A new trading month has begun, and JPMorgan is spotlighting several key stocks that it anticipates will outperform. On Tuesday, the three major averages started October poorly, influenced by Iran’s missile attack on Israel, which increased tensions in the Middle East and negatively impacted investor sentiment toward risk assets. The Nasdaq Composite led the decline among the major indexes, dropping over 1%. However, all three indexes concluded September on a high note the previous Monday, marking the fifth consecutive winning month for both the S&P 500 and Dow Jones Industrial Average, both closing at record highs.
In this context, JPMorgan has updated its top ideas list, focusing on growth, income, value, and short selling strategies. The investment bank has added six stocks while removing seven from the previous month. Notable additions for October include Best Buy and Carmax, with Wayfair, CarGurus, and First Citizens BancShares among those removed.
Among JPMorgan’s picks for October, Best Buy was added to the focus list as a value strategy. The firm sees potential growth in key categories such as TVs and appliances for the electronics retailer. JPMorgan highlighted positive home sales and increased AI adoption as factors that may boost Best Buy’s average selling prices. Analyst Christopher Horvers noted Best Buy’s potential for increased profitability, projecting operating margins to rise to 5% from 4.1% last year. He rated the stock overweight with a price target of $111, suggesting over 9% upside from Tuesday’s close. Despite Horvers’ optimism, 16 out of 28 analysts covering Best Buy are neutral, with an average price target of $104, implying a mere 3% upside. Year to date, Best Buy, headquartered in Richfield, Minnesota, has surged by more than 29%.
AT&T was also included in JPMorgan’s focus list under the value strategy. The bank rated AT&T overweight with a price target of $24, about 8% above Tuesday’s close. The sentiment on Wall Street aligns with this bullish outlook, as 16 of 29 analysts give AT&T a strong buy or buy rating, despite the average price target indicating roughly 2% downside. Recently, AT&T’s shares experienced a slight increase after the telecommunications company announced on Monday its agreement to sell a 70% stake in DirecTV to TPG for $7.9 billion. Excluding dividends, the company’s stock has climbed nearly 32% this year.
On the growth side, JPMorgan named Eli Lilly as one of its favorable picks. The bank set a target of $1,100 for Eli Lilly, suggesting more than 24% upside. The maker of Mounjaro and Zepbound diabetes and weight loss drugs has risen by more than 51% in 2024. General sentiment on Wall Street is positive for Eli Lilly, with a consensus price target of $1,003 implying more than 13% upside, and 23 out of 28 analysts assigning a buy-equivalent rating. Lilly recently announced plans to invest $1.8 billion in expanding manufacturing in Ireland, targeting treatments for Alzheimer’s, obesity, and diabetes, among other conditions.
Other stocks JPMorgan recommended for October include Charles Schwab and Ulta Beauty, highlighting both companies for their growth potential. The bank’s price target suggests about 22% upside for Schwab and about 18% potential appreciation for Ulta Beauty based on Tuesday’s close.
