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5 Top Stocks to Buy in October

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5 Top Stocks to Buy in October


With the first three quarters of the calendar year in the books, investors are strolling into October with the major indexes at all-time highs and a more than 20% year-to-date gain in the S&P 500 and Nasdaq Composite. Go back even further, and the S&P 500 is up a staggering 50% since the start of 2023.

Efficiency improvements and artificial intelligence (AI)-powered innovations are sending ripple effects through the stock market — from changing how legacy companies do business to setting the stage for more demand for energy and electricity to power data centers.

The Federal Reserve just announced its first interest rate cut in four years, which was quickly followed by a Chinese stimulus package and rate cuts. With the cost of capital getting cheaper, there’s reason to believe consumer spending could get a much-needed uptick this fall.

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Despite all the momentum heading into October, investors should still take a long-term approach. They should only invest in companies that they believe can deliver on promises and navigate the cycle, and that are worth holding for at least three to five years. Here’s why five Fool.com contributors picked Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B), Shopify (NYSE: SHOP), Albemarle (NYSE: ALB), D.R. Horton (NYSE: DHI), and Chevron (NYSE: CVX) as top stocks to buy in October.

A piggy bank with a coin inserted into it on a bed of orange and yellow leaves.

Image source: Getty Images.

It’s time to pounce on affordable Berkshire shares

Anders Bylund (Berkshire Hathaway): It’s rarely a bad time to invest in Berkshire Hathaway. Warren Buffett’s insurance-based investing machine almost always looks ready to beat the stock market in the long run.

But you know what Buffett says about pricing. He prefers buying stock in amazing companies at a fair price. That’s his secret recipe for keeping business risks low and investor returns high. That wisdom-packed quote applies perfectly to Berkshire’s own stock right now.

The company is not putting much money in the market these days. Berkshire’s cash and short-term investment reserves have swelled to $277 billion, crushing the former record of $150 billion in the fall of 2021. More than 21% of Berkshire’s assets are held in the form of cash or liquid government bonds. That’s not exactly a record, but it’s the highest ratio seen since the aftermath of the dot-com bubble popping.

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That’s exciting to me. I can’t wait to see what the investing legend will invest in when the time is right. But Berkshire’s market makers have a different view, driving the stock 3% lower in September. Whether you’re buying the high-priced Class A shares or the more affordable Class B stock, Berkshire trades at just 14.6 times trailing earnings today.

So Berkshire Hathaway is gearing up for a buying spree in the near to mid-future. Meanwhile, the stock is changing hands well below its 10-year average price-to-earnings (P/E) ratio of 21. It’s the best of both worlds — a wonderful company trading at a wonderful price. The time is unusually right to invest in Berkshire Hathaway.

Shopping for deals

Demitri Kalogeropoulos (Shopify): Investors should take a closer look at Shopify stock right now. The e-commerce platform’s shares have rallied since the company reported excellent operating results in August. It’s easy to see why Wall Street cheered that update. Sales volumes were up a healthy 22% in the period, and there’s room for that figure to expand for many more years as e-commerce rises from its current level of 16% of retail spending. But the stock is still far below its all-time high, and it has trailed the wider market in 2024.

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That underperformance shouldn’t last long. Earnings are rising at a faster pace than sales as Shopify benefits from growth in its subscription services and payment processing. It isn’t done reaping the financial rewards from the spinoff of its logistics business, either. Gross profit margin improved to 51% of sales last quarter, from 49% of sales a year earlier.

Shopify executives are calling for another quarter of rising margins and ample cash flow for the selling period ending in late October. That positive momentum helps explain why Wall Street has placed such a premium on this stock, which is valued at over 13 times sales today. Yet for growth stock investors who don’t mind volatility, Shopify looks like a compelling long-term buy.

Buy this stock while there’s still time

Neha Chamaria (Albemarle): 2024 has been a rough year for Albemarle stock — it plunged 50% and hit its 52-week lows by mid-August. Although the lithium stock has rebounded since, it’s still down about 45% this year as of this writing. I still believe the sell-off is overdone, and it’s an opportunity to buy a magnificent value stock that could soar when its end markets recover.

