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Top 5 High-Flying Stocks That Have Survived September Mayhem

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September – historically the worst-performing month on Wall Street – is likely to maintain its trend this year too. The broad-market rally has stopped completely this month, with just seven days of trading left.

The three major stock indexes — the Dow, the S&P 500, and the Nasdaq Composite — have tumbled 4.1%, 3.7%, and 3.4%, respectively. The small-cap-centric Russell 2000 is down 3.9%. The U.S. stock markets are currently suffering from several near-term concerns.

Fed’s FOMC Meeting

The two-day FOMC meeting of the Federal Reserve started on Sep 21. The outcome of this meeting will impact financial markets immensely. At present, economists and financial researchers are divided whether the central bank will give any definite sign, if not the timeline, related to the tapering of its existing $120 billion per month bond-buy program.

After its last FOMC meeting in June, Fed chairman Jerome Powell gave a signal that the Fed may start tapering this year although he maintained an extremely cautious view.

However, the rapid spread of the Delta variant of coronavirus and a possible slowdown of U.S. economic growth, highly disappointing job additions in August, and a marginal decline in inflation rates in the last couple of months have compelled many experts to believe that the Fed may restrain itself from shifting from its ongoing ultra-dovish monetary policies.

Evergrande Crisis

Global stock markets including the U.S. stock markets fell sharply on Sep 20 following the news that a large China-based property developer, the China Evergrande Group, is in possible bankruptcy. The company faced a debt payment on its offshore bonds last week and said that it is suffering from unprecedented difficulties. It has more than $300 billion of offshore bonds.

U.S. markets continued to suffer on Sep 21 due to the news as a section of investors believe that the default on debt servicing may have a rippling effect on the global financial sector. Moreover, a recession in the Chinese property development market will significantly reduce demand for metal and industrial products.

Government Debt Ceiling in Focus

On Sep 21, the House of Representatives passed a bill in majority voting that will prevent a government shutdown and suspend the debt limit to prevent an economic disaster. However, the Republicans have threatened to block the bill in Senate.

The Congress needs to pass a funding plan by Sep 30 to prevent a government shutdown. The clearance of the bill in the House will enable the government to run up to Dec 3 and suspend the debt ceiling till December 2022.

Spread of the Delta Variant

The spread of the Delta variant remains a threat to the robust U.S. economic recovery. Some recently released economic data has shown that the Delta variant has taken a toll on the economy and it may get worse in the upcoming winter months. Investors remain concerned although the infection rate has dropped marginally this month.

Not All Stocks Have Suffered This Month

Despite several immediate concerns and the historical downtrend of September, a number of stocks have popped this month. Among those winners, there are a handful of large-cap (market capital > $15 billion) stocks with a favorable Zacks Rank. Large-cap stocks generally have a solid business foothold. Investment in these stocks may be fruitful going forward.

Our Top Picks

We have narrowed down our search to five large-cap stocks that have gained nearly 5% or more than 5% month to date. These stocks have strong growth potential for the rest of 2021 and have seen positive earnings estimate revisions in the past 60 days. Each of our picks carries either a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The chart below shows the price performance of our five picks in the past month.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

Moderna Inc. MRNA is a biotechnology company, which develops therapeutics and vaccines based on messenger RNA for the treatment of infectious diseases, immuno-oncology, rare diseases, cardiovascular diseases, and auto-immune diseases.

The company’s COVID-19 vaccine demonstrated strong uptake in multiple countries where it received authorization for temporary use in the past few months. It expects more than $19 billion in vaccine sales in 2021. Advance purchase agreements with several countries worth $20 billion in aggregate for 2022 are already in place.

This Zacks Rank #2 company has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.4% over the past 30 days. The stock price has jumped 15.2% month to date.

Quanta Services Inc. PWR is a leading national provider of specialty contracting services, and one of the largest contractors serving the transmission and distribution sector of the North American electric utility industry.

The company expects utility, communications certain pipeline and industrial infrastructure services — which currently account for approximately 80-90% of revenues — to remain robust in 2021. Quanta Services’ optimism stems from healthy backlog levels which are expected to grow further. Also, rising renewable energy generation and associated demand bode well for the company.

This Zacks Rank #2 company has an expected earnings growth rate of 19.9% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.4% over the past 30 days. The stock price has climbed 12.5% month to date.

Avantor Inc. AVTR provides products and services to customers in biopharma, healthcare, education and government, advanced technologies, and applied materials industries in the Americas, Europe, Asia, the Middle East, and Africa.

The company offers materials and consumables, such as purity chemicals and reagents, lab products and supplies, formulated silicone materials, customized excipients, customized single-use assemblies, process chromatography resins and columns, analytical sample prep kits, education and microbiology products, and clinical trial kits.

This Zacks Rank #1 company has an expected earnings growth rate of 51.7% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 7.1% over the past 60 days. The stock price has appreciated 8.6% month to date.

ON Semiconductor Corp. ON is seeing strengthening demand across most end markets as evident from its booking trends over the last few quarters. It has a well-diversified business generating a significant percentage of revenues from each of the computing, consumer, industrial, communications, and automotive end markets.

ON Semiconductor continues to gain traction among electric vehicle manufacturers. It witnessed a solid demand environment in the second quarter, particularly for its power and sensing products, which it expects will continue in the near term.

This Zacks Rank #2 company has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for its current-year earnings has improved 0.4% over the past 30 days. The stock price has advanced 7.5% month to date.

KLA-Tencor Corp. KLAC designs, manufactures, and markets process control and yield-management solutions for the semiconductor and related nano-electronics industries worldwide. KLA is benefiting from solid momentum across the process control market. Moreover, growing Foundry and Logic investments remain major positives.

Its transition to advanced nodes and the insertion of EUV lithography are expected to drive growth in the near future. Enhanced wafer cleanliness and geometry specifications in the bare wafer market are driving demand for the company’s wafer products. Additionally, the Services business is likely to grow, driven by expanding installed base and higher utilization rates. High exposure to 5G infrastructure and the smartphone market is another positive.

This Zacks Rank #2 company has an expected earnings growth rate of 32.7% for the current year. The Zacks Consensus Estimate for its current-year earnings has improved 12.5% over the past 60 days. The stock price has risen 4.9% month to date.


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Quanta Services, Inc. (PWR) : Free Stock Analysis Report

KLA Corporation (KLAC) : Free Stock Analysis Report

Moderna, Inc. (MRNA) : Free Stock Analysis Report

ON Semiconductor Corporation (ON) : Free Stock Analysis Report

Avantor, Inc. (AVTR) : Free Stock Analysis Report

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