Stock selection to buy, best investments in Q4, stocks with high price gains

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  • September was tough for stocks as US stocks suffered their worst sales in 18 months.
  • Many investors are increasingly concerned that a major sell-off or “correction” is not far away.
  • RBC says its top 30 stock picks could add significant upside in Q4 and beyond.
  • Check out Insider’s business page for more stories.

Investors have gotten nervous and have the power to make some of their own fears come true.

After a few weeks of unstable stocks, stocks were in their worst sell-off since the market bottomed out in the early stages of the pandemic 18 months ago.

The benchmark index S&P 500 fell 4.8% in September and is just over 5% below its all-time high it hit earlier this month. That’s not a huge drop by historical standards, but more and more experts are saying that it may not be over yet.

So now the question is whether this decline will calm investors’ nerves or just encourage them to wonder if more bad news and more sales are ahead.

It might help that RBC’s top researchers update their top stock ideas as the fourth quarter of the year begins. The recent changes mean that its top 30 list has a large overweight in energy and a smaller overweight in bank stocks.

“Our US equity strategy team has an overweight positioning in the financial, energy and technology sectors and is balanced on value / cyclical and growth exposure,” wrote Global Head of Research Graeme Pearson, Head of US Research Mark Odendahl, Head of Canadian & APAC Research André -Philippe Hardy and Head of European Research Michael Hall.

The group added Amazon to replace Home Depot, traded AIG for Arch Capital, substituted UnitedHealth in the place of Humana, and substituted Alexandria Real Estate Equities while removing Americold Realty Trust. Financial information services company S&P Global was also added while energy pipeline company Enterprise Products was removed.

While RBC cites this as its best ideas for the fourth quarter, its analysts say all stocks are up at least 13% over the next year, while the top two picks will more than double the price.

The stocks are ranked lowest to highest based on RBC’s total expected return on the stocks over the next 12 months. This return may be made up of share price increases and dividends. The upward numbers were calculated at the close of trading on September 30th.

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