Periods of market volatility are never easy for investors to navigate, especially when market participants have been conditioned to “buy the dip” for the better part of the last year. We’ve witnessed a few selloffs since the market’s massive move off of the pandemic lows, but each bout of volatility never lasted more than a few days or weeks at most. What happens when the market dips but keeps dipping? This is a question for many investors to ponder in the coming weeks, as September has certainly seen the market flash several warning signs that should be taken seriously.
With that said, volatility can also be viewed as an opportunity to take advantage of better prices on quality names. Although October might present a challenging market environment for periods of time, it will also provide plenty of opportunities for investors with dry powder that are ready to put their capital to work. A few stocks stand out as strong buys in October regardless of what the major indices are doing, which is why we’ve put together the following list of the top 3 stocks to buy in October. Let’s take a further look below.
1. Dell Technologies
There aren’t too many large-cap tech stocks trading near their all-time highs to start the month of October, which is why Dell Technologies (NYSE:DELL) really stands out. The manufacturer of IT hardware, software, and service solutions serves a variety of different customers and looks nicely positioned to capitalize on growth in the hybrid cloud computing space over the next few years. Dell is also a big beneficiary of some of the permanent changes taking place in the business world after the pandemic, particularly as enterprises look to beef up their infrastructure and networking.
It’s also worth noting that the company is getting closer to a spinoff of its majority stake in VMware (NYSE:VMW), which will free up a lot of capital for the company and improve its financial position. Dell just announced that it is planning a $5 billion share-repurchase program and will start paying dividends to shareholders following the spinoff, which is another attractive reason to consider adding shares. The company estimates that it expects to achieve a CAGR of between 3%-4% through the fiscal year 2026, which certainly provides a reason to be optimistic about the stock price going forward. With the stock hitting new highs as the market falters, Dell could be in for a very positive October if its breakout is the real deal.
2. CF Industries
Next up is an agriculture stock that saw heavy accumulation towards the end of September, which tells us that funds were very interested in adding exposure. CF Industries (NYSE:CF) is a leading producer and distributor of nitrogen fertilizers, a primary plant nutrient that is essential for crop nutrition and producing maximum crop yields. With products like ammonia, urea, urea ammonium nitrate solution, and ammonium nitrate, CF Industries plays a key role in helping farmers produce crops like corn, which is a commodity that happens to be hitting high prices not seen since the year 2012.
CF Industries saw a 22% year-over-year increase in Adjusted EBITDA in Q2, and investors can probably anticipate a strong revenue increase for FY 2021 given the current market circumstances. Strong global demand for corn and ethanol should benefit CF Industries in the long term while increasing energy costs should keep the prices of nitrogen fertilizers rising throughout the remainder of the year. All of this adds up to a strong bull case for CF Industries, and it’s even more attractive when you realize that this stock is not interest-rate sensitive and offers a 2.14% dividend yield.
3. Salesforce
Although things got a bit dicey for high multiple tech stocks towards the end of September, best-in-breed companies like Salesforce (NYSE:CRM) are still worth a look in almost any market environment. It’s a cloud-based software-as-a-service customer relationship management software company that could be in for a strong October, particularly when you consider that the stock was hitting all-time highs prior to the recent market weakness. Salesforce is a huge beneficiary of enterprises migrating to the cloud, as the company’s platform is widely viewed to be the most comprehensive and feature-rich CRM software on the market.
Over 150,000 companies rely on Salesforce to develop strong relationships with their customers and grow their customer base, which in turn leads to revenue increases, improved customer satisfaction, and better marketing performance. The company recently bumped up its revenue guidance for FY 22 and anticipates 24% growth for the year, which tells us that Salesforce is firing on all cylinders this year. Consider adding shares of this cloud software winner in October once the market stabilizes, as it might be one of the best performing tech stocks to close out the year.