Conviction “Buy” Stocks for November

Picking the wrong stocks can decimate your portfolio.

They’re pure portfolio poison.  

But the right stocks…

If you pick the right stocks, you could find yourself jumping for joy on top of an enormous pile of cash.

With over 4000 tickers to choose from, finding the right stock at the right time can prove to be nearly impossible… 

Unless you’re spending hours each day combing the markets and researching companies.  

That’s why we’ve done the legwork for you.  

We sort through thousands of stock ideas and whittle them down to a few top choices that are primed for solid price action in the coming days, weeks and months.  

This week, we’ve narrowed it down to three stocks that could be getting significant attention in the near future.

Enel Chile (ENIC) 

Based in Santiago, ENIC is a key player in Chile’s electric sector. This leading utility company not only generates and distributes electricity across Chile but also manages natural gas distribution. Its energy sources are impressively diverse, including thermal, hydroelectric, wind, geothermal, and solar power.

Chile’s energy sector is experiencing a significant surge, with energy consumption expected to increase by 25% this decade. ENIC is well-positioned to capitalize on this growth, anticipating strong profit increases in the near future.

The company’s performance is evident in its financial success. ENIC’s stock has skyrocketed, achieving over a 100% increase in the past year. Its financial health is further highlighted by a net income margin of 28.4% for the trailing twelve months (TTM), surpassing the sector median by 200%. Additionally, its return on common equity (ROCE) for the same period is an impressive 36.2%, significantly higher than the sector average.

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Cintas (CTAS)

Cintas, a leader in specialized services and products, operates in two main segments: Uniform Rental and Facility Services, and First Aid and Safety Services. It dominates the U.S. uniform rental market, earning four times more revenue than its closest competitor, UniFirst (UNF), thanks to its extensive distribution network.

The company also provides first aid and safety products, positioning itself as a comprehensive service provider for corporate clients. This diversity of offerings has fostered customer loyalty and increased customer lifetime value.

Cintas has consistently grown its revenues and operating profits, with revenues compounding at an 8.6% annual rate over the last three years and EBIT growing at a 15.3% CAGR. Its operating margins average 20%, significantly outperforming UniFirst’s 7%.

Recognized for its consistent growth and superior profitability, Cintas is included in the Goldman Sachs Conviction List. Additionally, it’s a dividend aristocrat, having raised its dividend for 41 consecutive years. CTAS stock, with its stable business model, steady growth, and increasing dividends, offers reliability and value to shareholders.

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Supermicro (SMCI) 

Investors often prefer the stability of supplying essential tools, akin to selling shovels during a gold rush. Supermicro embodies this principle in the AI sector by providing the necessary hardware and servers that AI technologies depend on.

Supermicro’s role in enabling AI has already led to a 187% increase in shares year-to-date, with a 1,655% rise over five years. Despite these gains, the company maintains a reasonable 21 P/E ratio and remains profitable.

In the fourth quarter of fiscal 2023, Supermicro’s revenue grew by 34% year-over-year. While slower growth is projected for Q1 FY 2024, the full year anticipates a 33%-47% increase in revenue.

The company is expanding its operations in San Jose, Taiwan, and potentially Malaysia, aiming to meet the growing demand for AI capabilities. Supermicro’s strategic growth and expansion underscore its emerging leadership in a rapidly advancing industry.

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