I’m looking for the top stocks to buy in June.
Carvana (NYSE:CVNA), the online used car marketplace, emerged as the top-performing stock in the past month (through June 1), surging 128% and being one of three companies to double its share price.
When selecting the best stocks for June 2023, it’s typically about quality companies for long-term ownership. However, I’ll approach it differently this time.
I previously recommended stocks that performed well last year, expecting a repeat performance. However, for high returns in June, I selected three names with potential for a repeat performance from May, as they were among Barchart.com’s top price change advances.
Here goes.
| CELH | Celsius Holdings | $145.16 |
| NFLX | Netflix | $410.99 |
| SPLK | Splunk | $102.19 |
Celsius Holdings (CELH)
Celsius Holdings (NASDAQ:CELH) has gained nearly 34% over the past month and is up 93% over the past year.
Celsius is a functional energy drink maker. PepsiCo (NASDAQ:PEP) acquired the company’s U.S. distribution in August 2022, boosting its business, with global distribution planned. It also invested in convertible preferreds that would give it 8.5% of Celsius.
Distribution is critical to your success when you’re a fast-growing consumer brand. Nobody does it better than Pepsi. It seems to have helped. Celsius’s North American sales more than doubled in the first quarter, with global sales up 95%. The company achieved a significant improvement in gross margin, up 340 basis points to 43.8%. This resulted in a four-fold increase in operating profit to $44.9 million compared to the previous year.
I first recommended Celsius in November 2020, suggesting it was a micro-cap stock to hold for the next 10 years. Despite many names on the list fading or being acquired, my confidence in the energy drink company remains, particularly with Pepsi’s involvement.
It’s capable of a 33% move in June.
Netflix (NFLX)
Netflix (NASDAQ:NFLX) stock is up nearly 27% over the past month and 145% since hitting a 5-year low in June 2022. Its business is back to being the premier streaming service, while its competition is hemorrhaging losses.
The company recently revealed its Australian revenue for the first time, and it is pretty robust. Netflix Australia generated $1.o6 billion in revenue in 2022 from approximately five million subscribers.
However, success in Australia does have its consequences. The Australian government could force it to spend between $100 million and $200 million on Australian productions. Given my Netflix viewing experience, that shouldn’t be a problem.
In one of the more toothless gestures, Netflix shareholders recently voted down the pay package of Netflix executives recently. This was largely a symbolic move, and one I’m not losing sleep over.
More importantly, in May, Barron’s reported on the company’s password-sharing crackdown and the positive aspects for shareholders. If 10% of Netflix members add just one more member, the company could generate $1.7 billion in additional annual revenue with minimal cost. That’s a real potential win for shareholders over the long-term.
Between the password crackdown and its ad-supported tier, Netflix’s future revenues will improve greatly.
Splunk (SPLK)
It’s been a while since I covered Splunk (NASDAQ:SPLK), the data analysis software company assisting businesses with large data sets. It’s up 24% over the past month, moving it into positive territory in 2023.
The company reported Q1 2024 results at the end of May. The highlights included an 11% revenue increase to $752 million, surpassing analyst estimates, and a 16% rise in annual recurring revenue to $3.7 billion.
Notably, the quarter saw adjusted earnings per share of 18 cents, surpassing the consensus by 31 cents, along with a positive free cash flow of $486 million, a 253% year-over-year increase. Splunk now expects free cash flow of $815 million in fiscal 2024 at the midpoint of its guidance.
Based on its 2024 free cash flow projection, SPLK stock carries a free cash flow yield of 4.8%. Anything between 4% and 8% is fair value.
The company continues to convert existing clients from software to the cloud. In the first quarter, its cloud revenue was $419 million, 30% higher than a year ago. Furthermore, at the end of the first quarter, it boasted 810 customers with $1 million in ARR, marking 17% year-over-year growth.
Analysts are moderately positive on the stock, with 25 out of 40 rating it as overweight or buy. The median target price is $123, and no one rates it as a Sell.
Down 12% over the past five years, it’s time for SPLK stock to get going.
On the date of publication, Will Ashworth did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.