September is usually a weak month for stock markets, but this year has been different. The US Federal Reserve made its first rate cut in four years, which has helped avoid the usual declines.
The S&P 500 index is up 1% so far this month, up 8% since late June, when markets went through a volatile period. Despite this, risks such as the US elections, inflation and geopolitical tensions remain, raising doubts about what is to come.
The Federal Reserve and the risk of recession
David Bianco, chief investment officer at DWS, noted that the Federal Reserve is more concerned about avoiding a recession than a rise in inflation. “I think this cut reduces the chances of a recession, and we will probably see the yield curve steepen further,” he said.
In his opinion, the banking sector could be one of the main beneficiaries. Additionally, he mentioned that solid growth stocks, in sectors like healthcare and software, could be good opportunities if they have reasonable valuations.
Opportunities in international markets
Simon Webber, head of global equities at Schroders, said equity markets were exposed to a correction after a strong nine months, but company fundamentals remained strong. This higher volatility, he says, offers good opportunities to reposition when price imbalances arise.
Webber also highlighted that the UK market is one of the most attractive in terms of valuation, compared to its long-term history. In the United States, valuations are less demanding if the large technology companies that are driving up multiples of the S&P 500 index are excluded.
Stocks with the most potential in 2024
Despite the volatility, some stocks have outperformed the market and could still continue to rise in the remainder of the year. CNBC Pro, using FactSet data, identified companies that have already performed well in 2024 and have the potential to grow even further.
The criteria used to select these actions include:
A performance of more than 13% so far in 2024.
At least half of analysts rate the stock as a buy.
Growth potential of at least 20% on your target price.
Below are the actions that meet these criteria:
Performance in 2024 (%) Potential upside to target price (%) Purchase recommendation (%)
Amazon 26.1 15.1 83.1
Barclays PLC 47.5 2 0.1 65.0
Dell Technologies 53.6 24.8 60.7
First Solar 39.4 22.0 65.8
Marvell Technology 22.5 25.3 85.3
MicroStrategy 129.2 39.7 70.0
Novo Nordisk 21.8 18.0 60.6
NVIDIA Corporation 134.2 28.9 79.7
SoftBank Group 36.1 33.8 60.0
Uber Technologies 20.1 18.8 79.2
United Airlines Holdings 26.4 37.5 78.3
Source: FactSet, data as of October 23.
Finally, although September is known for being a difficult month for stocks, there have been factors this year that have bucked that trend. Despite the economic and political risks, investment opportunities remain present, especially in sectors such as banking, healthcare and software. International markets also stand out, such as the United Kingdom, with attractive valuations. Stocks that have already performed well this year could continue to rise in the coming months, offering opportunities for investors looking for growth.
Disclaimer: All information found is given with the best intentions, it does not represent any investment recommendation and is for informational purposes only. Remember to always do your own research.