The problem is not with Albemarle. It’s the weakness in lithium markets that sent the stock tumbling. Lithium prices peaked in 2022 and have plunged more than 90% since. The rally of 2022 driven by a supply deficit was unsustainable, as prices shot up too much and too fast. Soon enough, global lithium supply started to catch up with demand in anticipation of a boom in the electric vehicle (EV) market. Lithium prices cooled off, but before they could stabilize, the global EV market began slowing down in 2023. Albemarle’s top and bottom lines were bound to take a hit, as the company is one of the world’s largest producers of lithium for EV batteries.

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However, lithium’s long-term growth potential remains intact, as it’s a critical element for the EV industry. Albemarle is taking necessary steps to preserve cash while it awaits a recovery. Albemarle’s financial flexibility has been its biggest strength over the decades, and it should be no different this time around.

When the business cycles turn, Albemarle could become one of the fastest-growing stocks in the industry, given its foothold and financial discipline. The company has also increased its dividend for 30 consecutive years. With recent industry developments renewing hopes of a recovery in lithium prices, now’s the time to load up on Albemarle stock.

A homebuilding homerun

Keith Speights (D.R. Horton): The Federal Reserve is lowering interest rates for the first time in four years. More rate cuts are likely on the way. Mortgage rates are also coming down as a result. If you think this news is great for homebuilders, you’re right. It’s especially great for the U.S.’s biggest homebuilder by volume — D.R. Horton.

Shares of D.R. Horton have soared 25% year to date. All this nice gain, though, has come since July, when anticipation of a forthcoming interest rate cut began to intensify. Investors knew that lower interest rates typically lead to lower mortgage rates, which make it more affordable for Americans to buy new homes.

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D.R. Horton has been able to operate successfully, even in the high-rate environment of the last few years. However, the company has had to offer incentives such as mortgage rate buy-downs to help make the homes it built more affordable. Management expects that the Fed’s interest rate cuts could allow it to reduce the use of incentives to some extent, which would improve profitability.

While the rate cuts serve as a near-term catalyst for D.R. Horton, there’s an even more important long-term tailwind for the stock. The U.S. continues to face a major housing shortage. Zillow estimates that the country needs another 4.5 million homes.

Finally, the November U.S. elections could provide another spark for D.R. Horton. Vice President Kamala Harris has proposed tax incentives for homebuilders that sell homes to first-time homebuyers. Should she win the presidential election, D.R. Horton’s shares could soar even higher.

Chevron and its growing dividend are built to last

Daniel Foelber (Chevron): West Texas Intermediate crude oil prices — the U.S. benchmark — have fallen below $70 per barrel, the lowest level in 2024. The sell-off is dragging down the energy sector, including big names like Chevron, which is now less than 9% away from its 52-week low.

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Chevron has performed significantly worse than its U.S. peer, ExxonMobil, in 2024, because of uncertainties regarding its acquisition of exploration and production company Hess. Chevron and ExxonMobil both announced blockbuster acquisitions in October 2023 to strengthen their cash flows and boost oil and gas production. ExxonMobil closed its deal in May, but Chevron was caught up in a series of challenges that have prevented the deal from going through.

On Sept. 30, Chevron got some good news: The Federal Trade Commission completed its antitrust review and concluded that the Hess deal could proceed, on the condition that Hess CEO John Hess not be appointed to Chevron’s board (but could serve as an advisor).

The market hates uncertainty, so the sooner Chevron can move forward with the deal, the better. While Hess would give Chevron better global diversification and access to low-cost reserves in offshore Guyana, it doesn’t really need the deal to go through. Chevron has a highly efficient portfolio and can generate plenty of cash flow to cover its dividend and capital expenditures, even at lower oil prices. It also has an excellent balance sheet with very little debt, given Chevron’s size.

Chevron has paid and raised its dividend for 37 consecutive years — meaning it has raised the dividend even during years when growth has slowed, or it reported a net loss. Chevron has accomplished this feat because it invests through the cycle and doesn’t structure its business to depend on high oil prices. When oil prices are high, Chevron tends to pay down debt and position itself so that it can be more flexible for the next downturn.

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In the following chart, you can see that Chevron’s total net long-term debt declined during years of higher operating cash flow, but its debt-to-capital ratio was still at a healthy level even during industry downturns.

CVX Net Total Long Term Debt (Quarterly) Chart

CVX Net Total Long Term Debt (Quarterly) Chart

Chevron remains one of the well-rounded buys in the oil patch. With a 4.5% dividend yield, it stands out as a great buy for passive income investors in October.

Should you invest $1,000 in Berkshire Hathaway right now?

