These 5 Best Stocks to Buy Now Are Due to Rise

Our latest list of the best stocks to buy brings together five stocks our investing experts have recommended over the last year. Each of these stocks have received a top score by our Money Morning Stock VQScore™ system, indicating that they are undervalued and poised to rise.

best stocks to buy nowHere's a glimpse at the stocks we'll be sharing with you today:

  • A pick-and-shovel play on smartphones and other devices that manufactures equipment used by tech companies all over the world
  • A stock that doesn't look flashy, but provides essential services that literally everybody needs and has implemented impressive innovations to generate even more profits
  • One company that suffered a PR setback a few months ago and is about to bounce back as it puts customers first and rolls out a loyalty program that's the envy of the retail world
  • A Fortune 500 beverage company that has entered the legal cannabis market just in time for legalization in Canada
  • An unloved automaker that has been identified by a Wall Street insider as drastically undervalued - just like we already pointed out

Now for our five latest best stocks to buy now...

Best Stocks to Buy Now, No. 5: The Best Pick-and-Shovel Play on Apple and Google

California's Silicon Valley regularly churns out the most advanced technology the world has ever seen. But in some ways it's not much different from the wild frontier of the California Gold Rush in the mid-1800s.

Everybody's racing to get to the next tech breakthrough and strike it rich.

As an investor, you can always guess who's going to win that race. Or you can focus on the supplies they need - like picks and shovels in the Gold Rush - and get rich no matter who wins.

Today the picks and shovels for high-tech gadgets are semiconductor chips and the equipment used to produce them.

Every electronic gadget you use - be it a smartphone, tablet, computer, or a dashboard display in your car - has a semiconductor chip in it. So no matter who made it, they had to go to one of only a few chip manufacturers. And those chipmakers had to get their equipment from an even more limited number of producers.

One of the biggest producers is Lam Research Corp. (Nasdaq: LRCX).

In fact, Lam doesn't just provide to the tech industry in California. In its most recent fiscal year, the company made $7 billion in sales to Asia. So even when it comes to international competition in technology, this pick-and-shovel play has shareholders covered.

Since Money Morning Defense and Tech Specialist Michael Robinson recommended LRCX in June of last year, it's up an impressive 31%. But looking at the metrics, this stock is still undervalued.

The company just beat earnings expectations for the 24th straight quarter, and earnings per share has risen 79% this year.

Its price/earnings (P/E) ratio for the last 12 months is 25% lower than the industry average. And it just boosted its dividend by 120%. That gives it a 2.4% yield, which is 150% better than the industry average.

That's all while keeping its dividend payout ratio at a paltry 18.46%.

This suggests that LRCX has a lot more climbing to do. And it confirms what Michael said last year when he called Lam a "great foundational holding... that will hand you returns for years to come."

Best Stocks to Buy, No. 4: This Must-Have Stock Isn't Flashy, but You Can Buy It and Hold It Forever

While the rest of the market is busy speculating on the next mobile app or wearable device, our next pick keeps delivering steady gains by providing essential services that never go out of fashion.

After all, you're not going to stop throwing out your trash any time soon. And neither is anybody else.

For Waste Management Inc. (NYSE: WM), your trash is its treasure.

With more than 21 million customers, WM is the largest provider of waste management and residential recycling services in North America.

According to CSIMarket, Waste Management holds the largest market share in the United States for every major segment of environmental services - and a 37% share overall. That's compared with a 22% share for its top competitor.

But the moneymaking opportunities don't stop when the trash is picked up. WM is also a leader in converting trash to LNG fuel that can go into its truck fleet or even into natural pipelines or local electric grids.

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In other words, Waste Management is not just a trash company. It's also an energy company. It's solving one of humanity's more pressing problems - how to deal with a growing population using the same amount of space - by turning it into a new resource for communities and more profits for shareholders.

