If you are like me, you’ve probably noticed that the Internet and your email inboxes are starting to fill up with chatter from experts, pundits and brokerage firms about what to do in the fourth quarter.
If you ask me, the fourth quarter is going to be a volatile one. We will hear more taper talk until they actually begin the process of slowing down bond purchasing, and that can roil the markets. We also have not one but two possible government shutdown decisions looming thanks to the budget battle and the need to extend the debt ceiling.
Headlines from Washington could easily overshadow everything else going on in the economy and the market as we enter the final quarter of the year.
Instead of reconfiguring your portfolio in an attempt to figure out what Washington might do, I recommend sticking with what has been working in the markets. The stocks that lead the way in the third quarter and have great fundamentals are likely to lead the way for the rest of the year as well
Yahoo (YHOO) is such a stock, as it rose by 22% in the thid quarter. The Internet and search giant has totally turned around and new CEO Marissa Mayer has become a media superstar. As usual, Wall Street has been slow to recognize the important changes at Yahoo and the company has posted four consecutive positive earnings surprise.
Portfolio Grader picked up on the improvements at YHOO long before Wall Street and upgraded the stock to an A last December. YHOO remains a “strong buy” and is likely to continue its market-leading behavior.
The fourth quarter also brings us the most important selling season of the year for retailers. Most disappointed during the third quarter, though, and it was a dismal back to school season. Best Buy (BBY) stood out as a top performer as students and parents loaded up on electronic gear. Oh, and the stock was up an impressive 43% in the quarter.
The company is probably going to have a strong holiday selling season too, and pent up demand for new flat screens, game consoles, smartphones and tablets will drive strong Q4 results. BBY was moved up to a B ranking earlier this summer and fundamentals continued to improve on the heels of that great back to school electronics boom. Last week BBY was upgraded to an A by Portfolio Grader and is positioned to continue as a stock market leader.
The bottom line is that the barrage of advice from pundits and brokers will never stop, but we need to learn to ignore all the noise. Instead, stick with the very best stocks and you will able to ride out the coming bumps.
Louis Navellier is Editor of Blue Chip Growth.