MarketBeat’s MarketRank tool, a powerful resource for investors, analyzes over 1.5 million global listings across eight key categories to provide a comprehensive ranking. The tool assigns a score from one to five, with a Five Star stock signifying a top 1% ranking, making it an attractive target for long-term investors. Factors considered include analysts’ sentiment, news sentiment, ownership, short interest, earnings, and valuation. Here’s a look at the top three stocks heading into October.
Schlumberger: Number One Pick for October
Schlumberger, the world’s largest oilfield services company, is a top pick for October investors. Based in Texas, Schlumberger provides a wide range of services, including reserve management, production, and digitization. The company, and the oilfield services industry in general, is benefiting from a super-cycle fueled by years of underinvestment leading into the post-pandemic era and the need for modernization and efficiency. Schlumberger is projecting sustained double-digit top-line growth, margin expansion, and strong cash flow to support its dividend in 2024. Known for its dividend growth, Schlumberger has the potential to maintain its dividend growth indefinitely thanks to its low payout ratio, robust cash flow, and strong balance sheet. The stock currently yields around 2.6% and is trading near a two-year low, presenting a value-based entry point for dividend growth investors.
While analyst sentiment cooled somewhat over the summer, MarketBeat tracks 19 analysts who still rate Schlumberger as a Buy, with only one Hold rating and no Sells. The consensus target price of $66, although down $2 from a year ago, still implies a nearly 60% upside for the market. The low target price also highlights the deep-value opportunity for investors. Short interest is healthy, below 3%, and insider selling is light, providing minimal headwind for the market. Institutional ownership is strong at over 80%, acting as a tailwind with bullish net activity in the first three quarters of the year.
Jack in the Box: A Second Place Finish
Jack in the Box, a smaller fast-food chain, is actively re-franchising its network while expanding into new territories and growing organically within existing ones. While 2024 projections include a system-wide top-line contraction due to consumer habits, re-franchising efforts, and a flat year-over-year store count, the company is offsetting these factors with progress in its development pipeline. This pipeline includes nearly 100 agreements for 437 restaurants, with roughly 10% already completed. One notable recent development is a 12-unit franchising deal in the Chicago-land region, with at least 100 more opportunities in that market.
Analysts trimmed targets and ratings for Jack in the Box in the first half of 2024. However, the consensus remains a strong Hold verging on Buy, with a price target 50% above the current $42 level. The low-end range of targets suggests a deep-value opportunity, with the lowest target on record being $55, representing an 18% upside. Only one analyst rates the stock as a Sell, with nearly 50% rating it as a Buy. Jack in the Box stock pays a dividend worth 3.75% with shares at a four-year low, and the payment is considered safe. While distribution growth has been paused, payments are less than 30% of earnings and are easily sustainable.
Ally Financial: A Friend for Dividend Investors
Ally Financial, an auto lender, faces challenges in 2024 due to economic conditions and weakened consumer strength. However, it remains in a solid financial position and can reliably pay its dividends. Recent results included a boosted outlook for credit write-offs, which impacted the share price and led to a shift in analyst sentiment in favor of investors. While analysts have trimmed targets over the summer, the stock is still rated as a strong Hold verging on Buy, with eight Buy ratings and seven Hold ratings offsetting two Sell ratings. Citigroup recently added Ally Financial to its focus list, citing the new lows as an attractive entry point and believing the sell-off is unrelated to fundamentals.
Ally Financial’s dividend yields about 3.35%, and its shares are near the 2024 lows. While the company has not increased its distribution for several years, growth is possible due to the 45% payout ratio and improving earnings power. Adjusted EPS was flat year-over-year in Q2 despite a mid-single-digit contraction in revenue. Earnings are projected to nearly double from 2024 levels in 2025.
Overall, MarketBeat’s MarketRank tool has identified three compelling stocks for October, offering a blend of growth potential, dividend yields, and value opportunities. Investors looking to add to their portfolios or explore new opportunities should consider these selections carefully.
