Navigating the Stormy Seas of September and October: Stocks with Momentum to Weather Volatility
As September, traditionally the worst month for the S&P 500, comes to a close, investors are understandably cautious about the upcoming October, also known for market volatility. However, a handful of stocks with strong momentum, bullish sentiment, and robust buyback activity could offer investors some protection against potential drawdowns. Evercore ISI, leveraging their extensive research, has identified these potential outperformers, helping investors navigate the choppy waters ahead.
Key Takeaways
- September’s Volatility: Despite a historically difficult September, the S&P 500 has shown resilience this year, boosted by the Federal Reserve’s rate cut. However, October’s volatility still looms large.
- Seeking Shelter in Momentum: Evercore ISI has screened stocks that are in the top quintiles for momentum, sentiment, and buybacks, focusing on companies with a market cap above $2 billion and a share price of at least $5.
- AppLovin: Mobile Tech Powerhouse With a 209% surge in 2024, AppLovin (APP) has caught the eye of analysts. UBS upgraded the stock to "buy," citing improving revenue growth visibility and potential in gaming and e-commerce.
- Robinhood: A Maturing Trading Platform Another standout, Robinhood (HOOD), is up 80% this year, with analysts pointing to a maturing business model and a $1 billion share repurchase program announced earlier this year.
- Sprouts Farmers Market: Healthy Eating Trend Sprouts Farmers Market (SFM) has witnessed a remarkable 118% year-to-date surge. Evercore ISI upgraded the stock to "outperform," citing a potential benefit from the "healthy eating" trend.
AppLovin: A Mobile Tech Leader with Growth Potential
AppLovin, a mobile tech company specializing in mobile apps and games, has been a standout performer in 2024. The company’s stock has skyrocketed 209%, attracting attention from analysts. UBS, in a recent upgrade to "buy," cited improving visibility into medium-term revenue growth, a supportive valuation, and potential expansion into gaming and e-commerce as key catalysts for the stock’s upward trajectory. While consensus price targets suggest potential downside, analysts at BTIG have a $150 price target on AppLovin, the highest among analysts polled. This optimistic outlook underscores the potential for continued growth in the company’s mobile app and game offerings.
Robinhood: A Trading Platform Embracing Maturity
Robinhood, the popular financial trading platform, has also been a bright spot in the market, with its shares soaring 80% in 2024. Analyst Benjamin Budish at Barclays upgraded the stock to "equal weight" from "underweight," citing a maturing business model and potential top-line catalysts. Robinhood’s $1 billion share repurchase program further underlines the company’s confidence in its future potential. The program demonstrates Robinhood’s commitment to rewarding shareholders and signifies its belief in its ability to generate consistent future profits. Even though the stock is attracting mixed sentiment, with eight of the seventeen analysts covering it rating it a "hold", average price targets suggest an upside of 5% according to LSEG.
Sprouts Farmers Market: Riding the Healthy Eating Wave
Sprouts Farmers Market, a grocery retailer specializing in organic and natural products, has enjoyed a remarkable 118% rise in share price this year. Evercore ISI upgraded the stock to "outperform," citing a potential benefit from the growing trend toward healthier eating. Their analyst, Michael Montani, set a $125 price target, the highest on the Street, indicating a strong belief in the company’s future prospects. While consensus price targets suggest a downside of nearly 9%, the analysts’ bullish sentiment highlights the potential for Sprouts to capitalize on the rising demand for healthy and organic food options.
Navigating Volatility with Confidence
While inherent market volatility remains a factor, these stocks offer investors a potential advantage during a period of market uncertainty. Their strong fundamentals, including momentum, bullish sentiment, and robust buyback activity, position them for continued growth and stability. Investors seeking to navigate market challenges and potentially outperform in the coming months should consider adding these stocks to their portfolios. However, as always, individual investors should conduct thorough research and consult with a financial advisor before making any investment decisions.
