In this article, we will be taking a look at the top 10 stocks to buy in 10 different sectors for the next 3 months. To skip our detailed analysis of changing stock market dynamics today, you can go directly to see the Top 5 Stocks To Buy In 5 Different Sectors for the Next 3 Months.
“Routine August Pullback Or The Start Of A Meaningful Move Lower?”
In the months leading up to August 2023, the stock market was seeing a prolonged rally. The valuations of many stocks got stretched during the first half of the year and were brought down as soon as August hit. According to a CNBC report from August 18, Cameron Dawson, the Chief Investment Officer at NewEdge Wealth, had the following to say on this matter:
“I do think that corrections are very normal in even the best of bear markets, and we usually see them in the high single digits to low teens, that’s all run of the mill, and what we were seeing into July is that you had a lot of position chasing, you had the dynamic of it all being valuation-driven, there was really no change in the earnings outlook, even after a great earnings season. And so it did appear that there was this ‘feeding on itself’ mentality that was leading to the upside, so no wonder you’re seeing the air come out of stocks that went up the most.”
Based on how market trends have been developing since the start of August, Adam Parker from Trivariate Research chimed in with the following take on the market:
“I’m probably more bullish now than I was a month ago. I mean the market’s down five and the earnings are higher – 2024 and 2023 earnings are up a little bit. So if I’m trying to be, you know, intellectually honest, I guess I should like it a little bit more than I did a month ago. I mean, earnings season I thought was pretty good, the big-cap tech stocks generally delivered.”
Despite Parker’s generally bullish outlook on the market, it was noted that the markets are seeing some pullback in several areas. One reason put forward for this development in August was seasonality. CNBC showed a seasonal history chart of the S&P 500’s performance dating from 1983 to 2023 to drive home the point that the benchmark index generally tends to experience a pullback around August. According to Dawson, though, seasonality is just one of several factors investment professionals need to take into account when mapping out the progress of the market to try and figure out why a pullback happens.
“People Are Just Putting Money Elsewhere”
Another August 18 CNBC report showed how the August pullback was not just restricted to stocks, with bonds and crypto also becoming part of the larger downhill trend witnessed in the markets. Here’s what Victoria Fernandez, the Chief Market Strategist at Crossmark Global Investments, had to say about this:
“I think you have to look at people’s cash positions right now and look at their short term treasury allocations. I think that’s where we’re seeing a lot of this cash go. They’re getting good yields by just keeping their money in cash, so why take the risk of having it in some tech names that are down 10-11% a month, having it in bonds where 10-year yields have gone up about 50 basis points over the last couple of weeks? So short term elements right now I think is where most people are hiding their money, waiting for an opportunity to get back in this market.”
Sarah Kunst, the Managing Director at Cleo Capital, agreed with Fernandez’s take on investment moves people are taking at this point, considering the way sectors like technology are currently performing in the market. Despite the August stock selloff, though, many sectors are continuing to hold on. A Reuters article from August 19 mentioned that defensive sectors like consumer staples and utilities are continuing to rise even in August. The S&P 500 energy index has also posted small gains, and the tech sector is brushing off the fall because of some rallying stocks.
In each sector, the market-leading demeanor of companies like Meta Platforms, Inc. (NASDAQ:META), Microsoft Corporation (NASDAQ:MSFT), and Amazon.com, Inc. (NASDAQ:AMZN) may help many sectors retain a significant portion of their gains even after the August selloff. In light of these developments, we have compiled a list of some of the top stocks to buy in 10 different sectors for the next three months. These include several of the best stocks to buy in 2023 for the long term since we have covered some of the best sectors to invest in right now.
Image by Sergei Tokmakov Terms.Law from Pixabay
Our Methodology
We used Insider Monkey’s hedge fund data for the second quarter to pick the top stocks in each sector. The stocks are ranked based on the number of hedge funds holding stakes in them, from the lowest to the highest number.
Top Stocks To Buy In 10 Different Sectors for the Next 3 Months
10. NextEra Energy, Inc. (NYSE:NEE)
Number of Hedge Fund Holders: 59
Sector: Utilities
NextEra Energy, Inc. (NYSE:NEE) is an electric utility company based in Juno Beach, Florida. The company generates, transmits, distributes, and sells electric power to retail and wholesale customers in North America through its subsidiaries.
As of July 21, David Arcaro, an analyst at Morgan Stanley, maintains an Overweight rating on shares of NextEra Energy, Inc. (NYSE:NEE). The analyst also maintains a price target of $93 on the stock.
There were 59 hedge funds long NextEra Energy, Inc. (NYSE:NEE) in the second quarter, with a total stake value of $918.3 million.
At the end of the second quarter, Citadel Investment Group was the largest shareholder in NextEra Energy, Inc. (NYSE:NEE), holding 2.8 million shares in the company.
9. Chevron Corporation (NYSE:CVX)
Number of Hedge Fund Holders: 73
Sector: Energy
Josh Silverstein, an analyst at UBS, maintains a Buy rating on shares of Chevron Corporation (NYSE:CVX) as of August 17. The analyst also raised his price target on the stock from $202 to $209.
