Stocks have had a great run recently. Currently, many major indexes are near their all-time highs.
I’m still seeing buying opportunities however. I think plenty of stocks have the potential to climb higher. With that in mind, here are three I’d buy now.
Warren Buffett’s top stock
One stock that strikes me as a buy right now is Apple (NASDAQ: AAPL), which is Warren Buffett’s top holding. While the market has climbed this year, Apple’s share price has fallen. I think this weakness has created a buying opportunity. Currently, Apple’s P/E ratio is under 25. That seems very reasonable to me.
I expect Apple to have a strong second half of the year. New iPhones are expected later in the year, which should boost sales. Meanwhile, with many people now working from home on a regular basis, demand for iPads and Macs should remain robust. Last quarter, these two products saw year-on-year growth of 79% and 70% respectively.
But there are risks to the investment case. One is growing regulatory scrutiny. In April, the European Commission said that Apple has abused its dominant position in music distribution.
Overall however, I think the risk/reward proposition here is attractive. It’s worth noting that Wedbush analyst Dan Ives has a price target of $185 – 46% above the current share price.
A reopening play
Another Buffett-owned stock I’d buy right now is Mastercard (NYSE: MA). It’s one of the largest payments companies in the world.
Mastercard is a classic reopening stock. As the world reopens in the months ahead, transactions are going to increase significantly. Mastercard – which profits every time someone uses one of its cards – should benefit. It should also benefit from the return of travel, as cross-border transactions make a large contribution to total revenues.
But Mastercard isn’t just a reopening play. In the long run, it should benefit from the shift from cash to electronic payments. It should also be a beneficiary of the growth of e-commerce.
This stock does have a relatively high valuation. Currently, it’s trading at 35 times next year’s earnings. This valuation adds risk. If growth slows, or the company experiences setbacks, the shares could fall.
I believe MA deserves a premium valuation however. The company is very profitable and it has significant growth potential.
A top UK growth stock
Finally, turning to the UK market, I’d buy shares in JD Sports Fashion (LSE: JD). It’s a leading retailer of athletic footwear and athleisure clothing that operates globally.
After Covid-19 lockdowns, there are a lot of cashed-up consumers around the world. This is particularly true in the US, where many people have received stimulus cheques. I expect a lot of this cash to flow into discretionary goods, such as trainers and clothing. JD should benefit. This year, analysts expect sales growth of 17%.
This isn’t the only reason I’m bullish on JD Sports Fashion shares. In my view, the company is well-placed to benefit from a number of powerful clothing trends, including the ‘casualisation’ of fashion, and the increasing demand for loungewear.
One risk here is the threat from larger retailers such as Amazon. Another risk is that brands such as Nike and Adidas are increasingly focusing on selling directly to consumers.
I’m comfortable with these risks though. I see plenty of upside from here in the long run.
Edward Sheldon owns shares in Apple, Amazon, Mastercard and JD Sports Fashion. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool UK owns shares of and has recommended Amazon, Apple, Mastercard, and Nike and recommends the following options: long January 2022 $1920 calls on Amazon, short March 2023 $130 calls on Apple, short January 2022 $1940 calls on Amazon, and long March 2023 $120 calls on Apple. 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.