Before you buy stock in Berkshire Hathaway, consider this:

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Anders Bylund has no position in any of the stocks mentioned. Daniel Foelber has no position in any of the stocks mentioned. Demitri Kalogeropoulos has positions in Berkshire Hathaway, Shopify, and Zillow Group. Keith Speights has positions in Berkshire Hathaway, Chevron, and ExxonMobil. Neha Chamaria has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Berkshire Hathaway, Chevron, D.R. Horton, Shopify, and Zillow Group. The Motley Fool has a disclosure policy.

5 Top Stocks to Buy in October was originally published by The Motley Fool



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Warren Buffett Breaks 6-Year Streak Of Berkshire Hathaway Stock Buybacks, Say ‘It’s Too Expensive’

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Warren Buffett Breaks 6-Year Streak Of Berkshire Hathaway Stock Buybacks, Say 'It's Too Expensive'


Warren Buffett Breaks 6-Year Streak Of Berkshire Hathaway Stock Buybacks, Say 'It's Too Expensive'
Warren Buffett Breaks 6-Year Streak Of Berkshire Hathaway Stock Buybacks, Say ‘It’s Too Expensive’

Berkshire Hathaway CEO Warren Buffett recently ended a six-year streak of stock buybacks for the company. While the company regularly participates in stock buybacks, it did not do so during the third quarter, according to Securities and Exchange Commission filings.

Despite having over $325 billion in cash reserves, Buffett opted not to use that cash to buy back shares, suggesting that he believes the stock is too expensive.

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Buffett’s approach to stock buybacks is straightforward: he only buys back shares when he considers them a “bargain.” According to Berkshire Hathaway’s regulatory filings, he looks for a stock price below the company’s intrinsic value – a conservative measure considering the long-term worth of Berkshire’s assets. Analysts believe the absence of buybacks sends a clear message to the market: Berkshire’s stock is overvalued at its current price.

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Berkshire Hathaway‘s Class A shares are trading around 1.6 times their book value, representing the company’s assets once debts are subtracted. In the past, Berkshire has avoided buybacks when the stock traded above 1.2 times its book value, but that guideline was dropped in 2018.

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Buffett’s conservative investment philosophy remains firm even with a more flexible policy. Robert Korajczyk, a finance professor at Northwestern’s Kellogg School of Management, explained to CNN, “He’s been very clear that they would never buy back shares if they thought that the firm was overvalued.”

In addition to ending its buyback streak, Berkshire increased its already significant cash holdings by selling stocks in the third quarter. Some analysts took this as a cautionary move due to concerns about the current market environment.

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NYU Stern School of Business professor Aswath Damodaran told CNN that Buffett’s decision to hold cash suggests Berkshire is taking a conservative stance, likely due to high stock prices. “It’s a signal that they feel cautious about where the market is,” Damodaran said. “They’ve become cautious because they think the market is richly priced.”



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Dow, S&P 500, Nasdaq trade mixed as inflation print keeps Fed rate cut on track

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Dow, S&P 500, Nasdaq poised to drop as inflation worries rise


US stocks traded mixed in early trading on Wednesday as investors weighed fresh consumer inflation data that looked to keep the Federal Reserve on pace for another rate cut next month.

The Dow Jones Industrial Average (^DJI) rose just around 0.1%, coming off a steep slide as stocks closed lower across the board. Both the S&P 500 (^GSPC) and Nasdaq Composite (^IXIC) fell into the red after initially rising earlier in the session, down about 0.1% and 0.3%, respectively.

Consumer prices rose largely as forecast in October, with the Consumer Price Index rising 2.6% year over year and 0.2% on a month-over-month basis, both meeting forecasts. Rises in “core” inflation — of 3.3% year over year and 0.3% month over month — also met estimates.

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Inflation has taken center stage again after the post-election rip higher hit a wall. The FOMO market lost some mojo Tuesday as it ponders whether President-elect Donald Trump’s policies could boost inflation as well as the economy. That has helped push Treasury yields higher, promising higher borrowing costs all around.

The report appears to keep the Federal Reserve on track for a December rate cut. Minneapolis Fed president Neel Kashkari told Yahoo Finance that inflation data was the key focus for the central bank in the weeks ahead, saying at Yahoo Finance’s Invest conference that any surprise to the upside “might give us pause.”

According to the CME FedWatch tool, 80% of traders expect a rate cut in December.

