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3 of the best stocks to buy now

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I’ve been researching the best stocks to buy now to add to my portfolio or to increase my holdings of, and these are the three most promising I’ve come up with.

A loser from 2021

Two of what I see as the best stocks to buy this year were serious underperformers in 2021. I expect their fortunes to change, however. One is spread-betting company CMC Markets (LSE: CMCX). I still believe the sell-off in the shares has been overdone.

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I think the reason why the shares fallen is that the company had a very strong 2020. As a spread-better, the market fall and subsequent volatility that year led to a lot of client trading and more money for CMC Markets.

Now, however, the shares can be picked up cheaply. The P/E is just four. That’s incredibly low and, in my eyes, very tempting.

As a platform-based business, CMC has high margins and returns on capital employed, both attributes of the high-quality businesses I like to invest in long term.

That said, 2021 highlighted the risks of investing in spread-betters like CMC. Earnings can be lumpy and are affected by what’s happening in the stock market. 

But I’m prioritising adding more CMC Markets shares to my own portfolio this year. I’m confident it’s one of the best stocks to buy now – at least for my portfolio and circumstances.

Will Boohoo turn a corner?

The second ‘loser stock’ is fast fashion e-commerce company Boohoo Group (LSE: BOO). Shares in the retailer are down 70% over the last 12 months. It now means they’re below where they were five years ago.

Sentiment has turned against fast fashion broadly as a sector. ASOS shares have fallen heavily at the same time Boohoo’s have. Increased returns, supply chain pressures, more competition and possibly a cost of living crisis have all combined to put pressure on share prices in the sector.   

There are, however, reasons for optimism. Boohoo has expanded its range of brands as high street retailers have gone into administration. Its Brands added include Debenhams, Oasis, Warehouse and Dorothy Perkins. It’s still highly profitable and despite environmental concerns its core customers of young adults, continue to buy from Boohoo. 

I’ll be starting a position in Boohoo in the coming months, maybe even weeks.

One of the other best stocks to buy now

Diageo (LSE: DGE) was identified by one of my colleagues as a top British stock for 2022. I happen to agree and think it’s also one of the best stocks to buy in the UK right now. In no small part that’s because Diageo expects an extra 550m consumers to come of age this decade.

At its Capital Markets Day in November, it laid out new medium-term forecasts. The guidance was for annual organic sales growth of between 5% and 7% for the next three years, compared with 4% to 6% from 2017 to 2019. I think management can exceed these targets and this growth is very achievable, in my eyes. 

The big risk is that the shares aren’t cheap on a P/E of 34. Management needs to grow sales and profits, otherwise the share price could underperform. But I think the risk-reward balance skews firmly towards the latter and so I’m keen to add more Diageo shares to my portfolio.

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Andy Ross owns shares in CMC Markets and Diageo. The Motley Fool UK has recommended ASOS, Diageo, and boohoo group. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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