Potential Market Champions: Promising Stocks for June 2023

US Stocks to Watch in June 2023

The spotlight for June 2023 shines on First Solar Inc. (FSLR), Nvidia Corp. (NVDA), and Penumbra Inc. (PEN), all of which have seen their share prices double over the last year. This trend is observed as the Russell 3000, a capital-weighted stock market index encapsulating the whole US stock market, records a modest return of 1%.For a comprehensive understanding, we present the top five stocks in each category: value, growth, and momentum.

Identifying the Best Value Stocks

Value investing employs a factor-based strategy where investors scout for stocks they perceive are priced below their intrinsic worth. This perceived worth is usually established by comparing the stock’s price to one or more key business metrics. A popular metric used in value investing is the price-to-earnings (P/E) ratio. Advocates of this approach argue that if a stock is undervalued relative to its intrinsic worth (using its P/E ratio for instance), its price may rise faster than other stocks as it realigns with the company’s actual worth. Here we highlight stocks with the lowest 12-month trailing P/E ratio.

Southwestern Energy Co.: This company is an oil and natural gas explorer and producer with assets across Pennsylvania, Ohio, West Virginia, and Louisiana. In June 2022, the company approved a $1 billion share buyback scheme that runs until the end of 2023. Southwestern recorded a net income of $1.9 billion in the first quarter, an impressive recovery from a net loss of $2.7 billion the previous year, despite a 28% year-over-year revenue drop.
Chesapeake Energy Corp.: An oil and gas explorer and producer with operations across the U.S., Chesapeake Energy agreed in February to sell a part of its Eagle Ford assets to global chemical firm INEOS for approximately $1.4 billion. The company's revenue tripled year-over-year in the first quarter of 2023, with net income amounting to $1.4 billion, or $9.60 a share.
First Citizens BancShares Inc.: This holding company offers banking services like deposit products, consumer loans, and commercial leases. First Citizens saw a surge in net income in the latest quarter after acquiring the assets and liabilities of Silicon Valley Bank at a considerable markdown.
Ovintiv Inc.: Ovintiv owns and operates an array of natural gas and oil properties in the U.S. and Canada.
DISH Network Corp.: A television service provider that offers a variety of programming packages, Sling TV, and wireless subscription plans. The company announced its first-quarter earnings results on May 8, revealing a 46% decrease in net income and a 9% overall revenue reduction compared to the same period in 2022. DISH lost more than half a million Pay-TV subscribers in the first quarter, with a 9% drop in retail wireless subscribers compared to the previous year.

Highlighting the Fastest-Growing Stocks

These stocks are ranked according to a growth model that assigns companies a score based on an equal weighting of their most recent quarterly year-on-year (YOY) percentage revenue growth and their most recent quarterly YOY earnings per share (EPS) growth. It's vital to note that both sales and earnings are crucial factors in a company's success.

Mirati Therapeutics Inc.: This biotech firm focuses on creating innovative cancer treatments. Their flagship medication, Krazati, targets metastatic non-small cell lung cancer.
Rivian Automotive Inc.: An electric vehicle maker, Rivian Automotive produces SUVs, trucks, and delivery vans.
Apollo Global Management Inc.: This private equity firm specializes in buyouts, distressed assets, and acquisitions. In March, the firm announced an agreement to acquire Univar Solutions, a specialty chemical distributor, in a cash transaction worth $8.1 billion. Subsequently, in April, Apollo Global unveiled a $500 million investment in the education technology company Cengage Group.
Chesapeake Energy: (As described above)
Norwegian Cruise Line Holdings Ltd.: This company operates a fleet of cruise ships offering international itineraries.

Spotlight on Stocks with High Momentum

Momentum investing is a strategy that involves buying stocks whose prices have risen faster than the market overall. Momentum investors believe that stocks that have outperformed the market will continue to do so because the conditions that caused them to outperform are not likely to suddenly disappear. Moreover, other investors looking to capitalize on the stock's outperformance will often buy it, further driving up its price.

First Solar Inc.: A solar energy firm that produces cadmium telluride solar modules for commercial and industrial applications. Despite a 45% drop in net sales to $548 million, First Solar reported net income of $43 million, transitioning to profitability from a $43 million loss in the year-ago quarter.
NVIDIA Corp.: This semiconductor firm generates most of its revenue from selling graphics processing units (GPUs) for gaming PCs. Following an earnings report indicating a 14% growth in data-center revenue and expanded AI development, NVIDIA's share price surged by 24%, briefly pushing the company to a $1 trillion market cap.
Penumbra Inc.: Penumbra creates and markets minimally invasive medical devices that assist in removing blood clots from the body.
Netflix Inc.: This entertainment streaming firm offers a broad range of original and licensed movies and TV shows.
Axon Enterprise Inc.: Axon manufactures and sells conducted-energy weapons under the Taser brand, as well as cloud-based video equipment and software for law enforcement. Axon's YOY revenue increased by 34% in the first quarter thanks to the release of several new products and a 51% growth in cloud sales.

Benefits and Risks of Investing in Top Stocks

Investing in top stocks often reveals companies exhibiting positive trends in earnings, revenue, and share price, suggesting a well-run business that can sustain profitability and add shareholder value. Investors can leverage free stock-screening tools like Finviz to find these top stocks, filtering by both fundamental and technical metrics.

While top stocks often receive extensive media coverage and are tracked by leading Wall Street analysts, meaning better liquidity and more efficient trading, investing solely in these large-cap stocks could mean missing out on profitable opportunities in other areas of the stock market. In addition, even the best-performing stocks are not immune to sudden trend reversals, and it's critical to use a stop-loss order to protect against these scenarios.

ADVICE FOR TRADERS

Stay Updated: Keep abreast of market news and earnings reports for the companies you are investing in. A sudden change in a company's fundamentals could significantly impact its share price.
Risk Management: Always manage your risk. Make sure to have a strategy in place for exiting a position if things go south. Use stop-loss orders to limit your losses.
Research: Do your due diligence before investing in any stock. Thorough research is essential to make informed decisions.
Diversification: Spread your investments across various sectors and markets. Diversification is one of the most effective strategies to manage risk.
Patience: Remember that investing is a marathon, not a sprint. Good investments often take time to show profitable returns.
Consult Professionals: Consider consulting with a financial advisor or professional trader, especially if you are new to investing. Their experience and expertise can help you avoid common pitfalls and optimize your portfolio.

Remember, past performance is not always indicative of future results. Every investment carries a certain degree of risk, and it's crucial to be mindful of this as you venture into your investing journey.

As we move through June 2023, traders should maintain a keen eye on First Solar Inc., Nvidia Corp., and Penumbra Inc., amongst others, considering their recent market performance. Whether they're looking for value stocks like Southwestern Energy Co. or Chesapeake Energy Corp., growth stocks like Mirati Therapeutics Inc. or Rivian Automotive Inc., or momentum stocks like Netflix Inc. or Axon Enterprise Inc., there is a variety of promising prospects to explore.

From a strategic perspective, diversification remains crucial. No matter how promising a particular stock appears, putting all your investments in a single basket can expose you to unnecessary risk. Consider a diversified portfolio that includes a mix of sectors and company sizes to minimize potential losses.