Meanwhile, Trump has named Tesla (TSLA) CEO Elon Musk to co-lead a new Department of Government Efficiency — another challenge for analysts trying to assess the EV maker’s prospects. The incoming president’s picks for his cabinet are also being closely watched for impact on his policies and the economy, though DOGE is not an government agency.

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Tesla’s stock erased earlier gains as shares attempt a comeback from a 6% fall on Tuesday. Meanwhile, shares of Rivian (RIVN) jumped double digits after Volkswagen raised its investment in the rival electric carmaker to $5.8 billion.

Read more: What the Fed rate cut means for bank accounts, CDs, loans, and credit cards

LIVE 4 updates
  • Alexandra Canal

    Inflation progress ‘a slow grind’ as outlook remains uncertain

    New inflation data out Wednesday showed consumer prices rose as forecast in October, keeping the Federal Reserve on track to lower interest rates again in December.

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    “There is progress on inflation,” Claudia Sahm, chief economist at New Century Advisors told Yahoo Finance following the data’s release. “We are pointed in the right direction, but it has been a slow grind. And this is another month that fits in that slow grind.”

    The outlook remains uncertain as economists warn of another potential inflation resurgence following the election of Donald Trump as the nation’s next president.

    Trump and his proposed policies have been viewed as potentially more inflationary due to the president-elect’s campaign promises of high tariffs on imported goods, tax cuts for corporations, and curbs on immigration.

    Immediately following Wednesday’s release, markets continued to price in another 25 basis point rate cut in December after the central bank cut rates by that amount last week. Traders currently see a more than 80% chance the Fed cuts rates by 0.25% next month, up from just under 60% on Tuesday, according to data from CME’s FedWatch Tool.

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    “It is clear that the Federal Reserve’s job is still unfinished and that markets are correct in repricing federal funds rate expectations going forward,” Raymond James’ chief economist Eugenio Aleman said in a note to clients following the report.

    “Under this environment, it is only oil and gasoline prices that are keeping inflation contained. That is, any surge in oil and gas prices could severely compromise the Fed’s inflation target. The Fed should be particularly concerned about the services less energy component of CPI.”

    Read more here.

  • Alexandra Canal

    Stocks open higher after inflation data

    US stocks moved to the upside in early trading on Wednesday as investors weighed fresh consumer inflation data that met economist forecasts as the central bank debates another rate cut next month.

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    The Dow Jones Industrial Average (^DJI) opened about 0.2% higher, coming off a steep slide as stocks closed lower across the board. Both the S&P 500 (^GSPC) and Nasdaq Composite (^IXIC) each rose roughly 0.1%.

  • Inflation holds steady in October

    A closely watched report on US inflation showed consumer price increases remained consistent during the month of October, according to the latest data from the Bureau of Labor Statistics released Wednesday morning.

    The Consumer Price Index (CPI) increased 2.6% over the prior year in October, a slight uptick from September’s 2.4% annual gain in prices. The yearly increase matched economist expectations.

    The index rose 0.2% over the previous month, matching the increase seen in September and also on par with economist estimates.

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    On a “core” basis, which strips out the more volatile costs of food and gas, prices in October climbed 0.3% over the prior month, matching September, and 3.3% over last year for the third consecutive month.

  • Jenny McCall

    Good morning. Here’s what’s happening today.

    Here’s a look at today’s key economic and market themes: Wall Street awaits fresh consumer inflation data, while Spirit Airlines (SAVE) plummets 70% amid looming bankruptcy concerns. US mortgage rates continue their post-election climb following Donald Trump’s victory. Meanwhile, SoftBank Group (SFTBY) plans to build a supercomputer using Nvidia’s (NVDA) new Blackwell chips, underscoring its ambitions in AI.

    Economic data: MBA Mortgage Applications, (week ending Nov. 8); Consumer Price Index, October; Real average hourly earnings, October

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    Earnings: Cisco (CSCO)

    Here are some of the biggest stories you may have missed overnight and early this morning:

    Kashkari: Inflation surprise could prompt Fed ‘pause’

    Stocks have ‘room to run’ but that doesn’t mean buy: Bridgewater CIO

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    Inflation ‘unlikely to show much progress’ in October

    Spotify forecasts profit above estimates, stock jumps

    US mortgage rates rose again in week after Trump’s victory

    Spirit plunges 70% amid looming bankruptcy threat

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    SoftBank first to get new Nvidia chips for supercomputer



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