Chevron Corporation (NYSE:CVX) is an integrated oil and gas company. It engages in integrated energy and chemicals operations in the US and internationally through its Upstream and Downstream segments. The company is based in San Ramon, California.
Chevron Corporation (NYSE:CVX) was spotted in the 13F holdings of 73 hedge funds at the end of the second quarter. Their total stake value in the company was $21.4 billion.
Like Meta Platforms, Inc. (NASDAQ:META), Microsoft Corporation (NASDAQ:MSFT), and Amazon.com, Inc. (NASDAQ:AMZN), Chevron Corporation (NYSE:CVX) is a highly popular stock among elite hedge funds today.
8. Teck Resources Ltd (NYSE:TECK)
Number of Hedge Fund Holders: 79
Sector: Materials
Soroban Capital Partners was the most prominent shareholder in Teck Resources Ltd (NYSE:TECK) at the end of the second quarter, holding 10.1 million shares in the company.
Teck Resources Ltd (NYSE:TECK) is a diversified metals and mining company. It explores for, acquires, develops, and produces natural resources in Asia, Europe, and North America. The company is based in Vancouver, Canada, and its principal products include copper, zinc, steelmaking coal, and blended bitumen.
On August 1, Carlos De Alba, an analyst at Morgan Stanley, reiterated an Overweight rating on shares of Teck Resources Ltd (NYSE:TECK). The analyst also maintained a price target of $53 on the shares.
We saw 79 hedge funds holding stakes in Teck Resources Ltd (NYSE:TECK) in the second quarter, with a total stake value of $2.4 billion.
7. Walmart Inc. (NYSE:WMT)
Number of Hedge Fund Holders: 81
Sector: Consumer Staples
Walmart Inc. (NYSE:WMT) was seen in the portfolios of 81 hedge funds at the end of the second quarter. Their total stake value in the company was $5.5 billion.
Walmart Inc. (NYSE:WMT) is a consumer staples merchandise retail company based in Bentonville, Arkansas. It engages in the operation of retail, wholesale, and other units across the globe. The company operates supercenters, supermarkets, hypermarkets, warehouse clubs, cash and carry stores, and discount stores under the Walmart and Walmart Neighborhood Market brands, among more.
As of August 18, Bill Kirk, an analyst at Roth MKM, maintains a Buy rating on shares of Walmart Inc. (NYSE:WMT). The analyst also raised his price target on the stock from $169 to $179.
Like Meta Platforms, Inc. (NASDAQ:META), Microsoft Corporation (NASDAQ:MSFT), and Amazon.com, Inc. (NASDAQ:AMZN), Walmart Inc. (NYSE:WMT) is a stock many investors and hedge funds are eyeing this year.
6. UnitedHealth Group Inc. (NYSE:UNH)
Number of Hedge Fund Holders: 111
Sector: Healthcare
Scott Fidel, an analyst at Stephens & Co., reiterated an Overweight rating on shares of UnitedHealth Group Inc. (NYSE:UNH) on August 11. The analyst also maintained a price target of $560 on the stock.
Our hedge fund data for the second quarter shows 111 hedge funds long UnitedHealth Group Inc. (NYSE:UNH) in the first quarter, with a total stake value of $10.1 billion.
UnitedHealth Group Inc. (NYSE:UNH) is a managed healthcare company that operates through its UnitedHealthcare, Optum Health, Optum Insight, and Optum Rx segments. The company is based in Minnetonka, Minnesota. It offers consumer-oriented health benefit plans and services for national employers, public sector employers, mid-sized employers, small businesses, and individuals. It also offers healthcare coverage alongside health and well-being services to individuals aged 50 and older to address their needs.
GQG Partners was the largest shareholder in UnitedHealth Group Inc. (NYSE:UNH) at the end of the second quarter, holding 4.9 million shares in the company.
This is what L1 Capital said about UnitedHealth Group Inc. (NYSE:UNH) in its second-quarter 2023 investor letter:
“Close observers of the Fund will note the increased exposure to healthcare, currently 13% of the portfolio. Healthcare is generally less macro-sensitive than some other sectors. In a reversal of market sentiment compared to 2022, the healthcare sector has been under modest pressure due to what we consider to be some short-term transitory issues, while technology, particularly anything to do with AI, has become the market’s dish du jour. We have been selectively increasing our investment in a few very high-quality healthcare businesses at prices we consider to be fair. UnitedHealth Group Incorporated (NYSE:UNH) is now a top 10 holding, and our investment thesis is outlined in this report.
We have previously written on our exposure to taxes through our investment in Intuit and its market leading TurboTax franchise (Intuit also owns the QuickBooks small business accounting franchise, Credit Karma and Mailchimp). UnitedHealth Group (UnitedHealth) is leading the charge to postpone the inevitable, while lowering overall healthcare system costs.
U.S. health spending has outpaced GDP growth for decades, with spending on healthcare increasing from around 12% of GDP in the 1980s to nearly 20% today, driven by advancements in healthcare capabilities and an ageing population with increased life expectancy…” (Click here to read the full text)
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Disclosure: None. Top 5 Stocks To Buy In 10 Different Sectors for the Next 3 Months.
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