Hot Stocks Today | What You Need To Know About Stocks

The hot stocks today won’t be the same as the hot stocks from earlier this year. The best stocks 2023 had to offer during the first 9 months of the year won’t be the top growth stocks to buy now. The growth stocks 2023 caused to rally so much over the past year are now extremely overvalued. That means the top growth stocks for the remainder of the year and into 2024 will not be the mega cap tech stocks such as Tesla and Nvidia, but rather value stocks such as small caps and mid caps, and especially dividend stocks. So the top stocks to buy now are actually boring dividend stocks and value stocks – these are the top stocks to invest in 2023. If you want to know how to invest in stocks, and you’re looking to find out how to invest in stocks for beginners, the best way to learn how to invest in the stock market is to take a course, such as the ones offered at If you want to know how to start investing in the stock market, I will tell you what you need to know about stocks.

October is where the stock market normally stops falling, turns around and goes on an eight month rally. And certainly with a rise in stocks we’ve seen over the past few days, it looks like that rally is starting already. And this is a very exciting time to be buying stocks. But it’s important to understand that not all stocks are going to go up in the same way. Some stocks have already rallied. Take the eight mega-cap tech stocks, for example. Some of the stocks are up 100% or 200% from the lows of last year. Some are still up over 100% this year alone, which means the hottest stocks in the first part of this year might not be the hottest stocks for the rest of the year.

And what we have to understand is that when we’re looking at valuations, the eight mega-cap tech stocks have risen so much, they’ve pretty much lifted the entire stock market with them. If you exclude the eight mega-cap tech stocks though, the entire stock market is pretty much flat on the year after the September sell off. Which means for the remainder of the year and probably into early next year, it’s not the eight mega-cap tech stocks that are going to be the hot ones that really rise a lot, because they already rose. They are already at some of the highest forward PE ratios we’ve seen since the dot com bubble in 2000.

Instead, the hottest stocks for the rest of this year and going into next year are more than likely going to be the small cap stocks, as well as the dividend stocks that are now paying extremely high dividend yields, with many traditional dividend stocks paying over 6% dividend yields, and some paying even 8% or 10% dividend yields. Those are the stocks that I would expect people to start buying throughout the rest of the year and into next year, as well as the small caps which have pretty much missed out on the rally so far. Now, when we look at how individual stocks are doing, we have to understand some of the news that’s coming out and some of the things that might bring down the Mega-cap stocks while bringing up some of the other stocks.

Now anybody who’s been following me for any amount of time knows that I’m an investor in Walgreens Boots Alliance. And the stock sold off significantly last month after their CEO quit. Now the pharmacy giant has named Tim Wentworth as the new CEO. Wentworth, who is set to start his new job on October 23rd, is the former CEO of Express Scripts, which is one of the biggest pharmacy benefit managers and now is part of Cigna Group. Wentworth helped sell the company to Cigna. Now this actually has me more excited than if Walgreens had chosen some other CEO. See, I’ve been a part of companies before who hired CEOs whose shining light was the fact that they had sold their prior company to another company.

And the fact that Walgreens has chosen Tim Wentworth, the former CEO of Express Scripts, whose shining light was selling Express Scripts to Cigna, the fact that Walgreens chose him, tells me that there’s a chance that Walgreens is looking to possibly sell itself. And if it does, we could see a significant increase in the share price of Walgreens. Now this was great news for Walgreens investors, because of the potential for a future sale, but more importantly, just because Walgreens now has a CEO and can now move on from some of the issues that caused the stock to drop last month.

And unsurprisingly, when this news was announced, Walgreens stock initially rallied over 7%. But then Jim Cramer opened up his big mouth and praised Walgreens’ new CEO pick, and told people to buy the stock, perhaps aggressively. And we all know what happens when Jim Cramer tells people to buy. That’s right. The stock goes down. Walgreens sold off significantly, finishing the day up less than 1%. Thanks a lot, Jim.

Now let’s talk about why some of the mega-cap tech stocks might fall. Turns out they’re running into a lot of problems. Europe has given Mark Zuckerberg 24 hours to respond about Israeli-Hamas conflict and election misinformation. Europe is concerned that Mark Zuckerberg is not being vigilant about removing disinformation on the Facebook platform.

And the IRS says Microsoft owes an additional $29 billion in back taxes. Of course, Microsoft disagrees with these claims and they’re going to fight the IRS in court. But what’s interesting is if they do have to pay this $29 billion in back taxes, that is more money than they earned last quarter, and it is more money than they actually have in cash on hand compared to the current liabilities. So Microsoft would either have to pay this out over many quarters or they would have to go get some new financing in order to pay this off. Either way, if Microsoft does have to pay this to the IRS, it’s going to cause a significant decrease in profits and will probably even cause a loss in whatever quarter they have to pay this out in. So this could cause a hurt to Microsoft.

Of course, some of the other tech stocks or mega-cap stocks are up so much, they are most likely going to drop just due to valuation. I mean, take a look at Tesla, which has a forward PE of 80. Take a look at Nvidia, which is running a forward PE of about 50 to 60. And these stocks just remain extremely overvalued like we have not seen since the dot com bubble. For that reason, they will eventually fall back down to a fair valuation. I don’t know how long it will take, but it will eventually happen. If we look at Tesla, for example, it’s still trading at about half of where it was compared to its all time high. Stocks do eventually come down. It just takes time.

