While it’s just an aphorism, the adage sell in May and go away generally rings true. Seasonality makes certain months not pleasant for the equities sector, though there are best stocks to avoid June gloom.
As InvestorPlace contributor Rich Duprey mentioned not too long ago, “June is absolutely the worst month in which to invest, no matter the market index. While things look up again in July, they turn positively sour once more in August. September isn’t much better.”
Basically, you have two choices: you can avoid the market altogether, which may lead to absorbing opportunity costs. Or you can focus on enterprises that can help you get through the choppy weather.
Granted, some of these ideas aren’t exactly thrilling. However, they should allow you to steadily build your portfolio while you get ready for the exciting months. On that note, below are the best stocks to avoid June gloom.
Colgate-Palmolive (CL)
Consumer goods manufacturer Colgate-Palmolive (NYSE:CL) inherently makes a case for the best stocks to avoid June gloom. How so? When it comes to brushing one’s teeth, people don’t have certain months or seasons in which they do. Instead, they’re brushing (and flossing) every day. That goes with many other activities to which Colgate offers aligning products.
No, providing oral-care solutions isn’t what you would call an exciting business. But as a candidate for best stocks to avoid June gloom? CL makes perfect sense. The underlying business is predictable and that’s exactly what you need to avoid the cyclical nature of market phenomena.
Financially, during the trailing 12 months (TTM), Colgate posted net income of $2.61 billion, translating to earnings per share of $3.15. Revenue during the period reached $19.75 billion. For fiscal 2024, analysts expect EPS to rise 9.3% to $3.53. On the top line, sales could land at $20.21 billion, up 3.9% from last year’s tally of $19.46 billion.
PepsiCo (PEP)
Fundamentally, PepsiCo (NASDAQ:PEP) makes a powerful case for best stocks to avoid June gloom because of one key concept: the trade-down effect. Let’s just be blunt here – Americans are addicted to caffeine. This psychoactive substance keeps us going in our nine-to-five. Typically, consumers would go to their pricey coffee shop (not naming names) to get their fix.
However, during an interesting period in our economic history, overpaying for something simple like coffee might not be particularly sensible. Instead, PepsiCo offers myriad beverages that offer caffeine via different mediums. Plus, the company is a massive brand in grocery stores everywhere, meaning that it’s cheaper; hence, the trade down.
During the TTM period, PepsiCo posted net income of $9.18 billion, translating to EPS of $6.63. Revenue reached $91.88 billion. For fiscal 2024, experts anticipate roughly a 16% lift to EPS of $8.17. On the top line, sales could jump 11.3% to hit $94.51 billion. It’s on the right trajectory to meet these targets, making PEP one of the best stocks to avoid June gloom.
Amazon (AMZN)
At face value, Amazon (NASDAQ:AMZN) represents a risky idea for best stocks to avoid June gloom. That’s because as an e-commerce giant, its business largely falls out of the secular component of retail and more into the cyclical. For example, if you want to buy the latest electronic gizmo or gadget, Amazon’s perfect. If you want to buy tomatoes and other produce, just go to your local grocery store.
Yeah, you can get groceries from Amazon but the economies of scale just don’t quite work yet. However, even though the company’s demand profile is centered on the cyclical side of the retail business, it’s fine. E-commerce as a percentage of total retail sales continues to march higher since the lull of the second quarter of 2022. You can bet that Amazon represents a big chunk of these online dollars.
In the TTM period, AMZN posted net income of $37.68 billion, translating to EPS of $3.57. Revenue reached $590.74 billion. For fiscal 2024, analysts are looking for a stunning growth rate of 56.6% in earnings to reach $4.54 per share. Revenue is projected to hit $638.21 billion, up 11% from last year.
