Stocks with momentum on their side if seasonal headwinds flare up

A handful of stocks that are aided by momentum, bullish sentiment and robust buyback activity could help investors navigate the rest of September and any storms that blow in October. September has traditionally been the worst month of the year for the S & P 500 going back to 1950, according to data from the Stock Trader’s Almanac. The broad market index has averaged a 0.7% loss every September. The three major averages kicked off September on a downbeat. But after the Federal Reserve cut rates by a half percentage point on Wednesday, stocks continued to overcome the traditional seasonal headwinds September is known for. Now the S & P 500 is ahead about 1.5% so far this week and more than 1% in September. The problem is, equities aren’t out of the woods yet — October is also known as a month for major drawdowns. With that seasonal volatility in mind, Evercore ISI screened for stocks that may continue to outperform in the current climate. The investment bank combed through the Russell 3000 for stocks that are in the top quintiles for momentum, sentiment and buybacks. The companies must have also had a market capitalization topping $2 billion and a share price of at least $5. Here are a few names that made Evercore ISI’s screen. One company that made the Evercore screen was mobile tech company AppLovin . The stock has climbed 209% in 2024. UBS upgraded AppLovin to buy from neutral this week. As catalysts, the bank cited improving visibility into medium-term revenue growth, a supportive valuation and potential opportunities in gaming and e-commerce. While Wall Street is overwhelmingly bullish on the name, consensus price targets are calling for downside of about 15% from current levels, according to LSEG. Still, one firm, BTIG has a $150 price target on AppLovin, the highest among analysts polled by FactSet. Financial trading platform Robinhood , which has soared 80% in 2024, also floated up on Evercore’s screen. Eight of the 17 analysts covering the stock rate it a hold, with average price targets suggesting upside of 5%, according to LSEG. Barclays upgraded Robinhood to equal weight from underweight earlier this month, with analyst Benjamin Budish pointing to a maturing business model and potential top-line catalysts. Earlier this year, Robinhood announced a $1 billion share repurchase program . Evercore ISI also highlighted Sprouts Farmers Market as a potential outperformer. Shares of the organics-focused grocery retailer have soared about 118% year to date. Evercore upgraded Sprouts to outperform from in line this week. Analyst Michael Montani wrote that Sprouts may benefit from a trend toward healthier eating, and his $125 price target is the highest on the Street, according to FactSet data. Still, 13 of the 16 analysts covering the name rate it hold, and consensus price targets suggest nearly 9% downside, according LSEG.