Now, that doesn’t mean just go out and buy any old small cap stock either. A lot of people in 2021 invested in small cap stocks, and they invested in companies that were not profitable, that were basically bankrupt, because they had a great story. And one of those stocks that people invested in was Chargepoint. And the problem with investing in a basically bankrupt company is they have to raise money in order to stay in business. And Chargepoint shares fell significantly on Wednesday after they announced a $232 million raise via stock sales. So Chargepoint is doing a share offering which is hurting shareholder value. That’s why the stock sold off so much. And that is the big risk when you’re investing in a company that’s not profitable, that’s running out of cash. You know they’re going to have to raise cash in order to stay in business. And when they do, that’s going to cause the share price to go down significantly. So be careful what you invest in.

I would definitely recommend you invest in profitable companies, preferably companies that are paying nice dividends, and companies that are extremely undervalued instead of overvalued. That means avoiding these zombie stocks and these small cap stocks that are not profitable. It also means avoiding the mega-cap stocks that have insane forward PE ratios, and try to find something in the middle, somewhere around a mid cap to small cap stock, that is profitable and growing, also paying a nice dividend, but has not yet run up and is still running at these low valuations that we saw in October of 2022.

Now as the market overall – if you look at the 9,000 stocks, excluding the top eight – as the majority of the stock market has mainly traded flat over the past year, it’s all due to the fact that there just isn’t a lot of money coming into the stock market due to the fact that Treasury yields are rising and people are preferring to put their money into treasuries and perhaps cash at the high yield savings account rates, instead of necessarily buying stocks. And as a result of this, it’s also hurting the IPO market. Birkenstock is the latest IPO. They opened at just $41 per share after pricing the IPO at $46 per share. Wow. That stock, that IPO, down over 10% on the day of its debut. It has just not been a good time for IPO. Pretty much all of the major IPOs that have come out over the past few weeks have gone down since the IPO. And of course, it’s not just IPOs that are going down either.

The regional banks have been hit especially hard. As we had the bank collapses in March, and as higher interest rates have absolutely destroyed the balance sheets of these regional banks, these stocks continue to sell off. And now regional bank stocks have sold off so much that some are at risk of being booted from the S&P 500. You see, the S&P 500 has a requirement that stocks have to maintain a market cap of $14.5 billion. Once the stock drops below $14.5 billion, it is at risk of being delisted from the S&P 500. Two regional banks, in particular Zions and Commercia, are both at risk of being delisted from the S&P 500. And should those stocks get delisted, you can expect the share prices to fall significantly, which in turn might help bring down other bank stocks as well.

Of course, it’s not just risk of delisting that is causing bank stocks to sell off. We’re also still waiting for downgrades from Fitch, as well as downgrades from Moody’s. Six banks are under review for a downgrade from Moody’s with another 11 banks with a negative outlook. So when it comes to the hottest stocks for the rest of the year and into next year, I don’t think bank stocks are going to make the list. Even though bank earnings are expected to rise, the risks that we still have in the banking sector are probably going to outweigh any increase in profits in the short term. However, once we get through the next round of bank downgrades from Fitch, Moody’s, and S&P, then we should finally start to see a bit of a bottom in these banks. And hopefully at that point we could see banks turn around and start to go up.

Now, looking a little bit more long term, we have some really important economic data that’s coming out on Thursday, as well as some other really important economic data coming out on Friday. On Thursday, the September inflation data, specifically the Consumer Price Index or CPI, is being released. Now CPI is expected to have fallen to 0.3% from 0.6% in the month prior. However, should the CPI come in higher than expected, that could cause a major sell off in stocks on Thursday. And unfortunately, wholesale inflation, that is the PPI or Producer Price Index, which came out on Wednesday, rose 0.5% in September, which was much higher than the 0.3% expected. So if CPI comes in just as bad as PPI came in, we could see a sell off in stocks on Thursday.

Now, the reason that we might get that sell off is because of what happened during the meeting minutes that came out on Wednesday from the Fed’s last meeting, where Fed officials said they see restrictive interest rate policy staying in place until inflation eases. And of course, if inflation starts going back up again and it doesn’t ease like investors are hoping it will, then that restrictive policy from the Fed is going to stay in place a lot longer than people are hoping for. Now after we get this Thursday economic data, we have some pretty important data coming out on Friday, as well as really the entire rest of the month of October.

That’s because on Friday, earnings season officially kicks off with the major banks reporting earnings, including JP Morgan Chase, BlackRock, Citibank, Wells Fargo, PNC and many others. Those banks will continue reporting through Tuesday of next week. And then on Wednesday, we start with the Mega-cap tech stocks, including Tesla and Netflix, with earnings continuing to come out throughout the rest of this month. And no doubt after Thursday, earnings season is going to be the biggest market mover this month. The good news is that profits are making a comeback despite the challenges, including rising labor costs and high interest rates. US corporate earnings are on an upswing and with profits expected to go up this quarter over the prior quarters, and that could add fuel to the fire, which might help increase this massive market rally that we historically get over the next eight months. So look for the earnings season, and hopefully good earnings, and hopefully we continue to see this market continue to rally, and this being a great time to buy stocks after the September sell off.

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