Happy Sunday to everyone on The Street. 

September turned out to be a surprisingly strong month for stocks, defying its usual reputation as a weak period for markets. (Thanks Jerome!)

Both the Dow Jones Industrial Average and S&P 500 hit new highs. In fact, the Dow has posted an impressive quarterly increase of over 7%.

However, as we head into October, a notoriously volatile month for markets, concerns are mounting. Historical data shows that the S&P 500 typically sees large daily swings, especially in election years, raising fears of a pullback or correction. Additionally, geopolitical risks and potential cracks in the U.S. labor market could add uncertainty.

The September jobs report is expected to be a key driver, with any weakness possibly weighing on stocks. While some analysts expect a dip of 5% to 10% over the next few weeks others remain optimistic about a strong finish to the year, with potential new highs once uncertainty subsides.

Hopefully we wrap the month up on a high note tomorrow. If not, things could get spooky heading into October.

Before we dive in, today’s sponsor is highlighting how everyday investors can get exposure to art as an asset…

SPONSORED & WRITTEN BY MASTERWORKS

Everyday investors net +$60M in proceeds from the sale of exclusive assets

From CEOs to shop owners, investors in Masterworks’ art offerings have received more than +$60,000,000 in total net proceeds to date (including principal) across their 23 exits.*

Surprised that so many people are interested in art investing? Bank of America recently found 83% of wealthy American investors 43 and under already collect, or want to. Normally, only the top 1% of investors would be able to diversify with art like Picassos and Banksys. But with Masterworks, you can easily diversify into this asset class without needing millions, or art expertise.

With a team that’s been working since 2019, Masterworks investors have realized representative annualized net returns like +17.6%, +17.8%, and +21.5% among assets held for longer than one year.

Readers can even skip the waitlist here.

Election Season Selections

Stock Picks for either Outcome

Pollsters have the US presidential election as a toss-up, so one megabank is dishing out its picks for either scenario.

Barclays analyst Terence Malone sent investors a note after researching both candidates' policy proposals. He considered Trump’s plan for broad-based tariffs, including up to 60% on imported items from China.

Malone also analyzed Harris’s pitch to voters, although he noted that most of her economic ideas would struggle to get through Congress.

The analyst’s base case is a divided Congress which he argued would cause bottlenecks for either party trying to push their agenda.

A Red Scenario

Malone expects crypto-related stocks to get a boost if Trump wins. He highlighted MicroStrategy (MSTR), noting that the company’s large bitcoin holdings would benefit.

UnitedHealth Group (UNH) got a nod as well. Malone noted that Trump might ease regulations which would boost the stock.

L3Harris Technologies (LHX) was also pointed out as a beneficiary if the Republican wins. Malone argued that the defense contractor could see its business grow if Trump advocates for more military spending.

A Blue Scenario

For a potential Harris presidency, the Barclays analyst likes healthcare stock Centene (CNC) since Harris would likely support Medicaid and the Affordable Care Act.

Another name that made the cut is homebuilder DR Horton (DHI) since Harris is advocating for more single-family home construction saying it would help bring down shelter costs.

With the election still over a month away, it’s too early to tell which move will pay off. But Malone believes it’s good to have a playbook for either scenario.

What Billionaires Are Buying

Ackman Backs Nike

Last month, Bill Ackman’s Pershing Square unveiled a new stake in its portfolio: Nike (NKE). Historically, Ackman likes to purchase large, profitable companies at a discount and Nike fits the criteria.

The apparel industry is notoriously cyclical, and high inflation and interest rates have taken a toll on Nike’s bottom line. However, the athletic apparel company has managed to thrive over the past 50 years amidst cyclical ups and downs.

The stock is currently trading at its lowest P/E since 2017 and analysts are projecting long-term double-digit earnings growth.

Buffett Bullish on Ulta

When Warren Buffett saw cosmetics industry leader Ulta (ULTA) trading at a low valuation, he jumped at the opportunity to buy. The beauty sector has seen a significant post-pandemic boost, but Ulta saw its shares drop 31% after it reported a 1% decrease in sales year-over-year in Q2.

Buffett particularly values Ulta’s size and brand recognition, which gives it a competitive advantage. The long-term growth outlook of the beauty industry is promising, and Ulta is expected to play a major part in that growth.

Not Everyone is Bullish on Ulta

Unlike Buffett, TD Cowen is bearish on the beauty stock. The firm cited a lack of execution, increased competition, and a slowdown in the industry as reasons to be wary.

