5 Top Stocks to Buy in October

As we enter the final three months of 2025, some investors may be looking for red-hot growth stocks with room to run. Whereas others may be searching for beaten-down stocks at compelling valuations to boost their passive income.

With the major indexes near record highs and just a handful of companies able to move the entire S&P 500 (^GSPC 0.59%), some investors may feel that there’s little choice but to ride the wave. But there are plenty of opportunities if you know where to look.

Down between 11% and 66% from their 52-week highs, here’s why these Fool.com contributors believe that PepsiCo (PEP 0.39%), Coca-Cola (KO -0.52%), Energy Transfer (ET 0.26%), Vertex Pharmaceuticals (VRTX 1.00%), and The Trade Desk (TTD 0.83%) stand out as top stocks to buy in October.

A tasty dividend giant

Demitri Kalogeropoulos (PepsiCo): With many stocks, especially in the tech sector, touching new highs in late September, this is the perfect time to consider adding a high-quality dividend giant to your portfolio. PepsiCo is an especially tempting value today, as it has lost ground in 2025 compared to the broader market’s double-digit rally.

Sure, the snack and beverage seller’s business is under pressure from weak demand and rising costs. Organic sales were up just 2% in the six months that ended in mid-June as core earnings fell 3%. Sales in 2024 rose at about the same 2% rate, yet earnings improved by almost 10%.

Investors can look past this year’s expected flat profits to pick up a cash-rich business with ample room to boost dividends over the coming years. Pepsi in July told shareholders that it plans to return $8 billion in dividends in 2025, even as it spends $1 billion on stock buybacks. The company also reported a modest sales acceleration, which might extend into Q3. Watch Pepsi’s Oct. 9 earnings report for signs of further improvement in growth and profitability.

In the meantime, Pepsi’s stock is yielding over 4% right now, and the Dividend King has hiked its payout for 52 consecutive years. That streak can easily continue through this period of sluggish sales growth, and investors can sit back and collect the cash while they wait for Pepsi to speed its expansion back up. In a market that’s offering fewer and fewer deals, PepsiCo stands out as a great choice for investors.

Coke is a no-brainer buy in October

Daniel Foelber (Coca-Cola): Playing off my colleague’s Pepsi pick, fellow beverage behemoth Coca-Cola looks like a great buy for income investors in October.

Like Pepsi, Coke is a Dividend King, having raised its payout for the 63rd consecutive year in February. Coke also has a high yield at 3.1%.

Coke faces similar pressures to its peer — higher cost of living and inflation hitting consumers’ pocketbooks. But Coke is holding up fairly well by generating organic growth and adapting to consumer preferences by leaning into low-sugar versions of its flagship Coca-Cola and swapping high-fructose corn syrup for cane sugar in the U.S. Coke is forecasting 5% to 6% organic revenue growth in 2025, which is impressive considering the operating environment.

You can count on one hand the number of S&P 500 companies in Coke’s league of dividend reliability. And with the business performing decently well, the question for long-term investors comes down to valuation. Coke is currently trading at a significant discount to its 10-year median price-to-earnings ratio. And in general, when Coke’s yield jumps above 3%, it’s usually a signal that the valuation is attractive.

KO PE Ratio data by YCharts

With established, slow-to-moderate growth companies like Coke, the entry point into the stock matters more than companies that can justify their valuations over time with breakneck growth rates. Coke’s long-term growth model calls for 4% to 6% annual organic growth and 7% to 9% currency-neutral earnings per share growth. This is great for steady dividend growth, but it also means investors want to make sure they are paying a fair or cheap price for Coke so the overall investment can produce a solid total return and not just depend on the dividend alone.

Coke is the type of stock you don’t have to overthink. The business model is sound, the results are good considering the circumstances, and the valuation is compelling for long-term investors. Add it all up, and it’s the perfect passive income powerhouse to buy in October, especially for risk-averse investors.

A wealth compounder in a volatile industry

Neha Chamaria (Energy Transfer): Oil and gas stocks are inherently volatile, but a bunch of companies in the sector provide essential services that are vital to the economy, and their cash flows are relatively stable regardless of the swings in oil and gas prices. One such company is investing $5 billion into growth this year alone and targeting 3% to 5% annual dividend growth in the long term. If you think that dividend growth is insignificant, here’s a five-year chart showing how significant reinvested dividends have been to the stock’s total returns in the past five years. That’s Energy Transfer for you.

