3 Stocks To Buy In May And Tuck Away

Includes: AAPL, CF, NOV
by: Quinn Bredl

During the month of May, it seems that Christmas arrives early for savvy investors. Sell in May and go away? No thanks. By the beginning of April, investors should be preparing their wishlists for the megasale of the year. And while I'm sure many people still have last summer's terrifying market in mind, it's no secret that those who bought on the market's fear made out like bandits. So, before people realize that May presents one of the most lucrative investment periods of the year, here are some stocks to consider adding to your wishlist before others do.

1.) Apple Inc. (NASDAQ:AAPL)

  • Market Cap: $532.50B
  • Current share price: $569.48
  • 52wk range: $310.50-$644.00
  • 50 day MA: $601.66
  • 200 day MA: $478.01
  • P/E: 13.88

I'm sure this surprises no one. Wall Street's darling stock, it is up 63.01% YTD, trumping the S&P 500's measly 2.55% gain YTD. One of the most innovative companies on the globe, if not the most innovative, Apple has everything that an investor could possibly want in a stock: incredible growth, tons of cash, no debt, a huge advantage over competitors, and the ability to crush earnings estimates again and again and again. Investors, of course, always find something to complain about. "Too much cash!" some say, but what is Apple to do, burn it? How about a modest dividend, say $10.60 this year (about a 1.9% yield). Sure that doesn't sound like much right now when you can buy some junk REIT which yields 15%, but the dividend's only getting started, in addition to the inevitable capital appreciation. Right now you can buy Apple at a discount at just under $570. It's trading about $36 below its 50 day moving average, and about $75 below its 52 week high, which it is bound to surpass, it's only a matter of time. With $28.54B cash, $0.00 long term debt, and a PEG of 0.61 (among other statistics you would hardly believe), I definitely have Apple on my May Wishlist.

2.) National Oilwell Varco, Inc (NYSE:NOV)

  • Market Cap: $29.96B
  • Current share price: $70.31
  • 52wk range: $47.97-$87.72
  • 50 day MA: $78.27
  • 200 day MA: $75.00
  • P/E: 13.63

Energy stocks are, and always will be, important stocks to own. We all need to be able to drive to work, or heat up the house on a cold winter day. But just because energy is a necessary sector, that doesn't mean that all the companies are good to own. If you're unlucky enough, you might just stumble upon the next Enron. But here's one company that's definitely worth doing some research on. National Oilwell Varco is the Costco (NASDAQ:COST) of the oil industry; if you need it, they have it. Oil is crucial to the global economy, and people aren't going to stop relying on it overnight. NOV boasts strong revenue and earnings growth year-over-year of 36.8% and 48.9%, respectively. The company also maintains a very clean balance sheet, $3.39B cash and $510M debt, while also paying a super modest dividend of $0.48 (0.7%) per year. The company expects solid growth for years to come, and is attractively priced at 13.63 trailing earnings with a PEG of 0.77. Recently the price has been depressed, mostly due to macroeconomic issues, but should still be able to retain, and strengthen, its already strong earnings power. National Oilwell Varco is likely to benefit from the rising demand of oil, and in addition to a clean balance sheet, competent senior management and a more than fair valuation, I can definitely ask Santa for NOV this May.

3.) CF Industries Holdings, Inc (NYSE:CF)

  • Market Cap: $12.05B
  • Current share price: $183.91
  • 52wk range: $115.34-$203.32
  • 50 day MA: $186.94
  • 200 day MA: $170.04
  • P/E: 7.76

A fertilizer company, although it might not sound as fun as an electric car company, is much more profitable. Actually, fertilizer is extremely profitable, especially with natural gas prices at all time lows (natural gas is needed in production). CF Industries manufactures and distributes agricultural chemicals which doesn't sound very lucrative at first, but the numbers are impressive. Shares trade at 7.76 times trailing earnings with a PEG of 0.61. The company also sports a fairly strong balance sheet of $1.71B cash and $1.62B debt while also rewarding shareholders with a very meek $1.60 (0.8%) annual dividend, with a payout ration of just 5%. But what happens when natural gas prices spike? Hedging would be the answer, but that doesn't seem to be an imminent issue as many believe that prices will remain depressed for quite some time. CF shares were down nearly 7% last trading session, possibly due to speculation that quarterly earnings had peaked in the first quarter of 2012. Even if this is the case, it does not warrant such a selloff. Subsidiary Terra Nitrogen Partners (NYSE:TNH) has performed exceptionally well in the past months, while CF has been fairly stagnant. I believe that CF is a steal at its current share price and that this is the month to buy.

So now that May has arrived, prepare to smash open those piggy banks. I feel like I'm little kid at FAO Schwartz and everything is on sale: 10, 20, 30% off. But keep in mind last summer's wild market. It's possible that June or July or August present even better buying opportunities; but I don't want to pass up these special offers. If you end up seeing some good deals, remember: Buy in May and Tuck Away.

All statistics from finance.yahoo.com/.

Disclosure: I am long AAPL.

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