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The top stocks trading on U.S. exchanges for September include Cabaletta Bio Inc. (CABA), Reata Pharmaceuticals Inc. (RETA), and MoonLake Immunotherapeutics AG (MLTX). The share price of each of these companies has risen by at least 689% in the last year. Meanwhile, the Russell 3000 Index, a market capitalization-weighted index that serves as a benchmark for the broader U.S. stock market, has risen about 9% over the same period.
Below, we look at the top five stocks in each of three categories: value, growth, and momentum. All data below is as of Aug. 16, while the benchmark figure above is as of Aug. 28.
Best Value Stocks
Value investing is a strategy in which investors select stocks that they believe to be trading at a lower price than they are intrinsically worth. The thinking behind this strategy is that an undervalued stock may rise in price faster than other stocks if the price comes back in line with the true worth of the company.
The price-to-earnings (P/E) ratio is a metric typically used to measure how under- or overvalued a company is. These stocks are those with the lowest 12-month trailing P/E ratio out of all that we looked at.
| Best Value Stocks | |||
|---|---|---|---|
| Price ($) | Market Capitalization (Market Cap) ($B) | 12-Month Trailing P/E Ratio | |
| National CineMedia Inc. (NCMI) | 3.55 | 0.3 | 0.1 |
| Banco Macro SA (BMA) | 23.30 | 1.5 | 0.2 |
| Cemex SAB de CV (CX) | 8.00 | 11.6 | 0.5 |
| ZIM Integrated Shipping Services Ltd. (ZIM) | 13.44 | 1.6 | 0.6 |
| Theravance Biopharma Inc. (TBPH) | 10.14 | 0.5 | 0.9 |
Source: YCharts
- National CineMedia Inc.: It provides cinema advertising through its Noovie trivia show at about 20,000 screens across the U.S. The company completed numerous steps in August to restructure and emerge from Chapter 11.
- Banco Macro SA: It is an Argentinian private local bank with the largest branch network in the country. In the last quarter, net income was about 400% more than the previous year.
- Cemex SAB de CV: A Mexican building materials company that provides ready-mix concrete, roofing tiles, asphalt, concrete pipes, and related products.
- ZIM Integrated Shipping Services Ltd.: An Israeli container transportation and logistics company that provides cargo services for roughly 100 countries. Shares of ZIM are down about 70% in the last year as the company has missed earnings estimates and issued pessimistic full-year forecasts.
- Theravance Biopharma Inc.: A biopharmaceutical company based in the Cayman Islands. It develops and makes respiratory medicines such as Yupelri and Trelergy used to treat chronic obstructive pulmonary disease (COPD).
Fastest-Growing Stocks
Investopedia ranks stocks according to a growth model that assesses both the most recent quarter’s year-over-year (YOY) earnings and revenue growth. The model scores companies based on a 50/50 weighting of these two factors.
Considering both sales and earnings growth is important because focusing exclusively on one or the other leaves a ranking system open to anomalies such as one-time restructuring costs, tax law changes, and so forth. In our rankings, we’ve eliminated companies with either quarterly earnings per share (EPS) or revenue growth of more than 1,000% as outliers.
| Fastest-Growing Stocks | ||||
|---|---|---|---|---|
| Price ($) | Market Cap ($B) | EPS Growth (%) | Revenue Growth (%) | |
| SAP SE (SAP) | 137.69 | 161.1 | 971.2 | 7.3 |
| Emerson Electric Co. (EMR) | 95.47 | 54.6 | 957.1 | 13.9 |
| Alamos Gold Inc. (AGI) | 11.41 | 4.5 | 850.0 | 36.5 |
| Canadian Solar Inc. (CSIQ) | 32.11 | 2.1 | 750.0 | 36.1 |
| Crestwood Equity Partners LP (CEQP) | 26.19 | 2.8 | 728.6 | -29.5 |
Source: YCharts
- SAP SE: A German enterprise software company. It offers tools to manage customer relations and other business operations. SAP reported significant revenue growth in its cloud business segment last quarter. Its EPS growth was affected by the completion of the sale of the company’s position in Qualtrics.
- Emerson Electric Co.: A technology company that makes products and offers services for the industrial, commercial, and consumer markets.
- Alamos Gold Inc.: A Canadian gold mining company operating mines in Canada and Mexico, with additional development projects in Canada, Mexico, Turkey, and the U.S. Record-high production in the latest quarter helped to drive EPS and revenue growth.
