3 Stocks To Buy (& 3 Stocks To Sell) Before May 2026 Ends

Some of the hottest stocks in the stock market right now could be setting investors up for a massive loss. And some of the most overlooked ones might be the best opportunities of 2026. Today, we're breaking down three stocks that Morning Star believes you should consider selling before May ends and three that you should be considering buying instead. So, let's get into it. Stock number one, Sienna. The ticker CEN. Sienna makes the fiber optic equipment that data centers need to move enormous amounts of information from one place to another. And right now, demand for that equipment is off the charts because every company in the world is building out AI infrastructure at the exact same time. The stock has gone absolutely parabolic. Now remember, one of our core tenants of principal driven investing and the fifth and most important one probably is a great story becomes a bad investment if you pay the wrong price. So here's the problem. Sienna is currently selling at 173 times what Morning Star expects the company to earn in all of 2026. And even if you look all the way out to 2030, it is still trading at 74 times 2030's earnings. In plain English, you're paying an enormous price today for profits that aren't even expected to come in for many years to come. And if anything along the way goes slightly wrong, slower AI spending, more competition, a slowdown in data center buildout, the stock has a long way to fall. Second stock that Morning Star says to sell, SanDisk. guys, they make memory chips, the short-term storage that computers and AI systems need in order to function. And right now, there's a massive shortage of these chips because of the AI boom. Demand is so high that companies will pay almost anything to get their hands on them. The stock is up over 400% this year alone. But here's the issue. Memory chips are commodity. That means when the supply and demand situation normalizes, and it always does over time, prices come back down. Companies that manufacture these chips are already retooling their factories to make even more. So when that extra supply hits the market in the next year or two, the same companies that are charging premium prices today could be under enormous pressure. If you're buying the stock based on these prices today continuing on forever, that's kind of a risk. The stock is priced like the shortage is going to last forever. History says it will not. So, we're going to take this through our process later in the video to see how it stands up to our test. Stock number three to sell, iron. This is a data center company focused on powering Bitcoin mining and AI using renewable energy. Morning Star has described it as almost a trifecta of everything that's hot right now in the stock market. Data centers, Bitcoin, and AI all-in-one. That being said, analysts say the company has no durable competitive advantage that sets it apart from any of the other competitors and it trades at a very very high premium. Remember, in the short run, the stock market's a voting machine, but in the long run, it's a weighing machine. What that means is what's popular in the short run will go up. What's not popular will go down, but in the long run, the fundamentals of business will drive the value of the company. So, let's shift gears to what everyone wants to hear. These are the stocks that Morning Star says you should be buying. Now, I want to say something very short and direct. Do not buy or sell a stock because Morning Star says to do it. Do not do any of these things because I don't like the company or I love the company. Don't do it because anybody in the world, the investors who get destroyed are the ones who hear a name, feel the excitement, and buy without ever understanding what the business is worth or what price they should be paying. That's how you lose real money. What we're trying to do on this channel and in our videos is a starting point. We're trying to teach a process, a reason to look closer, and then we do our own work. And that's what I want you to remember as a key takeaway from this video and any other video on our channel that you watch. Stock number one, Alphabet. Now, most people know this as Google. Or if you're a fan of this channel, I like to call it the googly moogly. Unlike what many people speculated not too long ago, Google search is not being destroyed by AI. It's actually being improved by it. More useful search results mean more engagement, which means more advertising revenue. YouTube, which is the world's second largest search engine and owned by Google, is benefiting tremendously both with ad volume and prices going up. And Google Cloud, which is their business that rents computing power to other companies, is growing fast as a key platform for AI development. Morning Star's reasoning on this one is that Alphabet benefits from AI in multiple ways at the same time. Internally through better products, externally through cloud demand, and in its advertising business. What's interesting is a few short years ago, Google was at $84 per share. On top of that, just a year ago, it was around 150 per share. Here's what's crazy about the market. It was a hated company. Better price, better potential returns than today. And now when it's two or three times higher, people are more excited. But we don't want that to affect how we look at it as a potential investment today. We want to be as unbiased as possible. So let's find out if the current price makes sense. And when you're done with this video, guys, I encourage you to go back and look at our videos on Google in past years. You're going to see a very consistent theme of how we talk about companies. So, Google, another great balance sheet business, $4.7 trillion market cap, very similar enterprise value with huge cash flow. But here's what's interesting. Their cash flow, 64 billion last year, 67 billion every year for the last 5 years. Look at this net income. $160 billion last year. That big difference is because of their capex spend. All of these major companies are spending a ton on capex. So the question begs, is it going to continue and are they going to get a return on the money they're investing? That's very very difficult to understand right now. So they have a little dividend of 2% but guys look at that. It pays $10 billion a year because of how high the market cap is here. Return on invested capital strong getting better. Look at this. Their profit margin 26% a year for the last 10 29 and a half% for the last five 38% last year. That's huge. And with a company with a 60% gross margin and that kind of growth rate, their profit margin can continue to go up. This is absolutely insane. 