WM's dividend has increased in 14 consecutive years and currently yields a solid 2.26%. But that stable income generation hasn't kept WM from being a growth stock. The stock has risen 93.5% over the last five years, compared to 66.2% for the S&P 500.

waste management stocks

Those gains worked out well for subscribers to Money Morning Chief Investment Strategist Keith Fitz-Gerald's High Velocity Profits service.

Last November, Keith recommended a Jan. 19 call option on WM. He recognized that it was a great stock, and an option trade allowed subscribers to put up a relatively small amount of money and enjoy big, fast gains if it did well.

That's exactly what happened. By the time the options expired, about two and a half months after the initial recommendation, they had gained 275% in value.

Don't worry. There's plenty more fuel to propel this stock upward in the coming months and years. And if you want to go for truly quick profits, a call option may be the way to go.

But if you'd rather have a stock you can hold onto forever - or as long as people keep producing trash - Waste Management is exactly that.

Best Stocks to Buy, No. 3: This Company Is About to Bounce Back from a PR Setback

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One of the challenges of running a multi-national business, especially one that involves direct interaction with the public, is keeping employees across many locations on the same page.

Starbucks Corp. (Nasdaq: SBUX) came face-to-face with this struggle in a big way after an incident at one of its Philadelphia locations in April. It ended up with two people arrested and many angry protesters calling for a boycott.

There has been plenty of debate over Starbucks' response - closing all its stores early for a half-day of anti-bias training. But the key takeaway is that the company is committed, as it always has been, to making its stores a "third place" for people to spend time between home and work.

When it appeared that some employees might not be on the same page in that respect, Starbucks took action.

That commitment is what's going to get the company through this PR mess and back to delivering big gains for its shareholders.

Starbucks has displayed an unparalleled level of trust from its customers for a long time, as Keith Fitz-Gerald noted last year when he upgraded SBUX from a nice-to-have to a must-have.

That's because Starbucks has pulled off what Apple Inc. (Nasdaq: AAPL) and Alphabet Inc. (Nasdaq: GOOGL) have only dreamed of: getting customers to use its mobile payments system.

About a third of Starbucks orders are paid for via its mobile phone app. That's huge for the company, because those mobile users become part of a system that enables efficient target marketing and inspires loyalty. When customers use the app, they get points - or "stars," rather - that can be cashed in for rewards.

This leashes the customers to the brand, as evidenced by the fact that the 18% of customers who are rewards members accounted for 36% of sales in one quarter last year.

"Starbucks' move," Keith says, "is a perfect example of innovation from a company that has two choices - get on board or get left behind."

Now that Starbucks has reaffirmed its commitment to the employees and customers across all of its stores, it's time to get back on board.

Best Stocks to Buy, No. 2: A Key Acquisition Brings Legal Cannabis into the Mainstream - and Money into Your Pockets

You probably know our next pick for its beer brands, like Corona and Negra Modelo, as well as its wine and spirits that include 7 Moons and Nobilo wines and Svedka vodka.

But thanks to a key acquisition and the wave of cannabis legalization in Canada and some U.S. states, it won't be long before some brand-new moneymaking products join that family.

Last October, Constellation Brands Inc. (NYSE: STZ) became the first Fortune 500 company to invest in legal cannabis, buying a $191 million stake in Canada's largest weed grower and one of Money Morning's favorites, Canopy Growth Corp. (NYSE: CGC).

Canopy had been primarily concerned with medical marijuana up to that point. But this partnership paved the way for cannabis-infused beverages, which are expected to be legal in Canada in the near future.

Beverages are a prime candidate to take over as the cannabis consumption method of choice for a number of reasons...

First, they are simply a more familiar option to many people. A Canadian government survey showed  77% of adult residents drink alcohol, but only 17% smoke.

And unlike alcohol, cannabis is calorie-free, giving drinkers an alternative that won't contribute to weight gain. (Researchers are currently working out ways to eliminate the infamous "munchies" experienced by some marijuana users.)

