5 Stocks I’m Buying in December [the Best in My Portfolio]

The stock market is currently in a bull market, with expectations for continued growth in the coming year. While stocks are becoming expensive, the speaker suggests focusing on existing winners within one's portfolio and avoiding chasing losing stocks. Five stocks are highlighted as strong buys due to their market leadership, competitive advantages, and growth potential, while two other stocks are held off on due to high valuations relative to their growth prospects.

Bull Market & Stock Outlook

• 00:00:05 The stock market is currently experiencing a bull market, having risen 25% in the past year. Wall Street anticipates this positive trend to continue for at least another year, with an average price target of 6,600 for the S&P 500 Index, representing a 10% return. However, with the S&P 500 trading at 28 times earnings, stocks are considered expensive, making it challenging to find good deals on new stocks.

Investing Rules

• 00:01:46 The speaker emphasizes two key investing rules. First, invest in what you already own and understand, rather than constantly searching for new, potentially hyped stocks. The speaker argues that stocks already in your portfolio are familiar and have been researched, making it easier to assess their industry performance and competitive advantages. Second, focus on chasing winners higher, instead of attempting to average down on losing stocks. This approach counters the common urge to buy more of a stock after it declines, suggesting that a company consistently underperforming its peers is likely to continue doing so, potentially leading to substantial losses.

Shopify & E-Commerce Growth

• 00:03:30 Shopify (SHOP) is highlighted as a strong buy, having a 90% return on the speaker's average cost. Shopify is a dominant player in the e-commerce market for businesses selling from their own websites, with a 27% market share. The speaker sees significant growth potential in e-commerce, as online sales currently account for only 15% of total retail sales in the US and even less globally, and believes Shopify will capture a large portion of that growth.

Cybersecurity Stocks

• 00:04:19 The speaker identifies cybersecurity as a strong growth theme, with CrowdStrike (CRWD), Palo Alto Networks (PANW), and Zscaler (ZS) as examples of stocks worth buying. Cybersecurity spending is increasing due to the escalating number of malicious programs and costly cyberattacks, and companies like CrowdStrike are leading with their software capabilities. Zscaler's partnership with CrowdStrike is seen as a significant development that could solidify their leadership position and propel growth.

Super Micro Computer & Data Center Buildout

• 00:05:22 Super Micro Computer (SMCI) is another stock the speaker is buying, despite initial skepticism. The company is a leader in the data center buildout for AI, and the speaker has experienced significant returns on his investment. While the stock may face short-term downside risk, the speaker believes the long-term upside potential is substantial, with the company experiencing strong growth and trading at an attractive valuation.