5 Top Stocks to Buy in November

2024 has been another excellent year for major indexes like the S&P 500 (SNPINDEX: ^GSPC) -- which is up 20% year to date. Some investors may want to ride the rally higher by targeting today's leading names, whereas others may be looking for better bargains or passive income opportunities.

Microsoft (NASDAQ: MSFT), Coca-Cola (NYSE: KO), and Roku (NASDAQ: ROKU) just sold off after reporting earnings. Meanwhile, Vertex Pharmaceuticals (NASDAQ: VRTX) is putting up another solid year, and Chinese electric vehicle (EV) maker BYD (OTC: BYDDY) has been one of the best-performing automakers.

Here's why five Fool.com contributors picked these five companies as top buys in November.

Image source: Getty Images.

Microsoft is too cheap to ignore

Daniel Foelber (Microsoft): The $3 trillion tech giant isn't cheap by traditional valuation metrics. However, it is a steal, considering the strength of its earnings profile and the multiple levers the company pulls to reward shareholders.

Coming off of a record fiscal 2024, there was pressure on Microsoft to deliver a blowout first-quarter fiscal 2025 report -- and it did just that -- with sales and earnings coming in ahead of Wall Street expectations. But the stock sold off 6.1% on Oct. 31 in response to guidance for Intelligent Cloud and Azure, which indicated growth could be slowing.

Intelligent Cloud is largely responsible for Microsoft's improved margins and top-line growth rate. The threat of slowing growth, paired with higher capital expenditures on artificial intelligence investments that could take years to pay off, led short-term-minded investors to run for the exits.

But even with higher spending, Microsoft is still growing revenue and earnings at a double-digit rate. The company is returning record amounts of capital to shareholders through dividends and buybacks. And it isn't taking on debt to fund its growth, but rather, reinvesting profits back into the business. So its balance sheet remains extremely healthy -- finishing the quarter with $78.43 billion in cash, cash equivalents, and short-term investments compared to just $42.87 billion in long-term debt.

The impressive results, paired with the sell-off in Microsoft stock, have pushed its price-to-earnings ratio down to just 33.9, which is right around the median P/E over the last five years. The valuation is beginning to look inexpensive -- given that Microsoft is a much higher-quality business today than in past years.

Add it all up, and Microsoft is an excellent blue chip growth stock to load up on in November.

Profits bubble up to the top

Demitri Kalogeropoulos (Coca-Cola): The Santa Claus-emblazoned red cans are already in stores, but that doesn't mean it's too late to consider Coca-Cola stock as an investment for 2024 and beyond. In fact, several metrics from the late-October earnings update signal even better days ahead for this dominant beverage giant.

Sales in the Q3 period that ran through late September were up a robust 9%, with healthy gains in both the U.S. and Latin American markets. Consumers don't appear to be revolting against price increases, either. That 9% sales bounce comprised 11% higher prices and a modest 1% volume decline. The gains reflect Coke's brand power at a time when many consumers are trading down to stretch their grocery budgets.

"Our business continues to demonstrate resilience in the face of a dynamic external environment," CEO James Quincey said. Coke gained market share despite slightly lower sales volumes.

The finances were just as impressive. Coke generated 31% operating profit margin, up from 30% a year ago. That result still compares well with rivals like PepsiCo, which are struggling with more price-sensitive shoppers in the snack food segment.

KO Operating Margin (TTM) data by YCharts.

But why buy Coke stock now? Shares in late October are priced at 6 times sales, which is about the middle of the trading range investors have seen in the past few years. You could have purchased the stock at 5 times sales in late 2023, but the valuation also reached 7 times sales at several points in 2021 and 2022.

Coke could indeed post slower growth in 2025 as the lift from price increases fades. That's the biggest knock against diving into this stock. However, that risk is balanced against Coke's market share gains, high profit margin, and a dividend that currently yields 3%. For most dividend investors seeking a balance between growth and income, Coke remains an excellent choice.

If you don't own Roku stock yet, it's a great time to get started

Anders Bylund (Roku): Media-streaming technologist Roku is Wall Street's worst-kept secret. The company keeps going from strength to strength, and bearish investors still find reasons to keep the stock price down.

Roku's stock was on the rise from early August to late October. The Street-stumping second-quarter report inspired several bullish analyst reviews and refreshed investors' confidence. When the company followed up on that positive momentum with another estimates-beating report last week, the bears were back in town.

The company smashed Wall Street's consensus earnings estimates, drawing close to breakeven bottom-line results after a couple of years in the red. Revenues also exceeded expectations, with a pronounced growth spurt in the platform segment. That's Roku's division for software licensing, ad sales, and the company's fees for streaming service subscriptions ordered through the Roku platform.

Ad sales are taking off, boosted by a freshly signed partnership with The Trade Desk. The Roku Pay service is generating significant sales and helping streaming services grow their subscriber counts. Yet, Roku's stock plunged the next day as investors focused on modest fourth-quarter guidance and a revamped set of key operating metrics.

The guidance issue needs some extra context. Three months ago, Roku said that the platform division's year-over-year growth rate should accelerate in the fourth quarter. The third-quarter report did not refresh that target, indicating an annualized growth rate of 14% for the platform segment's fourth-quarter sales. That's the same rate as reported in the third quarter, and not an acceleration at all.

But that bearish argument misses an important point. Sure, the platform sales jump from Q3 to Q4 won't be as dramatic as previously projected -- but the third-quarter results already delivered that planned growth spurt, three months ahead of schedule.

