Academy News TOP 3 stocks for November

TOP 3 stocks for November

A bull market on German markets, a stock rally in the US and the impact of the coronavirus on China. Another month full of trading opportunities is behind us with 3 particular stocks being the most promising for trading. Find out which ones in this article.

Earnings season in the US is practically over and traders have witnessed another stock rally supported by decent economic results. A strong bullish trend also prevailed among German equities. However, China is still struggling with the coronavirus and the stock markets there continue to suffer. Purple Trading's clients know this too, as they could not take their eyes off 3 titles in particular this month.

Alibaba - the Chinese curse continues

Alibaba shares have long been one of the most popular among Purple Trading clients. Looking at the chart below, it is no wonder. Alibaba shares are a nightmare for any value investor who buys and then holds the stock for the long term. For traders who can take advantage of the volatility and trade both ways, however, it can be heaven on earth. In fact, this stock is down nearly 40% since the beginning of the year, which is a really significant move. However, a look at the comparison to the all-time high is considerably more dismal.

Over the past month, however, Alibaba has done quite well, with its shares gaining nearly 20%. What are the reasons for this turnaround? And is it the right time to buy?

_{Alibaba shares on the MT4 platform on the D1 timeframe along with the 50 and 100 day moving averages}

The last month has been full of mixed news from Alibaba's perspective. The company posted relatively solid third-quarter results. Earnings per share rose 5% year-over-year to $1.82, and Alibaba also announced an additional $15 billion in share repurchases. These are expected to add to an earlier plan to buy back USD 25 billion worth of shares. A more dismal view was the sales, which fell 6% year-on-year to USD 29.1 billion (at least the cloud section is doing well, with sales up 10% year-on-year to USD 1.59 billion).

This is the third consecutive quarter-on-quarter revenue decline, which is alarming for an e-commerce company. However, this unfortunate streak should be broken in the fourth quarter, which is traditionally the best quarter. In addition, Alibaba's traditional Singles Day (11/11), which is a sales holiday and brings in huge sales every year, is over. Although the company did not disclose exact figures, the volume of goods sold should be at a similar level to last year (around USD 80 billion).

However, the world’s most populous country has one big problem to solve right now. China is still fighting in vain against the coronavirus and the daily number of new infections exceeds 30,000. This is the most since the beginning of the pandemic. China is fighting the covid with strict measures and some cities have even been closed for over 100 days. The closures also affect important industrial areas, and not only production but also demand is suffering. China is currently facing wild protests, which are said to be the worst since 1989. This could significantly depress the entire Chinese market. We must also not forget the ongoing geopolitical tensions between China and the West. The situation around Taiwan is still tense and the US has even banned the export of state-of-the-art chips to China. Given the current risks, Alibaba shares are thus suitable for speculation at most and not for long-term holding.

Zoom - welcome to the kingdom of volatility

Zoom Communications can be described as the kingdom of volatility, with its value down almost 60% since the beginning of the year. Such a fall was probably inevitable, after the Zoom shares shot up during the coronavirus. The current share price is comparable to that at the start of 2020. Adapting to a world without a coronavirus is extremely difficult for Zoom, and the company is thus facing a harsh reality. Can Zoom be described as a "one trick pony" - a company that no longer has anything to offer long-term investors? Or can the current price be attractive for long-term portfolios?

_{Zoom shares in the MT4 platform on the D1 timeframe along with the 50 and 100 day moving averages}

The company's third-quarter results would suggest the former. The numbers themselves were not too bad - earnings per share of $1.07 were well ahead of market expectations, and sales of $1.1 billion matched market expectations. If there is one thing investors do not like, however, it is a downgrade to the outlook for the next quarter or full year. Zoom is expected to end 2022 with $4.37 billion in revenue, which is less than the company itself and analysts had estimated. It is very hard for Zoom to find new clients, and the number of subscriptions through the web is even declining.

Moreover, Zoom has a very strong competitor in the form of one of the biggest companies in the world - Microsoft. Its Teams are stealing a large part of Zoom's clients. We must also not forget the competition in the form of Cisco and Google. With energy prices rising, it is possible that people will prefer working from the office to their own home. Zoom, like most of us, could be in for a tough winter. So Zoom definitely cannot be described as a "buy" and it would probably need a miracle to make a difference.

Lufthansa - a steep take off?

If anyone is benefiting from the post-covid era, it is the airlines. Strong demand for travel is driving their shares higher and Lufthansa, for example, has gained more than 12% since the start of the year, outperforming both the DAX and the S&P 500. However, the chart below shows that this year has not been without turbulence, and Lufthansa has also experienced high volatility. However, like the DAX index as a whole, it has been having a great time since the end of November. In that time, the shares have appreciated by almost 30%. Looking at the financial results, it is no wonder - sales practically doubled year-on-year to EUR 10.1 billion and EBIT quadrupled to EUR 1.1 billion. In addition, Lufthansa raised its outlook for the full year.

_{Lufthansa shares in the MT4 platform on the D1 timeframe together with the 50 and 100 day moving averages}

However, even Lufthansa is not a company without risks, as the pandemic has already shown us. Similar increases in the number of infections as China is currently experiencing could once again affect the aviation sector. Moreover, China is one of the destinations to which Lufthansa aircraft fly. Moreover, in September, the pilots' union went on strike in a fight for higher wages. This strike cost the company more than EUR 70 million and 800 cancelled flights. However, no more strikes are expected until June 2023. However, Lufthansa shares could pay the price for the overly optimistic rise in German shares in recent weeks. Winter can be very tough in Germany and the threat of a recession has certainly not yet been averted. A possible recession could have a significant impact on travel across Europe.

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