RBC gives its top stock picks for the fourth quarter

The fourth quarter is just getting started, and RBC Capital Markets sees some stocks slated for growth in the months ahead. October has been off to a shaky start. While the first session of the month was a losing one for stocks, that changed on October’s second day of trading, with the indexes closing marginally higher. All three major averages are still in the red week to date, however. This comes after September marked the fifth straight winning month for both the S & P 500 and the Dow Jones Industrial Average . Looking ahead, RBC unveiled a list of its top 30 high-conviction global stock ideas that it thinks are poised to outperform in the long term. Since the list’s inception in 2019, it has delivered a total return of nearly 92%, according to the firm. That’s above its benchmark, which is at 70%. A few key names were added and removed from this quarter’s list. Pinterest and Sarepta Therapeutics were among the eight additions, while Amazon , Chubb and S & P Global were among the seven removals. Here are some of the names on the list. For newly added Pinterest, RBC believes recent changes at the company – such as its partnership with Amazon to bring third-party ads to the platform and the incorporation of direct links – may increase advertising relevance on the platform and ultimately lead to greater return on ad spend for advertisers. “While it’s unclear whether these changes will be a tailwind to U.S. [monthly active users], we think the current user base is undermonetized to a degree that the company doesn’t necessarily need to grow U.S. users meaningfully in order to accelerate revenue growth and drive margins higher,” analyst Brad Erickson wrote in the note. As a result, RBC has an outperform rating on the name, with a price target of $48. That implies more than 46% upside from Thursday’s close. In 2024, the stock has fallen more than 11%. PayPal is another name on the list, as its more “narrow” focus on investment and innovation could make the company a leader in e-commerce and mobile payments once again. On that front, analyst Daniel Perlin pointed to its branded checkout and monetization from Venmo among the drivers of the company’s potential growth. PayPal noted in its most recent earnings results that those three drivers in particular led it to reach its biggest growth rate in transaction margin dollars in three years. That said, Perlin believes the company still needs to demonstrate its ability to drive better margins in unbranded transactions in the near term, doing so by “moving to smaller merchants and expanding international.” “As proof-points to the success of this strategy emerge, we believe the stock could begin to re-rate higher,” the analyst said. Moving forward, Perlin’s target of $84 implies more than 8% upside, as of Thursday’s close. Shares have surged about 26% this year. PYPL YTD mountain PYPL, year-to-date Italy-based luxury automaker Ferrari made the cut as well. The stock has surged around 33% year to date, and analyst Tom Narayan believes that the launches of its new vehicles, if successful, will send shares higher. On top of forecasting an imminent production increase for its vehicles in general, the analyst also anticipates that Ferrari will soon leverage its EV technology to enhance its products. In that vein, he thinks that fears pertaining to electrification are “overblown,” saying that there’s strong demand for the company’s plug-in hybrid electric vehicles. This comes as the brand prepares to launch its first electric vehicle next year. The car is expected to cost at least $535,000 , according to Reuters, well above its peers. Software name CrowdStrike and British oil giant Shell were also picked for the fourth quarter’s list. Year to date, those stocks have risen more than 11% and around 4%, respectively.