So Roku sped up the growth schedule in its highest-margin business division, and pessimistic investors saw that as a bad sign. It's hard to overstate how much I disagree.

Furthermore, changes to key metrics were widely criticized for making Roku's results less transparent. The company will stop reporting subscriber counts and average revenue per user (ARPU) in 2025, refocusing its financial reports around the four pillars of streaming hours, platform revenue, adjusted EBITDA, and free cash flow.

This reshuffling of key metrics is similar to what Netflix did in 2022. That's when the leading video-streaming service (and former corporate parent of Roku) refocused its financial reporting and overall business plan from maximum subscriber growth to profitable revenue gains. The shift was not popular at the time, and many investors complained when Netflix stopped offering guidance for subscriber growth.

Netflix's new reporting structure didn't stop the company's growth. If you bought Netflix stock in the summer of 2022, you've more than tripled your investment by now. Roku isn't following exactly in Netflix's footsteps, but is treading a similar path.

All things considered, I think Roku's stock took a haircut when it really deserved a punk-rock spike instead. As such, Roku looks like a fantastic buy right now.

A high-conviction biotech stock

Keith Speights (Vertex Pharmaceuticals): Many stocks are priced for perfection with the stock market near all-time highs. A new incoming administration adds uncertainty about what changes will come next year. I think now is the time for investors to focus on high-conviction stocks. For me, Vertex Pharmaceuticals fits the bill.

Vertex markets the only approved therapies that treat the underlying cause of cystic fibrosis (CF), a rare genetic disease. The company expects to generate revenue of around $10.8 billion this year. I predict significant revenue acceleration over the rest of the decade.

One new growth driver has already been approved by regulators. Vertex is ramping up commercialization efforts for Casgevy, a one-time treatment for the rare blood disorders sickle cell disease and transfusion-dependent beta-thalassemia.

Two others could be on the way soon. The U.S. Food and Drug Administration is scheduled to make an approval decision for Vertex's vanzacaftor triple-drug CF combo by Jan. 2, 2025. An approval decision for suzetrigine, a non-opioid therapy for moderate to severe acute pain, is expected by Jan. 30, 2025. I think both have the potential to become blockbuster drugs.

Vertex's pipeline features two additional late-stage candidates that could also be huge winners. The biotech company is evaluating inaxaplin in a phase 3 clinical study targeting APOL1-mediated kidney disease (AMKD). There are currently no approved therapies for treating the underlying cause of AMKD, and the indication presents a larger potential market for Vertex than CF. Vertex is also evaluating povetacicept in a phase 3 study targeting IgA nephropathy, a kidney disease that affects around 130,000 patients in the U.S. alone -- higher than the global CF patient population.

At first glance, Vertex might seem a bit pricey, with shares trading at 25.6 times forward earnings. However, its strong growth prospects over the next few years make this biotech stock a bargain, in my view.

An EV stock with huge potential

Neha Chamaria (BYD): The monthly sales numbers for EVs are out, and there's one company that's absolutely crushing the market. China's BYD, in fact, just topped Tesla, generating more revenue than the Elon Musk-led EV giant for the first time ever. And this could just be the beginning for BYD.

Defying all signs of a slowdown in the global EV market, BYD reported its fifth straight month of record deliveries in October, with monthly sales of its new energy vehicles (NEVs) crossing 500,000 units for the first time. Its NEV sales were up 66.5% year over year. NEVs include battery-electric vehicles, fuel-cell EVs, and plug-in hybrids. BYD generated $28.2 billion in revenue in its third quarter, topping Tesla's Q3 revenue of around $25.2 billion.

These numbers speak volumes about BYD's size and scale of business. It is already the largest NEV producer in China, has massive operations in North America, Europe, and Asia, and is also the world's second-largest manufacturer of EV batteries. In-house battery production is also one of the major reasons why BYD hasn't felt the heat of high costs and supply constraints, unlike several EV makers, and even earned record net income in Q3.

Aside from several passenger car models, BYD also produces commercial vehicles, including buses and pickup trucks, and has factories at multiple locations globally. With BYD delivering blowout sales numbers month after month, rapidly expanding its global footprint, and boosting its in-house capabilities, this EV stock could be one of your best buys in the long term.

Don’t miss this second chance at a potentially lucrative opportunity

Ever feel like you missed the boat in buying the most successful stocks? Then you’ll want to hear this.

On rare occasions, our expert team of analysts issues a “Double Down” stock recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:

• Amazon: if you invested $1,000 when we doubled down in 2010, you’d have $22,050!*
• Apple: if you invested $1,000 when we doubled down in 2008, you’d have $41,999!*
• Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $407,440!*

Right now, we’re issuing “Double Down” alerts for three incredible companies, and there may not be another chance like this anytime soon.

See 3 “Double Down” stocks »

*Stock Advisor returns as of November 4, 2024

Anders Bylund has positions in Netflix, Roku, and The Trade Desk. Daniel Foelber has no position in any of the stocks mentioned. Demitri Kalogeropoulos has positions in Netflix and Tesla. Keith Speights has positions in Microsoft, PepsiCo, The Trade Desk, and Vertex Pharmaceuticals. Neha Chamaria has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends BYD Company, Microsoft, Netflix, Roku, Tesla, The Trade Desk, and Vertex Pharmaceuticals. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.