September has a deservedly poor reputation on Wall Street: It’s the only month out of the year that stocks, on average, decline. According to LPL Financial, since 1928, the S&P 500 has dipped 1% on average and has posted a positive result only 43.8% of the time. No other month has a win rate below 50%.
End-of-summer blues hit hard, I guess.
The worst-ever result was a ways back — in September 1931, when stocks dropped 30%. But the trend has continued recently, with stocks down in the past three Septembers.
Certainly, the bulls are contending with a number of scary headwinds this year in particular … and no, I’m not just talking about the string of hurricanes in the south.
The Federal Reserve is preparing to roll back its balance sheet with an expected announcement of “quantitative tightening” later this month. Washington is a mess, with partisan rancor intensifying just weeks ahead of the debt ceiling deadline amid disagreements over issues like immigration, tax reform and the budget itself.
Yet just because conditions are rough overall doesn’t mean there aren’t certain pockets of market strength. Precious metals, for instance, are perking up in large part because of worries over the situation with North Korea, which is becoming increasingly aggressive about its nuclear weapons program.
Here are five stocks to buy in this typically tumultuous month:
Stocks to Buy in September: General Motors (GM)
General Motors Company (NYSE:GM) shares are pushing up to test highs last seen in March, up some 10% from their mid-August lows after finding support at the 200-day moving average.
Shares are up some 20% from their May lows despite tepid U.S. auto sales, growing inventory levels and increased promotional activity. Investors are betting that a tighter job market will boost spending. And they are betting that flood-damaged vehicles in Texas following Hurricane Harvey (and possibly Florida, should Hurricane Irma strike hard there) will increase demand for new vehicles as well.
Chinese sales have been a bright spot as well — with Buick, oddly, very popular in the Middle Kingdom — as the company reports that August sales increased 12% from last year. Overall, August sales increased 7.5% from last year vs. the 1.9% rise expected.
General Motors’ next earnings report is due out in late October. Analysts are looking for earnings of $1.13 per share on revenues of $30.5 billion. When GM last reported on July 25, profits of $1.89 per share beat estimates by 17 cents despite a 1.1% drop in revenue.
Stocks to Buy in September: MGM Resorts (MGM)
MGM Resorts International (NYSE:MGM) is moving back up to test its summertime highs near $34, rising more than 10% off of its July-August lows. From the March low near $25, shares have gained 36% on what UBS has highlighted as tailwinds from improving performance in Las Vegas and real estate deals.
Future catalysts include the opening of Cotai in Macau.
MGM’s next report is due in early November, and analysts will be looking for 37 cents per share in profits on revenues of $2.7 billion. When the casino company last reported on July 27, earnings of 28 cents per share missed estimates by 2 cents on a 16.4% rise in revenues.
Stocks to Buy in September: Home Depot (HD)
Home Depot Inc (NYSE:HD) — perennially one of the best performing stocks in the retail sector and among the Dow Jones Industrial Average’s components — is on the move again, up more than 3% over the past two trading sessions to challenge the highs set in June. This sets up a possible breakout from a five-month consolidation range and the first push to new highs since May.
A couple weeks ago, Home Depot reported profits of $2.25 per share, which beat estimates by 3 cents. That came on a 6.2% rise in revenues. Analysts at TAG were positive on the company’s results, noting that comp-store sales growth of 6.6% far outpaces rivals thanks to its strong relationship with professional contractors as well as prime real estate locations.
The company will next report results in mid-November. Analysts are looking for earnings of $1.80 per share on revenues of $24.4 billion.
Stocks to Buy in September: Target (TGT)
Target Corporation (NYSE:TGT) is perking up and looks ready for a possible move up and over its 200-day moving average. That hasn’t happened since January as the troubled big-box retailer — battered by tepid same-store sales growth and e-commerce pressures — has been mired in an eight-month consolidation range.
Within this, however, TGT shares have managed to climb 16% over the past two months.
The company has been buoyed by a 4-cent beat on earnings of $1.23 per share, which came on a 1.6% rise in sales. Shares also are getting a lift Wednesday on reports that Target is planning on rolling out its own beauty products brand.
Target will next report results in mid-November, and analysts will be looking for earnings of 85 cents per share on revenues of $16.5 billion.
Stocks to Buy in September: Anglogold Ashanti (AU)
AngloGold Ashanti Limited (ADR) (NYSE:AU) shares are rising off of support from its August lows near $9, which represented a test of the December 2016 lows. Watch for a possible breakout from the current four-month consolidation range which could set up a push up and over the 200-day moving average.
The company will provide a quarterly update on Nov. 6.
For the first six months of the year, the company reported operating earnings of $610 million, down 22% from last year, as all-in costs increased slightly on capital expenditures designed to boost profitability and improve safety.