38% bottom line profit margin. Incredible. Let's see what the eight pillars look like. All right. Everything's a check except for our valuation metrics. But remember guys, free cash flow and net income have in well, not free cash flow, net income has increased significantly in the last 5 years. So, I'm not really worried about this. I'm going to ignore these. And the other thing is if they're able to grow their profit 30 or 40% a year for a long time, this is cheap. But everything else, cash flow growth, net income growth, revenue growth, low debt, buying back shares, which could be bad. High returns on capital makes me feel good about the company saying this is probably a well-run business that might be a little expensive. So, let's see what analysts think the growth rate on earnings will be. 6% 16% 11 a.5 26 and 17 not as high as I would have thought but almost doubling in the next four years and earnings growth revenue growth I mean very similar $485 to 772 not quite doubling but guys a $780 billion revenue business in the next few years with amazing growth with amazing margins so it begs the question what is the right price to pay for this company so the assumption I 7 9 13% revenue growth. Less than analysts are thinking, but I'm okay with that. 25, 30, and 35% profit margin. Now, this one I'm a little hesitant on. I wondered myself, am I being too conservative here? And the reason being is I I look at their revenue going, isn't this probably pretty sustainable revenue? It's not like I'm worried about, you know, the cloud revenue collapsing. I'm worried about their capex spend, but the crowd revenue collapsing, I'm not as worried about. So, let's keep it there for right now. Now, what PE and price to free cash flow 10 years from now, I did 20, 23, and 26. And honestly, guys, if you said to me higher numbers than this, I'd be like, that probably makes sense. I mean, this is Google and YouTube. I mean, this is absolutely incredible. So, I get it. And then finally, my 9% market intrinsic value return. I hit the analyze button. The stock is currently at 385. I have a low price of 215, high price of 5.81, middle price of 330. So based on my middle assumptions, I'm looking at a 7% discounted cash flow return. Even if I make assumptions higher at the top, I don't think I'm getting the return I need for a company. Stock number two, DAO. Ticker is DO. Now, this one is a lot less exciting. But I think it's really interesting idea and many of our community members actually were a big fan of this opportunity before the recent runup. DAO is a US chemical company. They make chemicals that are derived from oil, things that go into plastics, packaging, coatings, and a wide range of industrial products. Now, here is the thesis. According to this article, basically because of the Iran war and the disruption to the straight of Hormuz, Asian chemical companies are struggling to get enough oil to keep their factories running. So, what are they doing? They're cutting production. But US companies like DAO have access to domestically produced oil and are not facing those exact same shortages. DAO can run their plants at full capacity right now and fill the gap that Asian competitors are leaving behind. So more volume at higher prices mean much better revenue and better margins. And on top of that, the stock pays a three and a half% dividend while you wait for that story to play out. A lot of investors love that. Finally, stock number three that Morning Star talks about buying is Loheed Martin LMT. Lheed is one of the largest defense companies in the world. They build fighter jets, they build missile systems, and they build military technology. The stock has pulled back from its highs, and Morning Star thinks that pullback has created a real opportunity. First quarter results were actually soft. Revenue was flat year-over-year, and margins actually contracted just slightly. But Morning Star says that that's it normal because Q1 is historically the slowest quarter for defense companies. More importantly, the long-term story has not changed. Defense budgets in the United States are not going down. Countries in Europe are spending more on their own defense than they have in decades. Now, you've heard the whole list, all six stocks. As I said before, we never even consider buying or selling anything blindly because anybody in the world or any company in the world with a fancy title said to even if Warren Buffett owns a company, my first thought is let me go see if I can find what he sees. So, I'm going to run Sandis through our stock analyzer so you can not only see what potential forward returns look like from today's price, but more importantly, we can understand that having a strong fundamental process is absolutely essential for successful investing. So, I'm going to pull up SanDisk here. SanDisk Corp., wow, look at this. Down 7 and a half% today, but year-to- date up 420% even after the fall today. The market cap is the true price of the business, $243 billion. And this is what I love, guys. Their enterprise value is exactly the same. What this means is they essentially have zero debt. That is awesome. A great balance sheet item. Now the issue we have is last year they they generated $4.5 billion in free cash flow but in the last five years they've only generated 1 billion. So this is the whole idea of the surge in the last year has really skyrocketed the free cash flow but is it temporary because of pricing no dividend price PE ratio 54 price to free cash flow 54 PE fiveyear P of 300 fiveyear um price to free cash flow of 240. Look at these margins. 