- Canadian Solar Inc.: This is a Canadian firm that designs, builds, and sells solar equipment for residential, commercial, and industrial customers. A strong improvement in solar module shipments has helped to drive growth in recent quarters.
- Crestwood Equity Partners LP: It has been a master limited partnership (MLP) owning and operating midstream energy infrastructure. On Aug. 16, oil and gas services provider Energy Transfer LP (ET) said it would buy Crestwood for $7.1 billion, including more than $3 billion in debt.
Stocks With the Most Momentum
The stocks below had the highest total return in the last year. Momentum investors hold that stocks that have recently posted speedy increases in price are likely to continue to rise faster than the overall market. The justification behind this is that the factors which have previously led to increasing prices are likely to continue to hold. Further, as other investors pile on to bid on shares of these companies, they help to push their stock prices up even higher.
| Stocks With the Most Momentum | |||
|---|---|---|---|
| Price ($) | Market Cap ($B) | 12-Month Trailing Total Return (%) | |
| Cabaletta Bio (CABA) | 13.67 | 0.5 | 793.5 |
| Reata Pharmaceuticals (RETA) | 169.13 | 6.5 | 720.6 |
| MoonLake Immunotherapeutics (MLTX) | 56.28 | 3.0 | 689.3 |
| American Coastal Insurance Corp. (ACIC) | 8.24 | 0.4 | 663.0 |
| Ambrx Biopharma Inc. (AMAM) | 13.80 | 0.9 | 463.3 |
| Russell 3000 Index | N/A | N/A | 8.8 |
Source: YCharts
- Cabaletta Bio: A clinical-stage biotechnology company that discovers and develops engineered T cell therapies to treat autoimmune diseases. Cabaletta closed a $100 million public offering in the most recent quarter, extending its cash runway for more than two additional years.
- Reata Pharmaceuticals: This is a biotechnology company developing drug treatments involved in the regulation of cellular metabolism and inflammation. Reata announced in late July that it would be acquired by Biogen Inc. (BIIB) in a deal valuing the former company at $7.3 billion.
- MoonLake Immunotherapeutics: This is a clinical-stage biopharmaceutical company that develops treatments for inflammatory disease.
- American Coastal Insurance Corp.: Provides insurance products to condominium and homeowner association properties and for properties specifically in Florida. Earnings from continuing operations almost quadrupled in the most recent quarter.
- Ambrx Biopharma Inc.: A biopharmaceutical company that develops protein therapeutics used in other drug substances to preserve potency and provide other benefits.
Benefits of Investing in Top Stocks
Most top stocks have strong positive trends in revenue, earnings, share price, or some other key business metric. This often indicates a well-run business—or one that is substantially undervalued—that is likely to continue to generate profit for shareholders so long as trends continue.
Here are a few of the benefits of investing in top stocks based on fundamental and technical metrics.
Diversification
Top stocks are not limited to one sector or industry. Investors can choose to focus on companies with competitive value, growth, and momentum characteristics while also exploring a wide range of industries. This helps to provide diversity to a portfolio, a hedge against negative performance affecting one category of companies.
Liquidity
Companies considered top stocks are popular for a reason. They tend to receive added coverage by investment-focused media and, in many cases, see a boost in liquidity while they are in the spotlight. For investors, this means that it is sometimes easier, faster, and cheaper to trade these stocks.
Disadvantages of Investing in Top Stocks
Missing Out on Unseen Treasures
The popularity of top stocks can have a flip side for investors, too. Choosing to focus only on top stocks means that an investor is likely to be targeting the same small number of companies as many other investors are. Indeed, if an investor focuses only on top large-cap stocks, it is easy for her to miss opportunities for profit outside of that niche. Small-cap and relatively unknown stocks can have a breakaway moment and a considerable rally under the right circumstances. Consider an unknown upstart biotech company that makes a breakthrough drug discovery that catapults its share price upward, for instance.
Dangers of Trends
While there is the potential for value in following the hottest trending stocks, investors can be left without anything to show for their efforts if they are too late. Trends can easily reverse, and investors who have gotten caught up in the popularity of a top stock may realize that they’ve bought in too high and will lose money on their investment.
The comments, opinions, and analyses expressed on Investopedia are for informational purposes online. Read our warranty and liability disclaimer for more info.
As of the date this article was written, the author does not own any of the above stocks.
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