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As a new month looms, Wall Street expects its favorite stocks to outperform — no matter what October might bring. September has historically been the worst month of the year for stocks, according to the Stock Trader’s Almanac . The equity market started the month on a downbeat, but a supersized interest-rate cut from the Federal Reserve righted the ship. All three major averages are currently on pace to finish September higher than where they started. But as October looms, some investors believe that the latest moves to historic highs might not be built to last . Janney Montgomery Scott’s Dan Wantrobski recently wrote that stocks are overbought in the short term. “The correction we had been looking for earlier in September experienced cycle inversion on 9/11, and since then, we have effectively experienced a ‘crash upward’ in risk assets,” the technical strategist said. “This will delay a bigger correction for the time being, but the markets in our opinion remain very vulnerable to exogenous shocks in this environment.” Meanwhile, November’s U.S. presidential election might inject even more volatility into markets. Against this backdrop, CNBC Pro screened for Wall Street’s favorite names that analysts believe could rally from here. To be included in the following table, stocks had to be in the S & P 500, have a consensus buy rating from analysts and at least 30% upside to the average price target. Semiconductor manufacturer Micron Technology was one stock that surfaced. Micron jumped nearly 15% Thursday after forecasting stronger-than-expected fiscal first-quarter revenue. Shares of Micron surged 11.7% in September through Friday, bringing its year-to-date gain to 26%. But analysts see the stock moving even higher from here, with the average price target corresponding to potential 46% upside from the last close. Following Micron’s strong guidance, Wall Street analysts reiterated their buy ratings. “We expect Street estimates to move higher following today’s print as [market] share gains idiosyncratic to Micron across multiple high-value segments of the market help the company overcome headwinds in the traditional PC and smartphone end-markets,” wrote Goldman Sachs analyst Toshiya Hari. Hari’s 12-month price target of $145 implies that Micron could rally 35% from Friday’s close. The average price target for ConocoPhillips implies potential upside of 31%. Shares of the energy producer are down 8% in September and 10% on the year. Last month, Wells Fargo named the Houston-based, $123 billion market cap one of its top picks to play the booming liquified natural gas market. The bank sees worldwide LNG supply increasing by an average of 31 million metric tons per year through the end of the decade. “What we find truly impressive about COP is the company is a leader in total and cash returns performance, is well positioned to deliver modest production growth for the foreseeable future, possesses one of the lowest breakeven levels, and has been judicious in both [acquisitions and dispositions],” analyst Roger Read wrote. Read’s $150 price target is way above the consensus $137, and about 43% higher than where ConocoPhillips closed Friday. Analysts are also bullish on fellow energy producer Diamondback Energy , with the stock’s upside to average price target coming in at 30%. Shares are down almost 13% in September but have risen 10% on the year. On Friday, Piper Sandler singled out Diamondback as a top pick in its oil and gas exploration and production coverage universe “given consistent, low-cost execution, improving Midland well productivity and expectations for further efficiencies on the back of the Endeavor acquisition which closed in 3Q24.” Analyst Mark Lear believes that shares could rise to $240, or 41% above current levels. Other stocks on Wall Street’s list of favorites include casino operator MGM Resorts International and biotechnology firm Biogen .
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https://www.cnbc.com/2024/09/30/wall-streets-favorite-stocks-heading-into-a-new-month-of-trading.html
