HomeMarket NewsBuy in May and Stay? The Top 7 Stocks to Buy This...

Buy in May and Stay? The Top 7 Stocks to Buy This Month

Actionable Trade Ideas

always free

“Sell in May and Go Away” is a very popular slogan this time of year. And I would admit it applies to many investors right now. Why wouldn’t it? The stock market just had one of the best rallies we’ve seen, which is cooling down now. That is along with bad macroeconomic reports spelling trouble for the economy.

GDP growth came in low at 1.6% vs 2.2% expected, and inflation came in slightly hotter. If you put all these things together, it might look like the perfect time to shift your gains away from growth and into defense right now. I do not think that is a bad idea, but I would also argue there are still opportunities in the market that could deliver good gains in May and beyond. That said, since we are just talking about May, my focus will be on stocks with a bit more of a near-term lens.

The market is still holding strong right now, and the old Wall Street adage of “making hay while the sun shines” seems apt here. Let’s take a look at the following seven top stocks to buy in May that have the potential to shine.

Perdoceo Education (PRDO)

text books on a desk with a chalkboard in the background

Source: Shutterstock

Perdoceo Education (NASDAQ:PRDO) is pretty self-explanatory in what it does — it provides post-secondary education, whether online or campus-based. It is a pretty niche business since there are not many public companies directly involved in education. Plus, this isn’t the best environment for a teacher or a company to be involved in teaching due to the hostile regulatory environment and challenges inside classrooms these days. That said, the fundamentals here are very attractive. Perdoceo is building corporate partnerships and offering many types of specialized courses supported by artificial intelligence and machine learning. While the near-term growth isn’t very flashy right now, I believe international students would drive a lot of growth in the years ahead, as they usually pay full price and aren’t subject to regular government intervention regarding student debt.

Despite the mid-single-digit EPS growth, the cash pile has been growing and currently stands at $642 million against just $23 million of debt. It also has a 1.84% dividend yield, and the stock recently broke out to nearly $24 due to revenue and EPS beating estimates by 13% and 3%, respectively. The stock is up 100% in the past year. In my view, Perdoceo’s solid financials and growth prospects make it an attractive pick for May.

Li Auto (LI)

Li Auto (Li Xiang) brand logo and electric car in store. A Chinese EV(electric vehicle) company

Source: Robert Way / Shutterstock.com

Li Auto (NASDAQ:LI) is one of the most well-rounded stocks in the market right now. I would argue that it is by far the best EV stock you can buy despite some near-term weakness here. Li Auto is the only startup with this much growth and has maintained positive margins with very little dilution. Every other EV startup you look at will likely have negative margins, very slow growth or some big red flag attached to it. This company does not face those problems, and despite a small slump in delivery guidance, I think it is well on its way to outperforming in May.

Revenue was up 136.4% in Q4 2023, along with a gross margin of 13.6%. It even outsold Tesla (NASDAQ:TSLA) and BYD (OTCMKTS:BYDDY) in many parts of China. Analysts expect continuing growth, with EPS rising from $1.8 to $3.2 from 2024 to 2026, along with 53% revenue growth for all of 2024. You’re paying just 20 times forward earnings and 1.1 times forward sales for all this growth. The growth runway is also massive, as it is an EV company. To me, Li Auto’s stellar financials and growth prospects make it a compelling buy this month.

Blue Bird (BLBD)

43

Source: ©iStock.com/kali9

Blue Bird (NASDAQ:BLBD) is mostly known for its school buses. This American company has also seen very flashy growth similar to Li Auto, though it is expected to moderate much faster. However, I believe it deserves a much higher premium as a domestic company. It dominates the school bus industry with a 30% market share, and this company could receive a lot of subsidies going forward as it switches to electric buses.

Blue Bird has a massive backlog of over 5,000 units. It sold 206 electric buses in Q1, up 124% year-over-year (YoY). Fulfilling all that backlog would lead to a lot of growth in the years ahead, and we are already seeing that growth kick in. The stock is up 91% in the past year, with revenue up 35% YOY. It is also scheduled to report its results on May 8th, which should be live by the time you read this article. As I noted in an article back in October 2022, BLBD will be a significant beneficiary of federal grants, and the stock has been up around 310% since then. I think it can still deliver triple-digit returns from current valuations if it keeps beating expectations.