Intel (INTC)
One of the legacy tech giants, Intel (NASDAQ:INTC) used to be the top name in central processing units (CPUs). However, with the rise of artificial intelligence and other data-intensive innovations, focus has shifted to graphics processing units (GPUs). You already know where I’m going with this. Intel has simply been left in the dust and therefore, analysts don’t really give INTC much of a chance.
Presently, the experts rate shares a consensus hold. However, it’s notable that the average price target stands at $38.02, implying almost 24% upside. Also, the most optimistic forecast calls for $68 per share. That implies a growth rate of over 121% from Friday’s close. Typically, these folks don’t like issuing rando price targets for fear of sullying their reputation.
Financially, INTC could be interesting. Because few investors give it a chance, it very well could fly under the radar in June. And while sales and earnings growth for fiscal 2024 may be modest, circumstances may perk up in fiscal 2025. That’s when EPS could rise to $1.94 on revenue of $62.59 billion, up 78% and 12.2%, respectively.
Duke Energy (DUK)
As a key player in the utilities business, Duke Energy (NYSE:DUK) makes an excellent case for best stocks to avoid June gloom. Here’s the reality. Generally speaking, utility firms benefit from natural monopolies. Fundamentally, companies like Duke offer critical power and resource services to their customers. Because of regulations and other challenges, would-be competitors don’t even bother. That leaves Duke and its ilk entrenched in their core markets.
You can cry foul. However, the cynical case here is that utilities often are the best stocks to avoid June gloom. Whether this month or any of the other 11 months, people need access to power and critical resources. Moreover, Duke – commanding a strong presence in the Carolinas and other desirable regions due to lower costs of living – enjoys a geographic and demographic advantage.
Basically, people are moving to the areas where Duke utilities are situated. So, it’s easy to trust analysts’ projections for DUK stock. They’re looking at EPS of $5.97, up 7.4% from last year. Also, revenue may reach $30.02 billion, up 3.3% from 2023’s haul of $29.06 billion.
Brookfield Renewable Partners (BEP)
With the ideological and political winds focused so heavily on renewable infrastructure, Brookfield Renewable Partners (NYSE:BEP) makes a strong case for best stocks to avoid June gloom. Going green isn’t just a one-month pet project. No, entire nations and regions are increasingly pivoting toward sustainable energy solutions. It’s not just good for the planet but the matter also carries geopolitical significance.
One of the reactionary moves that Russia’s invasion of Ukraine sparked was exactly that: a shift away from hydrocarbons and toward renewable energy infrastructures. Don’t get me wrong. Europe is still dependent on Russian hydrocarbon products in many ways. However, the region has made a concerted effort to reduce this dependency. As an underlying plot, that’s very positive for Brookfield.
Now, it must be said that during the TTM period, BEP incurred a net loss of $117 million. However, revenue reached $5.2 billion. For fiscal 2024, experts believe that revenue may rise 10.1% to reach $5.42 billion. Further, the high-side target calls for sales of $6.31 billion. It’s a bit risky because of the net loss but it’s worth keeping on your radar.
Phillips 66 (PSX)
While I just got done talking about the tremendous potential of renewable energy integration, we’ve got to be real: the world still runs on oil. And it’s quite possible that the world could continue running on oil for much longer than we’d like. Anticipating this paradigm, investors should consider downstream hydrocarbon energy giant Phillips 66 (NYSE:PSX). In my opinion, it’s easily one of the best stocks to avoid June gloom.
Here’s the deal: downstream entities focus on operations such as refining and marketing. If it goes into your gas tank, it’s downstream. Now, as much as people hate the pain at the pump, it’s just an inevitability. Folks need to get around and for many households, electric vehicles are either too expensive or just too cumbersome. So, as a necessary “evil,” PSX could thrive, irrespective of the month.
What I did notice that I thought was interesting was that for the longest time, PSX – because it performed so well – featured lowly projected returns based on consensus analyst price targets. However, the latest assessment of moderate buy also calls for a $163.67 price target. That’s almost 19% up. And I believe it reflects fundamental reality.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
