When it comes to stock picking, investors often look at major market trends to identify the types of companies to enter …
When it comes to stock picking, investors often look at broad market trends to identify the types of companies to enter. They also check the fundamentals of each company, as well as the sentiment of other investors who might move a company’s valuation away from what its fundamentals would suggest.
The list of hot October stocks to buy takes all three of these factors into account.
First at the market. The September Jobs Report provided a pretty decent microcosm for the competing forces ruling the economy today. It showed some job growth, but the economy added far fewer jobs than expected.
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This disappointment was tempered by a drop in the unemployment rate and an upward revision of job increases for the previous two months. The report also showed that hourly earnings were on the rise.
In a nutshell, it means the economy continues to improve. We’re not out of the woods yet, however, as the pandemic continues with a significant portion of the population refusing to be vaccinated. At the same time, the economy is strong enough that demand exceeds supply in some areas and pushes up prices.
Additionally, as the country’s economic health improves, the Federal Reserve will begin to scale back its bond buying program, known as quantitative easing. This will translate into higher interest rates even before the central bank officially raises its policy rate.
In this environment, “reopening trades and businesses that benefit from higher interest rates and inflation are the best places to be,” says Chuck Lieberman, chief investment officer at Advisors Capital Management.
Here are three hot stocks to buy today:
– Wells Fargo & Co. (ticker: WFC)
– Pioneer Natural Resources Co. (PXD)
– Lucid Group Inc. (LCID)
Wells Fargo & Co. (WFC)
The financial sector may be one of the first to come to mind when it comes to hot stocks, as banks tend to do better when long-term interest rates rise faster than those at short term. This means that businesses can earn more interest on the money they lend than they have to pay people with savings accounts or certificates of deposit.
“All the banks suffered from low interest rates which squeezed their profit margins,” Lieberman said. Rising interest rates will allow them to experience a rebound in margins, he said.
Among the banks, Lieberman particularly likes Wells Fargo. Shares have already jumped over 60% in 2021 In addition to the potential for rising interest rates, the bank also has the potential for increased profitability once the asset cap the Federal Reserve imposed on it due to of his fraudulent account scandal will be gone.
“Sooner or later that asset cap will be removed, which will trigger increased lending and increased profitability,” Lieberman said. He expects the bank to continue raising its dividend after cutting it last year, and he says the stock price, compared to its book value and expected earnings in 2022, is attractive. .
Pioneer Natural Resources Co. (PXD)
As the economy recovers, so will the transportation of people and goods and the manufacture of those goods, which all require energy.
While the United States has made strides in producing renewable energy from wind and solar power, it still depends on fossil fuels for most of its electricity, natural gas takes the lion’s share. And whether by car, train, boat or plane, our transport is still mainly supplied by petroleum products.
This demand is helping to create “a world where energy sources seem to be in a limited position in the short term,” explains Tavis McCourt, institutional equity strategist at Raymond James. Meanwhile, “for the first time in industry history, US energy companies appear to be focusing more on shareholder returns than growth,” he says.
[See: Artificial Intelligence Stocks: The 10 Best AI Companies.]
In this context, McCourt points to Pioneer Natural Resources. In its latest quarterly report, the company’s oil and gas revenues exceeded $ 2.6 billion, compared to quarterly revenues of just $ 600 million the year before. It declared a variable dividend of up to 75% of the free cash flow of the previous quarter after deducting the basic dividend paid during the quarter.
And if you’re wondering why PXD is on the list of the hottest stocks to buy now, look no further than its insane momentum since the start of the year and 71% gains in 2021.
“We are seeing strong growth in demand for oil as the global macroeconomic environment continues to improve, with corresponding improvement in commodity prices,” Pioneer CEO Scott Sheffield said in a statement. press accompanying the income statement. “Due to the improved outlook for commodity prices, which should further strengthen our balance sheet, we have accelerated and increased our variable dividend yield framework with the declaration of our first variable dividend. ”
Lucid Group Inc. (LCID)
Investor sentiment is a powerful force, and for better or worse it has been magnified by the internet. Sometimes, as we’ve seen recently with memes stocks, a company’s stock price can vary wildly depending on the influence of social media among retail investors.
“In the ’90s, brokers got rich selling their clients on dot-coms,” wrote Matthew Tuttle, CEO of Tuttle Capital Management, in a recent blog post about investing in memes. “They had all the power, controlling access and information. Fast forward to COVID. Apparently overnight, people were stuck at home in front of their computers, and things were moving. Unlike the 90s, retail investors now had the tools to do their own analysis, they could trade at lightning speed for free, and they were connected.
[READ: How to Pick Emerging-Market Stocks.]
He names Lucid Group as a retail favorite. “It’s bigger, so retail can’t necessarily move it, but it’s in the EV business, which is a good business right now,” he says. Perhaps to put it mildly: LCID stock is up about 125% this year.
The electric vehicle company, which is on meme inventory lists, aims to attract drivers of established luxury brands like Audi, Mercedes and BMW with its electric sedans, which start at $ 77,400.
The Lucid Air began rolling off the assembly line at the company’s Arizona plant in September. Deliveries to customers are expected to begin in late October and the company says it has reservations for more than 13,000 vehicles.
But Lucid still has a long way to go. Premium vehicles from Tesla Inc. (TSLA) offer more brand prestige and proven customer loyalty, and will provide competition for the newcomer. Tesla also has miles more manufacturing experience than Lucid. Plus, Tesla is far from the only EV game in town.
If it does manage to carve out a niche in luxury in the growing electric vehicle market, Lucid’s stock could perhaps accelerate further, making it one of the three hot stocks this month- ci which you should consider purchasing now.
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3 hot stocks to buy right now originally appeared on usnews.com
Update 11/10/21: This story was posted at an earlier date and has been updated with new information.