Don’t pass up the opportunity to get these highly discounted deals.Investors still need to concentrate on 2023 when the year switches to the fourth quarter. The market is full of opportunities, and there are a few equities that I intend to buy in October.My top three picks for this month’s purchases are MercadoLibre (MELI -0.67%), CrowdStrike Holdings (CRWD 1.29%), and Amazon (AMZN 1.84%). While CrowdStrike and MercadoLibre are terrific growth stocks that can be bought for a reasonable price, Amazon is more of a turnaround tale.To find out why these three are great purchases, keep reading.
Amazon
The Federal Trade Commission (FTC) and 17 states have filed a lawsuit against Amazon, the leader in global e-commerce, alleging anti-competitive conduct. The FTC believes Amazon has too much influence. The lawsuit claims that by utilizing unfair tactics, overcharging sellers, and other alleged wrongdoings, it unlawfully stifles competition.
Investors shouldn’t be concerned, but I won’t make any assumptions about the suit’s viability. It happens frequently that when a corporation is broken up that value is released. Additionally, it enables investors to directly purchase shares of the corporation.
I could probably purchase a share of the advertising business and AWS (Amazon Web Services) instead of buying Amazon as a whole, which includes slowly expanding segments like online and physical stores (up 4% and 6%, respectively, in the second quarter).
In the second quarter, advertising increased quickly by 22% to $10.7 billion, surpassing subscription services to become the business’s fourth-largest division. The market possibility is enormous, even though AWS, the cloud computing division, didn’t have a stellar quarter (up 12% to $22.1 billion). The accelerating pace of the economy should lead to growth for AWS.
The stock fell 4% on the announcement, which is hardly a significant price drop. But, with Amazon trading for an attractive 2.4 times sales, it’s at the top of my shopping list in October.
CrowdStrike
The cloud-first protection software developed by CrowdStrike, a cybersecurity firm that is expanding quickly, largely relies on artificial intelligence (AI) to improve the model on a continual basis for the benefit of its customers. Annual recurring revenue (ARR) increased 37% to $2.93 billion in the third quarter of its 2024 fiscal year, which concluded on July 31. This company is showing strong growth potential in a congested market.
Just the surface of the problem is covered by that ARR number. CrowdStrike estimates that it currently serves a $76 billion market and anticipates that its total addressable market will reach $158 billion by 2026 as a result of a number of product launches and industry expansion. The potential of that enormous opportunity must be fully realized by clients by utilizing multiple modules.
Fortunately, upselling is a skill that CrowdStrike has already mastered. The typical consumer spent $125 in the third quarter compared to $100 the previous year. Additionally, 63% of CrowdStrike’s clients use five or more of its services, while 24% use seven or more.
The company earned 26% free-cash-flow margins in its second quarter and is just beginning to post net income under generally accepted accounting principles (GAAP), which completes the investment thesis. Even if CrowdStrike is expanding more quickly, all of this potential success may be acquired for 15 times sales, which is a much lower price than some of its less successful software competitors.
MercadoLibre
Although it is not being sued by a regulator, MercadoLibre is sometimes referred to as the Amazon of Latin America and has an even bigger market share than Amazon thanks to its consumer loan and digital payment services. The second quarter continued the phenomenal rise that MercadoLibre has experienced over the past few months.
MercadoLibre’s gross merchandise volume increased 47% year over year, and its number of unique customers increased from 40.8 million to 47.6 million despite the flat growth experienced by American e-commerce enterprises. As a result, its commerce section increased by 38%, or 65% when adjusted for exchange rates.
Fintech services drove MercadoLibre higher last year, but they’re not doing as well this year, although their growth is nothing to be disappointed with. Total payment volume rose from $30.2 billion to $42.1 billion, while the number of transactions rose 69%.
And when management purposefully limited its growth last year due to high default rates, it experienced fewer losses in its credit segment this year. Even so, it didn’t stop its fintech segment from expanding by 24% annually, or by 48% when currency exchange effects are taken into account.
MercadoLibre can concentrate on turning a profit again now that it has a sizable market share and is expanding. In just one year, the operational margin increased from 9.6% to 16.3%, assisting in the rise of the net income margin from 4.7% to 7.7%.
Despite its success, the company is currently trading at levels unseen in the last ten years.
