Less than two months later, Wall Street was in the midst of a global market decline as fears of a U.S. recession intensified. The S&P 500 index is currently on track for its longest streak of positive quarters since 2021. A little time makes a big difference. The best-performing club stocks during the eventful third quarter are all outside of the Magnificent Seven or AI winner complex. There are several stocks that are riding the wave of rate cut optimism. The other was driven by the Home Run CEO switch. All five of our Q3 leaderboards reflect a healthy spread of investment themes that are gaining traction. The generative AI boom hasn’t collapsed yet. But it’s not the only game in town. The S&P 500 index turned negative in the third quarter, with the short-term outlook set to decline as stock markets slumped in early August, spurred by weak economic data in the United States and punctuated by the collapse of the so-called yen carry trade on August 5. became difficult. It’s quite cloudy. Sure, a rate cut was looming in September, but will the Fed cut rates to prevent an impending recession? Sensing the panic, we bought some of the hard-hit stocks, believing the pain was temporary. Still, we had no way of knowing that such a swift and sharp change in direction would occur. How much have your emotions improved? Even September, historically the worst month for the S&P 500, was a good month. Barring a dramatic reversal before the close of trading on Monday, the composite index will have its first positive September in five years. With one session left, let’s take a closer look at what drove our top five stocks from July to September. Percentages are through Thursday’s closing price. 1. Stanley Black & Decker: Up 35.6% The tool maker was a rocket ship in the third quarter as investors anticipated the start of the Fed’s easing campaign, but last week the U.S. central bank raised its benchmark lending rate. This became a reality with the 0.5% reduction. Percentage points. The Fed’s super-sized rate cuts – which the Fed typically prefers to do in quarter-point increments – were followed by further cuts in the coming months, slowed by the highest interest rates in 20 years. It is expected to bring relief to parts of the economy. Few companies fit this criteria better than the housing sector. That’s where Stanley Black & Decker comes into play. Lower mortgage rates will stimulate activity across the housing industry, whether it’s projects that allow existing homes to be renovated and made available for sale, or new construction, leading to increased demand for Stanley’s DeWalt and Craftsman branded tools. It should be. Investors clearly know that this is how the stock price can rise by almost 40% in three months. It hit a new 52-week high on Friday. Still, on a year-to-date basis, it has lagged behind the S&P 500 index, which is up about 12% compared to the index’s about 20%. 2. Starbucks: 25.2% The reason Starbucks stock is on the list is because of its new CEO Brian Nicol. The coffee chain had been one of our most disappointing holdings, but that all changed on the morning of August 13th when a press release was issued announcing Nicole’s sudden hiring. Starbucks stock had its best day ever, soaring 24.5% to $95.90 per share. The stock briefly regained some of its gains, but the stock is now trading near $98 a share on Friday as investors bet that Nicol would turn around Starbucks the way he did Chipotle. has been done. He helped stabilize the burrito chain following food safety issues and reinvented in-store operations for the digital age. In a note to clients on Friday, Deutsche Bank analysts reiterated their buy rating on Starbucks and said Nicol’s leadership could lead to new sales growth and improved profitability. Analysts expect Starbucks’ earnings report in late October to be the catalyst for a short-term stock rally. 3. GE Healthcare: 18.7% The maker of MRI and CT machines had an unremarkable third-quarter performance, ranking ahead of healthcare industry players such as obesity drug giants Novo Nordisk and Eli Lilly. It receives much less attention than other devices. Manufacturers such as Abbott Laboratories. Lilly and Abbott Labs are both club holding companies. Still, GE Healthcare performed well, hitting a record high in trading on Friday before retreating a bit. I decided to be disciplined and take some time off on Friday, but I still like the stock. One reason the company’s recent performance is likely strong is that lower interest rates have made it easier to finance purchases of GE Healthcare’s expensive machinery, which remains a tailwind. Also, positive news on Chinese stimulus in recent days has boosted stock sentiment as the company’s business in major markets has been weak. We are still waiting for a healthcare-specific stimulus fund to be rolled out in China, but the market currently understands that to be a 2025 event. If this happens, it will definitely have a positive impact on GE Healthcare’s business. 4. Best Buy: 18.6% Electronics retailers are also winners in price cuts. As the movement of people increases, the purchase of home appliances and televisions will also increase. That point was driven home on August 29, when Best Buy announced its fiscal year 2025 second-quarter results, and its stock soared 14% to $100.18 per share. The stock price hasn’t risen much since then, trading more than $2 above that level, but that doesn’t mean the fundamental reason to own the stock has disappeared. In addition to the housing tailwind, we should also see a general replacement cycle begin as products purchased during the pandemic reach the end of their useful life and new AI-powered PCs hit store shelves. In fact, JPMorgan analysts said in a note to clients on Friday that the reason to own Best Buy is that it is undervalued by investors. Analysts who have been bullish on the company’s stock since the beginning of this year added Best Buy to their watch list after meeting with management and reiterated their price target of $111 per share. . 5. Home Depot: 15.2% We didn’t own all of the gains in our newest stock, Home Depot, in the third quarter, but we did capture most of the upside. From the start of the quarter to September 4, the day before the buying began, the stock rose just under 6%. Since then, the stock has risen about 10%, including a solid move of about 0.9% on Friday. Like Stanley Black & Decker and Best Buy, Home Depot is benefiting from increased activity in the housing sector. We prefer us over our home improvement peer Lowe’s because we have greater exposure to professional customers. (Jim Cramer’s Charitable Trust is long SWK, BBY, SBUX, GEHC, HD. 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The New York Stock Exchange welcomes DEWALT (NYSE: SWK) to celebrate its 100th anniversary on May 14, 2024. To commemorate this occasion, Donald Allan Jr., President and CEO of Stanley Black & Decker, will ring the opening bell along with Chris Taylor, Head of NYSE Global Advisory.
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Less than two months later, Wall Street was in the midst of a global market decline as fears of a U.S. recession intensified. now, S&P500 is on the verge of four consecutive positive quarters, its longest since 2021. A little time makes a big difference.
