3 Magnificent Stocks to Buy in September

Key Points

• Apple has plenty of cash to solve its AI problems.

• Airbnb is expanding its addressable market by adding experiences and services to its platform.

• RH is performing well in a challenging housing market and should benefit from lower interest rates.

• 10 stocks we like better than Apple ›

The stock market makes it easy to build wealth. All you have to do is invest in strong businesses that are growing and profitable. Choosing top stocks from among brands or services you use regularly is a great place to start.

To give you some ideas, three Fool.com contributors are here to offer three timely stocks to buy in September. Here's why they chose Apple (NASDAQ: AAPL), Airbnb (NASDAQ: ABNB), and RH (NYSE: RH).

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »

Image source: Getty Images.

1. Apple still has an ace up its sleeve

John Ballard (Apple): Shares of Apple are up 40% over the past three years but are currently trading below their 52-week high of $260. Apple has a tremendous competitive moat around its ecosystem of products and services that locks in customers and generates enormous profits. While flat iPhone sales and the lack of a compelling artificial intelligence (AI) strategy has created uncertainty for investors, the recent dip is a good buying opportunity.

Apple is one of the strongest consumer brands. Its installed base of active devices, including iPhones, continues to hit all-time highs. Apple reported more than 2.35 billion active devices at the beginning of the year. This continues to fuel steady growth in services, including subscriptions and app purchases, which now make up more than a quarter of Apple's revenue.

While Apple Intelligence has had a positive impact on iPhone 16 sales, it hasn't been the game-changer investors were expecting. For a company that generates $96 billion in free cash flow and has massive cash resources on its balance sheet, Apple has surprisingly missed the boat on building its own proprietary AI models. But the good news is that Apple's enormous cash resources will allow it to catch up quickly through acquisitions, which is a catalyst to watch.

Apple's sticky ecosystem of products and services, growing installed base of devices, and profitability make the stock a solid investment. These advantages buy some time for Apple to figure out its AI strategy, providing investors a good opportunity to buy shares before better news sends the shares higher.

2. This travel powerhouse is thriving, but its stock isn't keeping up

Jennifer Saibil (Airbnb): Airbnb stock has not kept up with its growth, but as it continues to expand and increase sales, it looks poised to soar.

Airbnb has become the premier platform for vacation rentals, changing the landscape of the travel industry. While short-term rentals are its bread and butter, it offers a large assortment of services today, including longer-term stays and even living in Airbnbs.

It had already launched an entire segment devoted to experiences, which dovetails with its travel categories, and recently launched a new segment with all kinds of services, like salons and photography. Each of these new features increases its addressable market and its brand presence, making it the go-to name for travel-related services.

That's important to maintain its growth levels. Revenue growth has slowed, but it remains in the double digits, and revenue increased 13% year over year in the second quarter. Aside from the expansion, Airbnb is constantly adding new features and updates to improve the user experience and generate higher engagement and sales. Some of its updates include more flexible payments and a more fine-tuned search system, which makes it easier for customers to press the button.

It's also been building its brand in countries where it has plenty of rentals but lower name recognition. Just as many travelers use it domestically in the U.S., it's trying to make that happen in other regions.

It's done a spectacular job of generating free cash flow, which reached $1 billion in the second quarter at a 31% margin, and it's also highly profitable, with a 21% profit margin in the quarter.

The market has been disappointed in Airbnb's decelerating growth, and it has been concerned about regulatory hurdles. But Airbnb continues to thrive as a business, and its stock should eventually follow suit.

3. Housing stocks are coming back

Jeremy Bowman (RH): It's been a rough few years for RH, the home furnishing company formerly known as Restoration Hardware, but a number of tailwinds appear to be forming for the company.

First, after a long wait, the Federal Reserve appears to be ready to lower interest rates following Jerome Powell's comments at the Jackson Hole conference, and RH is likely to be one of the beneficiaries.

The company's business is correlated with the housing market, as home sales tend to trigger purchases of home furnishings. Even in a challenging housing market, RH has delivered solid results, returning to growth after an earlier lull as revenue rose by 12% in the first quarter.

Additionally, the company is expanding both geographically and into new businesses. It's opening up several galleries across Europe, and has launched new verticals, including a handful of guesthouses and restaurants, and leasing charter jets and yachts. That's all part of a strategy to extend the luxury brand beyond home furnishings, and it could significantly expand RH's addressable market.

The stock is still down significantly from its all-time high, and looks cheap based on forward estimates, trading at just around 15 times next year's expected earnings.

The company is set to report second-quarter earnings on Sept. 11, and better-than-expected results could spark a surge in the stock, and a rate cut from the Federal Reserve later in the month could do the same.

Over the longer term, RH has a lot of upside, especially if the housing market recovers.

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Jennifer Saibil has positions in Airbnb and Apple. Jeremy Bowman has positions in Airbnb and RH. John Ballard has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Airbnb and Apple. The Motley Fool recommends RH. The Motley Fool has a disclosure policy.