at an astounding pace and is seeing more users than ever before on its product offerings that include Daily Fantasy Sports, Sportsbook, and iGaming.
Another positive for the company is the fact that Google (NASDAQ:GOOGL) announced that it will allow sports-betting applications on its store starting on Mar. 1. Investors should be very bullish on the prospects of companies in the sports betting industry going forward, particularly as more and more states vote to legalize it.
The fact that Draftkings boosted its 2021 revenue guidance and now expects revenue ranging from $900 million to $1 billion, which would represent year-over-year growth of 40% to 55%, tells investors that this company is set for a big year.