Fortuna Silver Mines (FSM)

Macro of silver

Source: Phawat / Shutterstock.com

Fortuna Silver Mines (NYSE:FSM) is a Canadian silver mining company with operations spread worldwide in Argentina, Burkina Faso, Côte d’Ivoire, Mexico, Peru and Senegal. Moreover, this company mines gold, lead and zinc, along with silver. The company has seen excellent growth in the past few years, even though the stock has seen lots of ups and downs.

It recently reported blowout Q1 earnings, with net income coming in at $26.7 million vs. $20.6 million in the previous quarter. FSM also generated $84.3 million in cash flow from operations, and the Séguéla mine achieved higher-than-design mill throughput, while the San Jose mine focused on exploration at the high-grade Yessi vein. The company also did a small $3.5 million buyback program. In my view, these positive developments make the future outlook for Fortuna Silver Mines very bullish indeed. The stock is up 28% year-to-date, but I believe it can gain a lot more ground from here if gold and silver prices continue their upward trajectory.

Jamf Holding (JAMF)

Close-up of Apple (AAPL) retail store Logo in Honolulu at the Ala Moana Center. Advertising the latest generation of the ipad, iphones, and ipods with a Retina display.

Source: Eric Broder Van Dyke / Shutterstock.com

Jamf Holding (NASDAQ:JAMF) is a software company that specializes in Apple Enterprise Management, providing a complete management and security solution for an Apple-first environment. It is a profitable software company still growing its top line at double digits, yet I don’t think it should be trading at such low valuations.

The demand for Jamf’s products has remained healthy, with revenue growing consistently in a linear fashion. Analysts expect EPS to grow 76% in 2024 and 53% in 2025. Moreover, management’s guidance seems conservative considering past performance, so future beats could deliver significant gains. Given its strong growth prospects, Jamf appears undervalued at current levels.

Skechers (SKX)

sketchers show store. sleeper stocks

Source: ThamKC / Shutterstock.com

Skechers (NYSE:SKX) is a company similar to Crocs (NASDAQ:CROX) in that it is a footwear company that has been seeing lots of growth in recent quarters. The stock is up 27% over the past year, and we are looking at EPS growth continuing going forward.

Analysts expect EPS to grow from $4.2 in 2024 to $7.3 in 2028, along with low double-digit revenue growth. The 3-year EPS growth rate (minus non-recurring items) has been stellar at 74%, better than 90% of its peers. Of course, this company is not like Crocs and makes shoes instead of clogs, but it is still popular and is seeing lots of growth. In my estimation, Skechers could be a solid footwear pick for May.

EZCorp (EZPW)

Man buying gold jewellry, pawn shop and us dollar banknotes

Source: Miriam Doerr Martin Frommherz via Shutterstock

EZCorp (NASDAQ:EZPW) stock has a long history of ups and downs and seems to be enjoying a few years of stability post-COVID. Pawn shops have long been considered a thing of the past, but this company seems to be proving otherwise. It operates pawn shops in the U.S. and Latin America, and the company has been surprisingly profitable so far.

Its 3-year EPS growth rate sits at 55%, better than 87% of its peers. While it is a bit expensive right now, I expect growth to catch up to the valuation in the coming years. The stock is up 13% in the past year. Given its solid financials and growth prospects, EZCorp could be an intriguing under-the-radar pick this month.

On the date of publication, Omor Ibne Ehsan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Omor Ibne Ehsan is a writer at InvestorPlace. He is a self-taught investor with a focus on growth and cyclical stocks that have strong fundamentals, value, and long-term potential. He also has an interest in high-risk, high-reward investments such as cryptocurrencies and penny stocks. You can follow him on LinkedIn.

Swing Trading Ideas and Market Commentary

Need some new swing ideas? Get free weekly swing ideas and market commentary from Jonathan Bernstein here: Swing Trading.

Explore More

Weekly In-Depth Market Analysis and Actionable Trade Ideas

Get institutional-level analysis and trade ideas to take your trading to the next level, sign up for free and become apart of the community.