ET data by YCharts

With shares of Energy Transfer down about 11% in 2025 so far, it’s an opportunity to buy. Energy Transfer processes, stores, and transports natural gas, crude oil, natural gas liquids (NGLs), and liquefied natural gas. Its pipeline of over 140,000 miles spans major oil and gas production basins, and the company moves almost 30% of the natural gas produced in the U.S.

Energy Transfer is undertaking major expansions, especially in the Permian Basin. Other important projects include the Hugh Branson pipeline, which spans 16 Texas counties and will capitalize on demand for power from data centers, and the Nederland Flexport NGL terminal, the world’s second-largest NGLs export facility.

Energy Transfer also owns a 34% stake in Sunoco (NYSE: SUN) and formed a joint venture with it in 2024, combining their crude oil and produced water gathering assets in the Permian Basin. Just a few months prior, Sunoco had acquired NuStar for $7.3 billion in a deal immediately accretive to its cash flows.

So, while Energy Transfer enjoys the fruits of Sunoco’s growth, its own expansion projects are expected to come online starting in 2026. The potential growth in its revenue and cash flow should support Energy Transfer’s dividend growth goals, a big yield (the stock currently yields 7.6%), and generate meaningful returns for investors in the long run. The only thing to keep in mind is that Energy Transfer is a master limited partnership and sends Schedule K-1 Federal Tax Forms, something prospective investors should be familiar with.

Solid downside protection, strong upside potential

Keith Speights (Vertex Pharmaceuticals): I haven’t been bashful about declaring my concerns that the stock market is priced for perfection. I’m not alone in that view, by the way — Federal Reserve chair Jerome Powell recently expressed a similar take. But if a market decline is on the way, I think that Vertex Pharmaceuticals will hold up better than most stocks.

Vertex sells the only approved therapies that correct misfolded CFTR proteins that cause cystic fibrosis (CF). A stock market correction won’t prevent physicians from prescribing the company’s drugs, nor will it keep patients from taking them. While I like Vertex’s solid downside protection from its CF franchise, I’m even more enthusiastic about the stock’s strong upside potential.

Let’s start with Vertex’s newest CF therapy, Alyftrek. It offers a once-daily dosing that’s more convenient than the company’s top-selling drug, Trikafta/Kaftrio. Even better, Alyftrek has a lower royalty burden, which will boost Vertex’s profits.

I’m especially bullish about the company’s new pain drug, Journavx. It should have a huge commercial opportunity as a non-opioid. The initial launch of Journavx is going so well that Vertex is increasing its investment in sales and marketing efforts.

Then there’s Vertex’s pipeline. The company thinks it could file for regulatory approvals of two late-stage programs next year: zimislecel in treating severe type 1 diabetes and povetacicept in treating IgA nephropathy (a chronic kidney disease). In addition, Vertex has three other programs in phase 3 clinical studies. I’m particularly watching inaxaplin. If all goes well in late-stage testing, it could become the first approved therapy to treat APOL1-mediated kidney disease, which affects more than twice the number of patients worldwide as CF.

This adtech veteran looks cheap right now (in a certain slant of light)

Anders Bylund (The Trade Desk): Digital advertising titan The Trade Desk is down in the dumps these days. The digital advertising industry still hasn’t fully recovered from the 2022 inflation panic, where many big-ticket ad buyers slowed down their spending. Some customers are also unhappy about The Trade Desk’s high fees, giving Amazon (NASDAQ: AMZN) an opportunity to steal some market share with its lower-priced ad management system. And the ongoing trade wars with unpredictable tariff rates added another reason to hold back ad-buying budgets.

At the same time, The Trade Desk is posting several big wins. Its Unified ID 2.0 (UID2) technology is replacing third-party tracking cookies across many ad-buying systems and consumer-facing displays (web browsers, smart TVs, you name it). As for the macroeconomic pressure, no downturn lasts forever. Buying at a deep discount could set you up for big long-term gains as The Trade Desk navigates the guaranteed cyclical upswing — though I’ll admit it’s hard to pinpoint when the upturn might come.

And I get it if you turn up your nose at The Trade Desk’s valuation ratios. A stock trading at 57 times trailing earnings and 8.6 times sales never looked cheap, and that’s where this stock stands as of Sept. 24.

Yet, the stock is down 60% year to date and even more from last December’s all-time peak of $141.53. That’s a tremendous discount from recent prices. The Trade Desk’s long track record of success in both booming and busted market environments gives me confidence that this dip is just another temporary setback.

The stock may never be this affordable again, despite the lofty look of those valuation ratios. All things considered, The Trade Desk is one of my favorite buys right now.