Here’s September’s top 10 traded US stocks on Phillip’s Online Electronic Mart System (POEMS), based on gross market value traded. We hope the list will give you a macroeconomic view and insights into the liquidity and consumer trends that could affect these popularly traded stocks.
All three U.S. major indices – Dow Jones, S&P 500 and Nasdaq Composite – closed lower in September. The Dow was the only index with negative year-to-date returns of about -3.5%. S&P 500 and Nasdaq Composite hit new highs on 2 September, before giving up some gains to return a positive 7%.
September was a volatile month. The volatility index or VIX spiked to 38 in the earlier part of the month, before settling at 25-30. As the race for COVID-19 vaccines cooled down, pharma and biotech stocks like Moderna (MRNA) and Sorrento Therapeutic (SRNE) dropped out of the top 10 list. This month was the first time tech-related names made a clean sweep of the list, reflecting investors’ continued risk appetite for tech players.
Starting from the 10th position:
10th: DocuSign Inc (NASDAQ: DOCU)
DocuSign, which offers e-signature services, is a newbie in the list, making it to the 10th position. It has been on a roar since the start of the pandemic, rising close to 400% from its low in March to a high in September. It was, however, not immune to the tech sell-off in early September. It retreated by close to 30%, to below US$200. From there, it has recovered slightly.
With lockdowns continuing all over the world, work-from-home stocks are reaping the benefits of structural changes in business operations. The pandemic has boosted DocuSign’s subscription revenue by 38%1. However, its meteoric rise has also generated concerns about its valuations vs growth potential.
9th: NVIDIA Corporation (NASDAQ: NVDA)
After two months of absence, the most valuable chipmaker in the US regained a spot in this month’s list. During the tech sell-off in early September, Nvidia’s stock shed by more than 15%. Its retracement has taken some steam off this high-growth stock, which some think is massively overvalued.
After its recent US$40bn acquisition of chip designer, Arm Holdings (NASDAQ: ARMH), Nvidia is set to become the world’s premier computing company in the age of AI2. This acquisition should bolster its competitive position vis-à-vis rivals such as Intel and AMD. That said, the deal is still under the consideration of the U.K. government for potential national-security issues and loss of crucial home-ground technology. It is also subject to regulatory approval in the US and China.
8th: Alibaba Group Holding Ltd (NYSE: BABA)
Chinese tech darling, Alibaba, hasn’t ceded its place among the top 10. After the market retracement earlier in the month, Alibaba has rebounded and is within 5% of its all-time high.
As the largest e-commerce provider in China, Alibaba’s earnings beat analysts’ expectations in the most recent August quarter. Unlike some of the other industries which are reeling under the virus, the pandemic has helped Alibaba thrive, thanks to its pole position in the digital space.
The rebound in its share price in the last week of the quarter may be attributed to one of its fastest-growing businesses: cloud computing. This segment is expected to be profitable within the next financial year3. There is more room for growth, backed by increasing demand for big data and immense computing power.
7th: Facebook Inc (NASDAQ: FB)
Facebook has been on the list for the fourth consecutive month, since our series started in June. The social-media giant’s share price dipped from a high of over US$300 to a low of US$244 in September’s tech sell-off. The correction has allowed investors to enter at a lower price or lower average cost of investment.
While Facebook has been battered by accusations of violations of data privacy and the promotion of misinformation and hate speeches, it continues to grow. Earnings beat analysts’ estimates in the second quarter of 2020. The company added 100mn new monthly users for its flagship Facebook service, which lifted its monthly active users from 2.6bn in Q1 to 2.7bn in Q2.4
Facebook has also taken its first step to monetise WhatsApp, by introducing WhatsApp Pay in Brazil. As e-commerce becomes a bigger component of its business, WhatsApp Pay arguably represents a new frontier in the maturing social-media industry.
6th: CrowdStrike Holdings Inc (NASDAQ: CRWD)
Cyber security has been a big winner of the COVID-19 pandemic. Demand for such services is at an all-time high as companies all over scramble to keep their operations running remotely. It is, therefore, not surprising to see CrowdStrike, a cyber security company, popping up in the sixth spot this month.
CrowdStrike’s revenue leapfrogged from US$52.7mn in FY2017 to US$481.4mn in FY2020.5
Its cloud-based endpoint security software has become essential in today’s work-from-home environment. This software extends the defensive perimeter from an office to employees’ devices by leveraging CrowdStrike’s protective cloud-based threat intelligence. Its acquisition of Preempt Security for US$96mn in September is expected to enhance its platform further with identity security capabilities.
5th: Square Inc (NYSE: SQ)
Digital-payment and financial-service businesses have been super-charged by consumers’ shift to e-commerce during COVID-19. One of the top performers in this sector has to be Square, which made it to the fifth position in September.
This mobile-payment company was one of the top-performing stocks in recent years – gaining more than 1,200% in the last five years. So far this year, its share price has rallied by more than 150%.
