5 Scary Good Stocks for October
The extreme volatility of late August and September is in the rearview mirror. Now we open up trading in a month that’s known historically for major turning points in the market. October 1987 provided us with one of the scariest moments in modern times as the market crash left traders stunned. In 2007, the market peaked, rather unceremoniously, before beginning a slide that would take us into the depths of the Great Recession. What will this October hold for markets?
Maybe it’s Halloween that causes the freight fest during October. With major market indexes coming down to retest their August lows this week and the bounce today in the face of some miserable jobs data, maybe this October is gifting us with a great buying opportunity.
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You have to be careful though. Blinding buying the whole market here may not be the thing to do. There are several stocks which are bucking the trend of the overall market and setting off on their own path. These stocks are Zacks Rank #1 (Strong Buy) and Zacks Rank #2 (Buy) stocks with Momentum Style Scores of “A” or “B” that are within 10% of their 52-week highs.
I’ve put together a list of five of these stock ideas that I think have a great chance to outperform this market over the course of the next few weeks.
Atmos Energy (ATO)
Atmos Energy Corporation, headquartered in Dallas, is one of the country's largest natural-gas-only distributors, serving over three million natural gas distribution customers in over 1,400 communities in eight states from the Blue Ridge Mountains in the East to the Rocky Mountains in the West. Atmos Energy also manages company-owned natural gas pipeline and storage assets, including one of the largest intrastate natural gas pipeline systems in Texas and provides natural gas marketing and procurement services to industrial, commercial and municipal customers primarily in the Midwest and Southeast.
It looks like shares are finally going to breakout from the top end of the yearly range here. A large chunk of volume at $57.50 should provide some support to the downside. Leapfrogging the August high was a huge step but that $59 area still looms. With the commodity channel index up above 100 there is some risk of this move being overbought right now.
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Activision Blizzard (ATVI)
Activision Blizzard, Inc. is the largest and most profitable western interactive entertainment publishing company. It develops and publishes some of the most successful and beloved entertainment franchises in any medium, including Call of Duty, Call of Duty Online, Destiny, Skylanders, World of Warcraft,StarCraft®, Diablo®, and Hearthstone.
Shares of ATVI have been on a slow and steady money making climb all year. The downside volatility into the end of August dipped down into a “v-shaped” recovery. Basically shares haven’t skipped a beat. Volumes have begun to pick up a little over the last several weeks as shares have reached new 52-week highs. The 25-day moving average provides support on the downside at $29.
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Nike (NKE)
Nike, Inc.'s principal business activity involves the design, development and worldwide marketing of high quality footwear, apparel, equipment, and accessory products. NIKE is the one of the largest sellers of athletic footwear and athletic apparel in the world. The company sells its products to retail accounts in the United States and through a mix of independent distributors, licensees and subsidiaries in numerous countries around the world.
It took a couple weeks for shares of NKE to recover from the August 24th dip down. What shot NKE into the stratosphere was a killer earnings report. The initial gap up took shares all the way to $126. Shares retreated a bit following the report, but found renewed buying enthusiasm near $119 and now NKE is approaching a 52-week high again. Volume has ticked up and an overbought CCI is confirming the breakout here.
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Starbucks (SBUX)
Starbucks Corporation purchases and roasts high-quality whole bean coffees and sells them along with fresh, rich-brewed, Italian style espresso beverages, a variety of pastries and confections, and coffee-related equipments primarily through its company-operated retail stores. In addition to sales through its company-operated retail stores, Starbucks sells whole bean coffees through a specialty sales group and supermarkets. Additionally, Starbucks produces and sells bottled Frappuccino coffee drink and a line of premium ice creams through its joint venture partnerships and offers a line of innovative premium teas produced by its wholly owned subsidiary, Tazo Tea Company.
Starbucks shares also recovered nicely from the August dip. There is a chance we could be range bound here for a bit as the 25-day moving average has a horizontal slope and the CCI has been moving within the range of 100 and -100 for a few days here. Still, shares are so close to the 52-week high that any amount of renewed buying interest could push this over the top.
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SS&C Technologies (SSNC)
SS&C Technologies Holdings, Inc. delivers investment and financial management software and related services focused exclusively on the financial services industry. The Company provides a broad range of specialized software, software enabled-services and software as a service (SaaS) solutions for operational excellence. SS&C Technologies delivers mission-critical processing for information management, analysis, trading, accounting, reporting and compliance.
The 25-day moving average has provided support for the rally in shares of SSNC since June. It seems like all along with bullish trend, shares have pulled back from the highs 10% or more without breaking the trend to the downside. An easy way to play this is to look for oversold areas of the CCI then buy in the direction of the long term trend. The dip below -100 on the CCI a couple of days ago has since reversed and now it looks like shares are ticking higher. The 52-week high is only a few bucks away from the current price. I’d expect a bit of follow through past the highs before a renewed round of retracement takes place.
Bottom Line
October can be a scary month for equities. The best time to buy can be when you load up while others are being fearful. I feel like there’s some old billionaire we all know that has a saying that sounds like that…
Be sure to click FOLLOW THE AUTHOR above to stay on top of all the hot momentum stocks at Zacks.com. David Bartosiak is the Momentum Stock Strategist with Zacks, editor of the Momentum Trader and Home Run Investor, and host of “Trending Stocks”
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SS&C TECHNOLOGS (SSNC): Free Stock Analysis Report
STARBUCKS CORP (SBUX): Free Stock Analysis Report
NIKE INC-B (NKE): Free Stock Analysis Report
ACTIVISION BLZD (ATVI): Free Stock Analysis Report
ATMOS ENERGY CP (ATO): Free Stock Analysis Report
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