A new trading month is underway, and JPMorgan is highlighting key stocks that it believes are due to outperform. All three major averages kicked off October in the red on Tuesday as Iran’s missile barage attack on Israel heightened tensions in the Middle East, dampening investor sentiment toward risk assets. The Nasdaq Composite led the way among the major three indexes, falling more than 1%. On Monday, all three indexes closed out September higher. It was the fifth straight winning month for both the S & P 500 and Dow Jones Industrial Average , each of which closed at an all-time high. Against this backdrop, JPMorgan has refreshed its top ideas list targeting growth, income, value and short selling strategies. The investment bank added six stocks and removed seven from last month. For October, the additions include Best Buy and Carmax , while Wayfair , CarGurus and First Citizens BancShares are among those removed. Below are some of JPMorgan’s picks for October. JPMorgan added Best Buy to its focus list on Friday as one of the firm’s value strategies, seeing a possible inflection point in the electronics retailer’s key categories, such as TVs and appliances. The bank cited positive existing home sales, and an expansion in AI adoption, believing Best Buy will see continued growth in average selling prices . Analyst Christopher Horvers says Best Buy will increase its profitability over time, noting an uptick in operating margins to 5% from last year’s 4.1%. He has an overweight rating on the stock, and his price target of $111 implies more than 9% upside from Tuesday’s close. “We believe BBY sits in investors’ blind spot with replacement demand rising in 2025 given further time from the start of Covid, new computing technology in its early stages and the sensitivity of TVs/appliances to housing turnover,” the analyst wrote in a note to clients. “We also note that vendors need BBY, an important endorsement for quality investors looking for higher beta names with cyclical upside.” By contrast, 16 of the 28 analysts on Wall Street who are covering the stock are neutral, while 11 have a buy-equivalent rating. Analysts’ average price target on Best Buy stands at $104, implying just 3% upside. Year to date, Richland, Minnesota-based Best Buy has already surged more than 29%. AT & T also made JPMorgan’s focus list as another part of the bank’s value strategy. JPMorgan rates AT & T overweight, with a price target of $24, about 8% above Tuesday’s close. The Street is also bullish on Dallas-based AT & T, which sports a dividend yield a little more than 5%, with 16 of 29 analysts having a strong buy or buy rating, but their average price target implies roughly 2% downside. This week, shares of AT & T were marginally higher after the telecommunications company agreed Monday to sell its 70% stake in DirectTV to private equity firm TPG for $7.9 billion. The stock has jumped nearly 32% this year, not including the dividend. On the growth side, JPMorgan listed Eli Lilly as one of its picks. The bank’s target of $1,100 implies more than 24% upside, and the maker of Mounjaro and Zepbound diabetes and weight loss drugs is up more than 51% in 2024. LLY YTD mountain LLY, year to date The Street is largely bullish on Lilly. The consensus price target of $1,003 would represent more than 13% upside. Twenty three out of 28 analysts covering Lilly give it a buy-equivalent rating. JPMorgan’s recommendation comes as Lilly said it in September it would invest $1.8 billion to expand manufacturing in Ireland for its Alzheimer’s , obesity and diabetes drugs, as well as other treatments. Other stocks that JPMorgan’s recommended for October, such as Charles Schwab and Ulta Beauty , were similarly on the bank’s focus list highlighting growth strategies. The bank’s price target for Schwab implied about 22% upside and for Ulta Beauty about 18% potential appreciation, based on Tuesday’s close.
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