The Top 3 Stocks to Buy in December

These 3 Stocks Could Be in for a Strong December

With market volatility on the rise and plenty of issues for investors to ponder such as the new COVID variant and upcoming changes to monetary policy, it’s easy to overlook the fact that December tends to be a seasonally strong month for the market. This is especially the case for the second half of the month, which means that if investors can successfully navigate the current pullback there could be some nice buying opportunities to end the year. While it's fair to say that the current price action in the market is concerning, it never hurts to put together a list of stocks that have attractive long-term prospects.

Remember that Warren Buffett once said that investors should be “fearful when others are greedy, and greedy when others are fearful.” That maxim certainly might apply to the current circumstances in the market, which is why we’ve put together the following list of the top 3 stocks to buy in December. Let’s take a further look below.

Applied Materials (NASDAQ:AMAT)

Semiconductor stocks have been some of the best performers in 2021 and if the market wants to establish a new leader there, Applied Materials could certainly be one to watch. The company produces semiconductor fabrication equipment, which includes products that are used in deposition, etching, wafer inspection, and more. Wafer fabrication is a process that is absolutely essential in producing semiconductor chips, and the fact that Applied Materials is the leader in manufacturing this type of equipment means that the company’s products are in high demand.

It’s always nice to see a strong backlog for a company, as it can provide insight into what earnings will look like in the coming quarters. As of Q4, Applied Materials had a backlog of $11.8 billion, up 77% year-over-year, which is a big positive for investors to consider. The company also reported Q4 sales up 31% year-over-year to $6.1 billion, although supply chain issues impacted the company’s revenue in the quarter. The stock has been noticeably strong during the recent market weakness, which means it could be on the verge of a breakout if the tech sector can find its footing. According to MarketBeat, the stock has an analyst price target consensus of $160.89, which implies 6.09% of upside at this time.

Pfizer (NYSE:PFE)

It’s safe to say that investors can expect a headline-driven market during December, especially as we learn more about the latest COVID-19 variant. That’s a big reason why Pfizer could be a strong option to consider this month, as the research-based global biopharmaceutical company is one of the best vaccine plays on the market. Investors are likely already familiar with the company’s mRNA-based COVID-19 vaccine, which added $13 billion in sales for the company last quarter. While we don’t know how effective current vaccines are against the omicron variant of the virus, there’s certainly a possibility that Pfizer will need to create a new vaccine for different variations of the virus in the future.

Since Pfizer/BioNTech already has the manufacturing capacity for billions of doses, rolling out a new vaccine should be a relatively smooth process. Investors should also be intrigued by the company’s antiviral COVID-19 treatment pill, which was found to reduce the risk of hospitalization or death by 89%. If this pill is approved by the FDA, Pfizer could have another massive bump in revenue going forward. Finally, the fact that Pfizer stock offers a 2.90% dividend yield at this time makes it a great option for investors that want extra income for their portfolios. Just keep in mind that this stock might be vulnerable to downside based on headlines about the new variant as well.

Toll Brothers (NYSE:TOL)

If you’re interested in a post-earning report play for the month of December, Toll Brothers is another stock to watch. It’s one of the leading homebuilders and will release its Q4 and Fiscal 2021 Year-End earnings on December 8th before the bell. As the nation’s leading builder of luxury homes, Toll Brothers could deliver very strong results amidst the continued strength in the housing market, which could ignite a rally to new highs. Thanks to affordable mortgage rates and people heading out of cities and into single-family homes in the suburbs, this company has already delivered very impressive growth in 2021.

In Q3, the company reported that its net orders rose by 35% and that its backlog value was $9.44 billion at quarter-end, which was an all-time record for the homebuilder. An annual dividend yield of 1.07% also makes this stock attractive, and if you believe that housing market supply will remain tight well into 2022 this is definitely an attractive stock to consider.