Following Tuesday’s Halloween, the holiday season is ahead just after Thanksgiving on November 24th. During the season, there is typically an uptick in retail sales. Case in point, MasterCard SpendingPulse data showed a 7.6% year-over-year increase from November 1 to December 24, 2022.Alongside ramped-up consumer spending, mutual funds and pension funds rebalance their portfolios, leading to extra buying pressure in the stock market. As a result, November has historically been the best month for stocks. According to the Stock Trader’s Almanac, the S&P 500 (SPX) has averaged 1.7% in November since 1950, as the highest monthly average. Barring geopolitical events or further bank crashes, this November could yield similar gains after a 2.3% SPX loss during October.So, which stocks are in a position to take advantage? Let’s take a quick look.
Advanced Micro Devices (Nasdaq: AMD)
As Nvidia gradually shifted from video gaming to data center supply, Advanced Micro Devices (AMD) followed suit, but not to the same extent. Offering more favorably priced CPUs and GPUs, AMD’s Client group, catering to the PC market, reported a 42% YoY sales uptick in Q3 2023.The company’s data center offering remained flat, at $1.6 billion in sales. Combined with AMD’s embedded segment, which decreased 5% due to a weaker communications market, AMD’s latest revenue figure stands at $5.8 billion, a 4% YoY increase. Year-to-date, AMD shares outperformed the S&P 500 by 6x.Unlike AMD’s competitor Intel, the company beat the LSEG consensus (ex Refinitiv) on revenue, at $5.7 billion expected, and earnings per share (EPS) at 70 cents vs. 68 expected. Moving forward, AMD expects greater gains from generative AI demand.With the deployment of the latest MI300X and MI300A chips for high AI workloads, AMD expects to take a chunk out of Nvidia’s market dominance, pushing data center GPU revenue over $2 billion next year. It also bears noticing that Nvidia has a debt-to-equity ratio of 31% while AMD’s is only 3%.Based on 30 analysts pulled by Nasdaq, the average AMD price target is $127.96 vs. the current $106.53, positioning the stock as “strong buy”. The high estimate is $150, while the low price target is $98.
MasterCard (NYSE: MA)
One of the world’s payment processing staples suffered a 2% dip last Thursday after releasing Q3 2023 earnings. MasterCard’s net revenue increased 14% YoY to $6.5 billion, with net revenue growth without currency fluctuations and special items increasing 11% YoY.The company beat earnings-per-share (EPS) at $3.39 vs expected $3.21 per share. Likewise, MasterCard’s gross transaction volume increased 11% to $2.3 trillion YoY. The problem is the gross dollar volume (GDV) missed the expected $2.32 trillion. Alongside geopolitical and macro uncertainty, a portion of investors decided to reallocate.Nonetheless, MasterCard remains the 3rd pillar for digital payments amid its global e-commerce reach. Likewise, MasterCard has a superior net margin to PayPal, at 42% vs 14.12%, respectively. This greatly aids the company’s free cash flow. Most importantly, the company has engaged in massive stock buybacks thanks to its ample free cash flow. This year, MasterCard repurchased $7.2 billion of MA shares, effectively returning capital to shareholders.Based on 31 analysts pulled by Nasdaq, MA stock is a “strong buy.” The average MA price target is $447.82 vs the current $376.44. The high estimate is $484, while the low price target is $420.
Applied Materials (Nasdaq: AMAT)
It is becoming increasingly apparent that the world will increase reliance on semiconductors. At the core level of this infrastructure is Applied Materials, providing chipmakers, such as AMD, Samsung, Intel (Nasdaq: INTC), or Nvidia (Nasdaq: NVDA), with semiconductor manufacturing equipment. Chipmakers then use it in a complex deposition process, etching, and chip implantation.Applied Materials additionally offers repair and support for these processes. Being essential to chip production, the company is more resilient to economic downturns. As such, AMAT stock outperformed the wider PHLX Semiconductor Sector Index (SOX), at 38% vs 29% respectively year-to-date.For Q3 2023, Applied Materials beat earnings-per-share (EPS) and revenue estimates. AMAT’s revenue went up 15% YoY to $6.43 billion vs estimated $6.33 billion. Likewise, AMAT’s 17% YoY EPS of $1.90 beat the estimated $1.85 EPS. The bulk of the revenue (74%) came from the Semiconductor Systems segment, at $4.75 billion, with the rest divided into Applied Global Services (AGS) and Display (fabrication of thin film displays).For the next quarter, Applied Materials expects $2 EPS, plus or minus $0.18, with the revenue hitting $6.51 billion, plus or minus $400 million. Based on 30 analyst inputs pulled by Nasdaq, AMAT stock is a “strong buy.”The average AMAT price target is $161.77 vs the current $133.30 per share. The high estimate is $185, while the low price target is $120.More By This Author:Could Netflix Stage A Comeback? These Two China-Based Stocks Are Outperforming U.S. CounterpartsNew Chip Restrictions Can Force Nvidia To Cancel $5B In Orders
