The month of September started off on a rocky note for the stock market, especially in the semiconductor space. Nvidia experienced a significant drop in its market capitalization, marking it as the biggest one-day loss for any U.S. stock in history. The VanEck Semiconductor ETF (SMH) also suffered a nearly 12% decline last week, the largest weekly loss in over four years. Additionally, all three major stock indexes reported sharp declines, with the S&P 500 seeing its worst week since the regional bank crisis of 2023.
Despite the overall market volatility, Mizuho has identified 24 of its highest-conviction stock picks across six sectors for the month of September. One of the notable additions to their list is chip giant Micron Technology. Even though Micron’s shares have experienced a 10% decline last week and a significant drop of over 33% in the past three months, Mizuho believes that the company is well-positioned in the artificial intelligence arms race. Analyst Vijay Rakesh highlighted the potential tailwinds from increased AI adoption and pricing improvements in traditional DRAM and NAND as drivers for Micron’s continued upside.
Energy Transfer is another top pick for Mizuho in September due to its attractive free cash flow yield, growth outlook, and discounted valuation. With a price target of $20, the stock has an implied upside of nearly 26%. Furthermore, Wolfe Research has also added Energy Transfer to its Alpha List, projecting significant upside for the stock in the future. Despite some ups and downs, shares of Energy Transfer have surged over 15% this year.
The Bright Future of Lowe’s
Lowe’s is one of the three names on Mizuho’s list that the firm is more bullish on compared to the Street’s consensus. While the average price target for Lowe’s sits around $256, Mizuho’s target of $280 implies an upside of nearly 15%. The firm sees Lowe’s as strategically positioned to benefit from the expected demand recovery in the industry post-pandemic. Analyst David Bellinger mentioned that the home improvement sector is transitioning into the later stages of post-pandemic digestion, and Lowe’s is expected to capitalize on this trend. Moreover, any potential easing by the Federal Reserve could unlock significant pent-up demand, further boosting Lowe’s performance in the market.
Validation from Other Analysts
Mizuho’s optimism about Lowe’s is also echoed by JPMorgan, as the stock was recently added to JPMorgan’s September focus list. Year-to-date, Lowe’s has demonstrated a strong performance with shares up more than 9%, reflecting the market’s confidence in the company’s growth prospects.
Despite the market turbulence witnessed in the early days of September, Mizuho remains bullish on select stocks with strong growth potential. Micron Technology, Energy Transfer, and Lowe’s are among the top stock picks for the month, with each of them expected to capitalize on specific industry trends and market developments to deliver value to investors.