September is widely known as the worst performing month on Wall Street. But this year the situation was completely different. The three major stock indexes – the Dow, the S&P 500 and the Nasdaq Composite – rose 1.9%, 2% and 2.7% respectively. The broad market benchmark – the S&P 500 – recorded its first September in the green since 2019.
On Monday, the month ended with the Dow Jones and S&P 500 hitting all-time highs on both an intraday and closing basis. October is also known for being very volatile. September’s solid performance and the Fed’s dovish stance should continue to boost US equity markets this month.
Under these circumstances, we recommend five momentum stocks for October. These are – Fortinet Inc. (FTNT – Free report), Barrick Gold Corp. (GOLD – Free report), Okta Inc. (OKTA – Free report), The Progressive Corp. (PGR – Free report) and Norwegian Cruise Line Holdings Ltd. (NCLH – Free report).
Positive numbers for October’s stock market outlook
This year, September started with a market disruption as investors became very concerned about a near-term recession. Many market participants believed that the Fed was late in adopting accommodative monetary policy.
Nevertheless, the situation took a complete turnaround after the central bank announced an aggressive 50 basis point cut in interest rates at the September FOMC meeting. In addition, the release of some important better-than-expected economic data boosted investor confidence in a much-hyped soft landing for the economy.
In October, Q3 2024 earnings results will be a key driver. Our current projection shows that headline earnings for the S&P 500 index are expected to rise 3.34% from the same period last year, based on 4.5% higher revenue.
Inflation is gradually declining toward the Fed’s 2% target. On September 27, the Atlanta Fed GDPNow tracker showed the US economy grew a solid 3.1% in the third quarter, after rising 1.4% and 3% in the first two quarters of 2024.
Finally, the Fed’s dot chart at the latest FOMC meeting shows that another 50 basis point rate cut is expected this year. Two FOMC meetings remain this year in November and December. On Monday, Fed Chairman Jerome Powell also hinted at more rate cuts this year in his speech to the National Association for Business Economics, but on a smaller scale depending on economic data.
5 Momentum Stocks to Buy for October
These five stocks have strong potential for October and have seen positive earnings estimates over the past thirty days. Each of the stocks is currently sporting a Zacks Rank #1 (Strong Buy) and has a Zacks Momentum Score of A. You can see The complete list of today’s Zacks #1 Rank stocks can be found here.
Fortinet Inc.
Fortinet is benefiting from rising demand from large enterprise customers and the growth of the company’s security subscriptions. FTNT also benefits from the robust growth of Fortinet’s Security Fabric, cloud and Software-defined Wide Area Network offerings. Increased IT spending on cybersecurity is expected to further cause FTNT to grow faster than the security market.
We expect net sales to increase 9.9% in 2024 compared to 2023. FTNT has a strong balance sheet that bodes well for investors. The focus on improving its unified threat management portfolio through product development and acquisitions is a boost for the company.
Fortinet expects revenue and profit growth of 10.2% and 24.5% respectively for the current year. The Zacks Consensus Estimate for this year’s earnings has improved 1% over the past 30 days.
Image source: Zacks Investment Research
Barrick Gold Corp.
Barrick Gold is expected to benefit from progress in key growth projects that are likely to contribute significantly to its production. GOLD continues to focus on high-return investments, particularly in Nevada, supported by successful exploration programs and continued project executions. The merger with Randgold also strengthened its position in the sector, which now has top tier assets.
The joint venture with Newmont offers additional benefits. GOLD also has a strong liquidity position and is focused on increasing shareholder returns by leveraging solid cash flows. GOLD’s debt reduction measures are also expected to reduce interest costs. Higher gold prices are also expected to boost the company’s margins and cash flows.
Barrick Gold has expected sales and profit growth of 16.1% and 50% respectively for the current year. The Zacks Consensus Estimate for current-year earnings has improved 3.3% over the past 30 days.
Image source: Zacks Investment Research
Okta Inc.
Okta operates as an identity partner in the United States and internationally. OKTA offers a range of products and services used to manage and secure identities, such as Single Sign-On, which allows users to access applications in the cloud or on-premises from different devices.
OKTA’s Adaptive Multi-Factor Authentication provides a layer of security for cloud, mobile, web applications and data, while API Access Management enables organizations to secure APIs. Access Gateway allows organizations to extend Workforce Identity Cloud, and Okta Device Access allows end users to securely log in to devices with Okta credentials. OKTA also offers Universal Directory, a cloud-based system for storing and securing user, application and device profiles for an organization.
Okta has expected revenue and profit growth of 13.1% and 61.9%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.4% over the past seven days.
Image source: Zacks Investment Research
The Progressive Corp.
The Progressive continues to benefit from higher premiums given its attractive product portfolio, leadership position and strength in both the automotive and real estate sectors. The focus on becoming a one-stop insurance destination, targeting customers who opt for a combination of home and auto insurance, bodes well for PGR’s growth.
The current policy and retention rate must remain healthy. Competitive pricing to retain current customers and meet their needs with new offerings should continue to drive policy longevity.
The Progressive has projected sales and earnings growth of 19.7% and more than 100%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.9% over the past seven days.
Image source: Zacks Investment Research
Norwegian Cruise Line Holdings Ltd.
Norwegian Cruise Line is benefiting from strong demand, high prices and increased booking volumes, leading to record advance ticket sales. NCLH’s focus on fleet expansion efforts and digital initiatives bodes well.
These factors demonstrate that NCLH’s strategy is well aligned with its growth targets and financial and sustainability targets for 2026. Given the substantial progress made to date and current demand expectations, NCLH has increased its expectations for the full year 2024.
Norwegian Cruise Line has expected revenue and profit growth of 9.8% and more than 100%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 12.1% over the past 60 days.
Image source: Zacks Investment Research