Be greedy in a fear-filled September by buying 15 stocks that have outperformed lately
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- As expected, the S&P 500 has struggled in September so far.
- But while US stocks may be overextended, there's reason to believe they'll bounce back.
- Here are 15 stocks on a large-cap list that has outperformed recently and since 2008.
The most predictable market pullback of the year is underway.
US stocks are getting hit hard in September, as they have in each of the past four years. The S&P 500 has fallen in each of the first three days of the month, like it did in August. However, it's only down 2.6% this time, which is much milder than August's startling 6.1% three-day selloff.
BMO Capital Markets
Large single-day declines have been rare this year, as the S&P 500 has only slipped by 2% or more in three sessions in 2024, according to BMO Capital Markets. But the firm's strategists say a pullback shouldn't be surprising.
In a typical year, stocks have historically fallen by 10%, BMO noted, and they only receded 8.5% from their peak last month. That suggests the market may be overdue for a drawdown.
"We never like when investors lose money, but at the same time, we are not totally surprised by the latest weakness given the lack of a meaningful pullback YTD," wrote Brian Belski, the chief investment strategist at BMO, in a September 4 note.
Despite seasonal weakness, the bull market has legs
Although history seems to be against US stocks — based on both their recent September showings and their tendency to suffer a 10% correction — that's not the full story.
When the S&P 500 rises as much as it has this year through eight months, it has built on its gains in the last third of the year without exception, according to BMO data since 1990. The market has lost ground in September in two of those four scenarios, so a loss this month wouldn't be unprecedented, though it isn't guaranteed either.
BMO Capital Markets
Besides, bull markets usually last at least five years, and Belski noted that this long-term uptrend isn't even in its third year. Returns in the middle of a bull market tend to be softer, but BMO is still optimistic about the S&P 500's chances to build on its year-to-date gains.
BMO Capital Markets
"We continue to view periods of weakness as dip-buying opportunities," Belski wrote.
BMO Capital Markets
15 stocks to buy for continued gains
Investors who follow BMO's advice should consider the 15 stocks on the firm's US large-cap list, which beat the S&P 500 by 2.2% last month and has topped the index by over 2% in 2024. The list also has a strong track record, as it has trounced the broader market since 2008.
BMO Capital Markets
Below are those 15 companies listed alphabetically, along with the ticker, market capitalization, price-to-earnings (P/E) ratio, and sector for each.
Markets Insider
Ticker: AMZN
Market cap: $1,870B
P/E ratio: 42.6x
Sector: Consumer Discretionary
Markets Insider
Ticker: AVB
Market cap: $32.2B
P/E ratio: 38.3x
Sector: Real Estate
Markets Insider
Ticker: AVY
Market cap: $17.6B
P/E ratio: 28.1x
Sector: Consumer Discretionary
Markets Insider
Ticker: STZ
Market cap: $45.2B
P/E ratio: 18.5x
Sector: Consumer Staples
Markets Insider
Ticker: COST
Market cap: $392.8B
P/E ratio: 54.9x
Sector: Consumer Staples
Markets Insider
Ticker: NFLX
Market cap: $293.4B
P/E ratio: 42.7x
Sector: Communication Services
Markets Insider
Ticker: REGN
Market cap: $126.8B
P/E ratio: 30.5x
Sector: Healthcare
Markets Insider
Ticker: TJX
Market cap: $133.1B
P/E ratio: 28.5x
Sector: Consumer Discretionary
Markets Insider
Ticker: UNP
Market cap: $153.2B
P/E ratio: 23.6x
Sector: Industrials
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