13.85 in the last 10 years, 11% in the last five, 34% last year. This, if I'm looking at this company for the first time and you cover the name, I would say, "What the f happened here?" Was there a temporary demand thing? There's, this seems very unlikely that a 10-year profit margin and a 5year profit margin are all of a sudden going to permanently triple. Seems unlikely. You know guys, the question was asked of is it because AI data centers need need hard drives? Guys, hard drives and this kind of data storage is so much easier to make than chips. So, if we're making the argument that Nvidia and Micron and AMD are making these great chips and they're going to start kind of like div, what about this kind of stuff? This is even easier for these guys to make. Now what's interesting guys is return on invested capital is 2% in the last year even with this amazing cash flow. I don't get why that is but look at this revenue growth. Last 10 years is 15% a year. Last 5 years is 15% a year. Last three years is 33%. So guys I threw a lot of data at you and if you're new to this you're probably like feeling overwhelmed and that's okay. At every point in every great investor's life they are overwhelmed and probably for a while. The question is do you want to become a better investor? Do you want to sleep better at night knowing that you understand that when you buy a stock, you're buying a piece of a business that you understand? So, I've made it very easy. I put all of these key metrics in an easy downloadable cheat sheet. Click the link below or click in the first comment that we pinned. We will send you this cheat sheet absolutely free within a matter of minutes to your email. have it readily available so as you watch more and more of our videos when we talk about individual companies, you can understand them better and you can really impress yourself and other people with your knowledge about companies. Right guys, let's see what analysts are saying about this company. So they have the profit going from $41 to $78 with a big jump next year and then coming back down and with revenue they have a they see a huge spike and then gradual decline again. So even analysts are like, "Listen, this probably can't stick around here for a long time." But if they're right and the company's still making $78 per share, $80 per share in two years, let's say you apply 20 times earnings of that one, it's still almost $1,600 in terms of a value. And what's the stock currently trading at? 1430. Now, we don't know what's going to happen in the future. Analysts could be wrong, and the company's fundamentals do even better. It's just when you're assuming great things all the time, it's kind of hard to get your head around that. Guys, one of the most important reasons I teach on YouTube is I want everybody to remember the the fifth and most important tenant of our principal driven investing. A great story becomes a bad investment if you pay the wrong price. I hear so many people, including financial adviserss and bankers, falling in love with the story and never asking the question, how much? And that really drove me nuts. That's one of the most important things I want you to get from this channel. So, how do we get there? We go to our stock analyzer tool. We can input the assumptions on our great story. So, guys, we pulled up SanDisk and my most recent assumptions about SanDisk. I did a 10-year analysis. I really don't know where this is going because whenever a company has a massive increase, it's like, is it stable? I did assume that here. But let's see when I did my assumptions on SanDisk the first time. the last time that was only last month. So guys, I'm gonna be a little more conservative here. I'm going to go with negative five, seven, and uh let's call it 15% revenue growth. For profit, I'm going to do 8,4 and 20 because I don't think the last year is going to be sustainable. And for PE, I did 14, 17, and 20. But remember, it's the PE and price of free cash flow 10 years from now, not today. after the company's grown whatever percentage, what's the value going to give it? And finally, my 9% no margin of safety intrinsic value return. What is the company worth today? Now, remember, I'm not paying to get a 9% return. I don't think you should either. You might as well just buy a lowcost ETF. But the return you ask for is very specific to you. Depends on how well you understand the company, what your goals are, etc. So, I hit the analyze button. If you're watching this video, you already know you need to be a smarter about how you invest. You just haven't found the right process to do it yet. Everything Money built software and community that makes smart investing feel a lot simpler. The stock analyzer tool shows you what a stock is actually worth based on the assumptions that you are making yourself, not somebody else out there. The eight pillars will help check whether the business behind it is strong. You put the two together and you finally have a process that you can trust every single time because it's based on you. You become the kind of investor who owns things for the real reasons, the right reasons, your reasons. You're not going to panic when the market drops. You're going to get excited. Who knows the difference between a bad day and a bad investment. That kind of confidence is rare. You're going to have it. And it changes everything. This was built for people like you, not for hedge funds or finance professors. Those people are not as smart as you may think. Just everyday investors who want to do this the right way. And you have the advantage of not having to make tons of investors happy on a daily basis. Just help you sleep better at night. So start a 7-day trial for just $7. Click the link in the description below and get full access in minutes. And here are the numbers I get. I have a low price of 56, high price of 773, middle price of 260. Guys, this feels like a very cyclical business and it's going to look its best at the peak and its worst at the bottom. But even assuming 20% returns and high assumptions here, I have a value of 773. This one's hard for me to it's a hard pill for me to swallow. I just can't get around this unless the last year is the same for many years to come and the growth is incredible. That seems unlikely. So guys, remember, even though Morning Star will say they're long-term oriented, they're talking about buying and selling stocks in any given month based on what's going on in the short run. That's not the way we operate. We look at this as, do I want to own this company for 10, 20, 30 years. So, if you want to see every stock that I'm buying right now for that 10, 20, 30 year period, I put together a video breaking down the 12 moves I just made in my own portfolio. So, go check that out next. Thank you for your time.