Plus, cannabis doesn't cause hangovers.

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So Constellation and Canopy have a chance to attract not just cannabis users looking for new consumption methods, but also drinkers who want the kick without the side effects.

That's probably why the alcohol industry has been fiercely opposed to cannabis legalization for so long. But Constellation made the forward-thinking move of not fighting the inevitable and cashing in on it instead.

To give you an idea of the growth prospects for this business, the latest edition of ArcView Market Research's "State of Legal Marijuana Markets" report projected spending on recreational marijuana in North America will grow from $4.2 billion in 2018 to $14.9 billion by 2021.

That's over 250% market growth in just three years.

cannabis spending

Once Constellation, with its $41 billion market cap, jumped into this market, Keith Fitz-Gerald said that it instantly turned cannabis stocks from speculative undertakings to quality investments "that can produce windfall profits year after year."

"Pot stocks are riding a huge wave of wealth," Keith says.

STZ shares have slipped 9% after earnings came in below expectations in late June. But that knee-jerk reaction didn't take into account the many ways Constellation has been making investments to increase its profit opportunities.

Their mistake is our gain. Grab STZ now while it's still on sale.

Best Stocks to Buy, No. 1: This Auto Giant Is One of the Most Overlooked Stocks on the Market - and We're Not the Only Ones Who Think So

When Money Morning Executive Editor Bill Patalon recommended Ford Motor Co. (NYSE: F) last year, he knew it was a long-term play.

Buy it with an "accumulation mindset," he said. "If it pulls back, put a few more bucks in," Bill said. "Look to hold it for the long term."

As he expected, it has taken a while for the market to catch on to what he saw. But that's starting to change.

This past spring, an analyst at Morgan Stanley (NYSE: MS) gave Ford stock a rare "double upgrade," boosting it from "Sell" to "Buy."

Ford was so undervalued, the analyst said, that its F-150 truck franchise alone was worth about 150% of what the company was valued at.

That's in line with some of Ford's key valuation metrics. Its forward P/E ratio is just 67% of the industry average, and the price-to-book ratio is 44% below average.

But that's just if we consider Ford to be a car company. It's not, Bill said. "It's a technology company."

Bill was especially impressed with Ford's new Smart Mobility unit, under the leadership of Jim Hackett. That's the team responsible for bringing Ford into the 21st century, making inroads into emerging fields like connected cars, self-driving technology, and ride sharing.

Hackett was no stranger to bringing organizations out of the doldrums. He engineered a complete turnaround of Michigan-based office furniture company Steelcase Inc. (NYSE: SCS), which was nearing extinction when he took over. It was posting $80 million in annual profits by the time he left in 2014.

He then went to work for his alma mater, University of Michigan, and pulled off one of the coaching coups of the decade in luring top-tier coach Jim Harbaugh from the NFL. The revamped Wolverines promptly delivered a Citrus Bowl victory over No. 19--ranked Florida in the 2015 season.

So while Wall Street was dismissing Ford as a dinosaur, Bill saw its move to put Hackett in charge of Smart Mobility as a sign of rejuvenation.

Just months after Bill praised Hackett in the Smart Mobility unit, Ford went one step further and named Hackett its new CEO.

Since then, Hackett has outlined a plan to shift resources away from less profitable divisions and into the company's big moneymakers, as well as to redesign factories with new technology to make them run more efficiently.

He's also planning to cut investment in internal combustion engines by a third, instead putting that money toward 13 new electric vehicles - 100% of them with Internet connectivity - to debut in the next three years.

In other words, Ford - which was already undervalued to begin with - is going to one of the major players changing the transportation landscape in the next few years.

And if you're worried about having to wait for the rest of the market to figure out what it's missing, you can enjoy a 6.11% dividend in the meantime.

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About the Author

Stephen Mack has been writing about economics and finance since 2011. He contributed material for the best-selling books Aftershock and The Aftershock Investor. He lives in Baltimore, Maryland.

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