Ulta’s market share has also come under fire as around 1,000 new beauty distributors have opened their doors over the last several years.

TD Cowen wants to see Ulta diversify into investments like exclusives and in-store experiences while working to deleverage itself.

Billionaires are buying these stocks, but investors can decide for themselves if the timing is right to add these holdings to their portfolios.

This Energy Stock Just Surpassed Nvidia

Excitement Is High

Power company Vistra (VST) recently saw its stock surge 14% following an announcement that Constellation Energy (CEG) inked a deal to reopen Pennsylvania nuclear plant Three Mile Island.

Investors believe that Vistra should have a deal of its own coming soon, and its jump in stock price reflects that sentiment. The stock is up 212% YTD and has surpassed Nvidia (NVDA) as the S&P’s top stock.

Looking to Expand

Earlier this year, Vistra acquired three nuclear power plants in Ohio and Pennsylvania when it purchased Energy Harbor for $3.4 billion. According to Jefferies (JEF) analysts, this purchase means the company has secured a valuable nuclear portfolio, and it hasn’t stopped there.

According to CEO Jim Burke, the company is currently in talks with several data center customers seeking direct power. One of those customers is a nuclear plant in Texas with 2.4 gigawatts of capacity: Comanche Peak.

Getting in on the Action

The utilities sector is up around 25% in 2024, largely due to data centers. Analysts believe that independent power producers like Vistra could be the best way for investors to gain exposure to this trend.

Jefferies has given the stock a buy rating and highlighted it as the bank’s top pick in the power sector. Its average price target is $116.89 per share.

Investors will be watching to see if the power company inks a new deal in the coming months, but excitement is already mounting.

SPONSORED & WRITTEN BY MASTERWORKS

Everyday investors net +$60M in proceeds from the sale of exclusive assets*

From CEOs to shop owners, investors in Masterworks’ art offerings have received more than +$60,000,000 in total net proceeds to date (including principal) across their 23 exits.*

Surprised that so many people are interested in art investing? Bank of America recently found 83% of wealthy American investors 43 and under already collect, or want to. Normally, only the top 1% of investors would be able to diversify with art like Picassos and Banksys. But with Masterworks, you can easily diversify into this asset class without needing millions, or art expertise.

With a team that’s been working since 2019, Masterworks investors have realized representative annualized net returns like +17.6%, +17.8%, and +21.5% among assets held for longer than one year.

Readers can even skip the waitlist here.

Last Week’s Poll Results

Where do you stand on Schlumberger (SLB)?

🟩🟩🟩🟩🟩🟩 🐂 Bullish

🟨🟨🟨⬜️⬜️⬜️ 🐻 Bearish

Which stock do you think will outperform over the next 12 months?

🟨🟨🟨🟨⬜️⬜️ Cenovus Energy (CVE)

🟨🟨⬜️⬜️⬜️⬜️ Matador Resources (MTDR)

🟩🟩🟩🟩🟩🟩 Baker Hughes (BKR)

Are you bullish or bearish on charter school municipal bonds?

🟩🟩🟩🟩🟩🟩 🐂 Bullish

🟩🟩🟩🟩🟩🟩 🐻 Bearish

*Past performance is not indicative of future returns. Investment involves risk. See Important Reg A Disclosures at masterworks.com/cd. The content is not intended to provide legal, tax, or investment advice. No money is being solicited or will be accepted until the offering statement for a particular offering has been qualified by the SEC. Offers may be revoked at any time. Contacting Masterworks involves no commitment or obligation. “Net Annualized Return” refers to the annualized internal rate of return net of all fees and expenses, calculated from the offering closing date to the date the sale is consummated. IRR may not be indicative of Masterworks paintings not yet sold and past performance is not indicative of future results. For additional information regarding the calculation of IRR for a particular investment in an artwork that has been sold, a reconciliation will be filed as an exhibit to Form 1-U and will be available on the SEC’s website. Masterworks has realized illustrative annualized net returns of 17.6% (1067 days held), 17.8% (672 days held), and 21.5% (638 days held) on 13 works held longer than one year (not inclusive of works held less than one year and unsold works). *“Net proceeds” represents the total liquidation proceeds distributed back to investors, net of all fees, expenses and proceeds reinvested in Masterworks offerings, of all works Masterworks has exited to date. This metric is not considered a presentation of performance but rather a mathematical figure that displays a platform metric on size, scale, and operation of the platform.