September has proven to be a turbulent month for stocks, particularly in the semiconductor space. Chipmaker Nvidia suffered a massive 9% drop on the first trading day of the month, resulting in a staggering $279 billion loss in market capitalization, marking the largest single-day decline in history for a U.S. stock. The VanEck Semiconductor ETF (SMH) also experienced a significant downturn, plummeting nearly 12% last week, its most substantial weekly loss in over four years. Adding to the chaos, all three major stock market indices recorded sharp declines, with the S&P 500 witnessing its worst week since the regional bank crisis of 2023.
Mizuho’s Top Picks
As the new trading month begins, Mizuho has identified 24 of its top stock picks across six sectors. Among its latest additions to the list are Micron Technology, a chip giant, and Coterra Energy, an oil and gas company. Micron, despite a recent 10% fall and a staggering 33% drop in the past three months, is seen as well-positioned in the artificial intelligence (AI) market. With anticipated tailwinds from increased AI adoption, especially in high-bandwidth memory, Micron is expected to benefit from pricing improvements in traditional DRAM and NAND memory. Analyst Vijay Rakesh believes these factors will drive continued upside for Micron.
Energy Transfer is another top pick for September, supported by its attractive free cash flow yield, growth prospects, and discounted valuation. Mizuho has set a price target of $20 for the stock, indicating a potential upside of nearly 26% based on Friday’s closing price. Similarly, Wolfe Research has added Energy Transfer to its Alpha List, suggesting significant upside potential in the coming months. Meanwhile, Lowe’s, a home improvement retailer, is one of Mizuho’s top choices that stands out from the broader market consensus. Mizuho’s price target of $280 for Lowe’s implies a nearly 15% upside from the recent close, compared to the average price target of $256 set by other analysts.
Mizuho is optimistic about Lowe’s prospects, citing the company’s strong positioning to benefit from the expected recovery in demand within the home improvement sector. Analyst David Bellinger notes that Lowe’s is well-equipped to capitalize on the post-pandemic rebound in consumer spending on home improvement projects. He also highlights the potential for increased demand in the housing market, especially if the Federal Reserve announces easing measures to stimulate economic activity. With the sector showing signs of recovery and with Lowe’s positioned to outperform, Mizuho sees significant upside potential for the stock.
Consensus and Continued Growth
Despite the challenges posed by the market turbulence, Mizuho’s top stock picks for September reflect a mix of established industry leaders and companies with strong growth potential. The firm’s analysis highlights the importance of identifying companies with a competitive edge, solid financial performance, and promising market positioning. By focusing on these key criteria, investors can navigate market volatility and capitalize on opportunities presented by evolving economic conditions. As the month progresses, monitoring these top stock picks and staying attuned to market trends will be crucial for investors seeking to maximize their returns and build a resilient investment portfolio.