On November 25, the stock market saw a significant surge, with the Dow Jones Industrial Average jumping 440 points to a new record close of 44,736.57. The S&P 500 also reached a new high, gaining 0.3% to 5,987.37, while the Russell 2000 index, which focuses on small-cap stocks, hit an all-time high, increasing 1.47% to 2,442.03. The Nasdaq also rose, closing 0.27% higher at 19,054.84. CNBC reported that the market’s strong performance was attributed to President-elect Donald Trump’s nomination of Scott Bessent, the founder of Key Square Group, as Treasury secretary. Investors are optimistic that Bessent, a hedge fund manager, will be supportive of the equity market and help mitigate some of Trump’s protectionist policies, such as his stance on tariffs.
US Stocks Poised for Continued Growth
In an interview with CNBC on November 25, Brian Belski, Chief Investment Officer at BMO Capital Markets, expressed his bullish stance on the US stock market, stating that it remains the best asset in the world. He emphasized that despite the negativity and doubts surrounding the market, his team has consistently maintained a bullish stance since 2009.
Belski pointed out that many investors are too focused on valuation, which he believes is the world’s worst metric for predicting forward performance. Instead, he emphasizes the importance of earnings growth consistency, where the US is expected to outperform other regions.
He also highlighted the potential for catch-up growth in the financial sector, particularly in the areas of scale, asset managers, and discretionary spending. His team’s research suggests that earnings in the US financial sector are massively understated, and he expects a big catch-up trade on the earnings front.
Regarding valuation, Belski dismissed the idea of assigning a specific valuation metric, such as a P/E ratio, as simplistic. Instead, his team uses a macro P/E longer-term trend and a dividend discount model to evaluate the market. He believes the S&P 500 can reach 6,700, driven by US growth and earnings consistency.
Brian Belski has been bullish on small-cap stocks for well over a year and believes small-cap stocks are a good value play. He also implies that small-cap stocks are undervalued, citing various valuation metrics such as price-to-sales, and price-to-book, as well as operating metrics such as return on assets and return on equity. He suggests that these metrics indicate that small-cap stocks are a good value investment opportunity.
The US stock market continues to show resilience and strength, with the Dow Jones Industrial Average and S&P 500 reaching new highs. The nomination of Scott Bessent as Treasury secretary has injected a sense of optimism into the market. With the market’s strong performance and positive outlook, investors are well-positioned to take advantage of the current trend. With that in context, let’s take a look at the top 8 stocks to buy in 8 different sectors for the next 3 months.
Our Methodology
To compile our list of the top 8 stocks to buy in 8 different sectors for the next 3 months, we used Insider Monkey’s database to research stocks in 8 different sectors. We picked stocks from different sectors that were the most popular among elite money managers. The final list is ranked in ascending order of the number of hedge fund holders, as of Q3 2024.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Top 8 Stocks To Buy In 8 Different Sectors for the Next 3 Months
8. Exxon Mobil Corporation (NYSE:XOM)
Number of Hedge Fund Holders: 86
Sector: Energy
Founded in 1882 as part of the Standard Oil Trust, Exxon Mobil Corporation (NYSE:XOM) is one of the world’s largest publicly traded oil and gas companies, with a significant presence in 60 countries around the globe, with a diverse portfolio of operations that include exploration and production, refining, manufacturing, and various activities across its upstream, downstream, and chemical segments.
Exxon Mobil Corporation (NYSE:XOM) provides energy solutions to a wide range of sectors, including transportation, manufacturing, energy generation, and consumer markets. The company’s extensive portfolio of products includes crude oil, natural gas, refined fuels, motor oil, and industrial lubricants, as well as a wide range of petrochemicals, including olefins, aromatics, and ethylene glycol.
In the wake of Europe’s shift away from Russian energy resources, Exxon Mobil Corporation (NYSE:XOM) is capitalizing on new opportunities in the region. On November 21, Reuters reported that ExxonMobil is set to drill a well off the coast of Cyprus in January 2025 as part of its efforts to explore natural gas in the region.
Exxon Mobil Corporation (NYSE:XOM) has spent the past two years collecting detailed seismic data and has identified several large prospects in the area. The upcoming drilling operation will test two new wells, Pegasus and Electra, with Electra being a highly promising discovery, although further appraisal drilling is needed to confirm its viability.
7. Walmart Inc. (NYSE:WMT)
Number of Hedge Fund Holders: 88
Sector: Consumer Staples
Walmart Inc. (NYSE:WMT) is a global, omnichannel retailer that operates a network of discount department stores, grocery stores, and hypermarkets in the United States and 19 other countries. In addition to its retail and wholesale stores, the company manages e-commerce websites and mobile applications. Walmart Inc.’s (NYSE:WMT) operations are divided into three segments: Walmart US, Walmart International, and Sam’s Club.
Walmart Inc.’s (NYSE:WMT) extensive footprint, broad product range, and convenience provide it with a strong competitive edge in the retail industry. Customers benefit from a wide selection of products and numerous store locations. The company’s store and club businesses continue to expand, with the pickup segment growing even faster. Walmart (NYSE:WMT) is enhancing delivery speed and accuracy while offering more options through advancements in e-commerce. For the three months ended on October 31, Walmart Inc. (NYSE:WMT) reported a 15% increase in membership income. The company’s e-commerce sales increased 26%, driven by club-fulfilled pickup and delivery.
Walmart (NYSE:WMT) is actively exploring practical applications for generative AI to enhance the experiences of its members, customers, and associates. By leveraging large language models and external data, the company is developing its own AI solutions. For example, generative AI has been used to improve the company’s product catalog. Additionally, the company introduced an AI-powered search feature on its app and website, offering customers better support through a new shopping assistant that provides ideas and advice.