As COVID-19 has led to a paradigm shift in consumer behaviour, Square can be expected to continue to enjoy high demand, as people hunker down and work from home.
4th: Zoom Video Communications Inc (NASDAQ: ZM)
Zoom shot up from 10th position in August to fourth this month. The American communications company’s share price has rocketed by about 600% year to date. Its market cap is now higher than IBM’s!
Demand for its products and services continues to climb, in the current remote-working and online-learning environment. However, with a price-earnings ratio of 600x, it is trading way above its historical valuations. Which makes it susceptible to wild price fluctuations in today’s volatile market conditions.
3rd: Nio Inc (NYSE: NIO)
The electric-vehicle fever shows no signs of screeching to a halt. Nio has maintained its third position for three consecutive months.
Following the Beijing International Auto Exhibition 2020 in September, Nio’s share price continues to advance, after it announced upgrades to its smart-operating system and the introduction of a new driver assistance functionality.6 Nio will also be adding faster charging options at several charging facilities under its battery-as-a-service offering.
Nio’s share price jumped by another 10% on 29 September, after Deutsche Bank’s analyst wrote that its high-quality premium branding may resonate with consumers, potentially helping it become a long-term winner in the electric-vehicle race.7
2nd: Apple Inc (NASDAQ: AAPL)
After its stock split, Apple now looks cheaper and more affordable at around US$100+ apiece. However, history repeated itself and Apple traded lower after its stock split. Its share price dropped all the way to US$103.1 from a high of US$137.98 on 2 September. Thereafter, the stock managed to recoup some losses and rebounded to around US$115. This made it the first runner-up in September.
Apple was supposed to make its annual product launch – new-generation iPhone – in September. It unveiled its new Apple Watch and iPad in mid-September, with some new features and services8. However, its new iPhone launch has been delayed to October this year due to delays in chip shipments.
1st: Tesla Inc (NASDAQ: TSLA)
The leading electric-vehicle maker, Tesla again topped the list, for the third consecutive month. Immediately after its stock split, Tesla’s share price receded to its September low of US$329.88. It lost 35% within a week of its split from a high of US$502.49. In the latter part of September, its share price stabilised at US$400-450.
Tesla hosted its 2020 Battery Day on 22 September. Major announcements included eliminating cobalt in its battery production, Model S to top 200mph and a new cathode plant to streamline its battery production9. Elon Musk also suggested that with a lower cost of producing batteries, Tesla will be able to make a US$25,000 electric car eventually.
That’s all, folks!
While COVID-19 and US-China trade wars continue to dominate headlines, the coming US election on 3 November bears close watching.
Reference:
- [1] https://investor.docusign.com/investors/press-releases/press-release-details/2020/DocuSign-Announces-Fourth-Quarter-and-Fiscal-Year-2020-Financial-Results/
- [2] https://nvidianews.nvidia.com/news/nvidia-to-acquire-arm-for-40-billion-creating-worlds-premier-computing-company-for-the-age-of-ai
- [3] https://www.cnbc.com/2020/09/30/alibaba-cloud-business-will-become-profitable-for-the-first-time.html
- [4] https://variety.com/2020/digital/news/facebook-q2-revenue-beats-wall-street-estimates-despite-covid-1234721122/
- [5] https://www.fool.com/investing/2020/09/27/crowdstrike-to-expand-its-cybersecurity-platform-a/
- [6] https://www.benzinga.com/news/20/09/17677473/nio-shares-rise-after-ev-maker-announces-autopilot-feature-faster-charging-options
- [7] https://www.barrons.com/articles/nio-electric-cars-could-become-an-iconic-brand-says-analyst-51601394855
- [8] https://www.apple.com/sg/newsroom/2020/09/new-apple-watch-and-ipad-features-enable-wellness-fitness-and-creativity/
- [9] https://www.theverge.com/2020/9/22/21450840/tesla-battery-day-production-elon-musk-tabless-range-cathode-cobalt-plaid
Disclaimer
Important Information: This report is prepared and/or distributed by Phillip Securities Research Pte Ltd (“Phillip Securities Research”), which is a holder of a financial adviser’s licence under the Financial Advisers Act, Chapter 110 in Singapore.
By receiving or reading this report, you agree to be bound by the terms and limitations set out below. Any failure to comply with these terms and limitations may constitute a violation of law. This report has been provided to you for personal use only and shall not be reproduced, distributed or published by you in whole or in part, for any purpose. If you have received this report by mistake, please delete or destroy it, and notify the sender immediately.
The information and any analysis, forecasts, projections, expectations and opinions (collectively, the “Research”) contained in this report has been obtained from public sources which Phillip Securities Research believes to be reliable. However, Phillip Securities Research does not make any representation or warranty, express or implied that such information or Research is accurate, complete or appropriate or should be relied upon as such. Any such information or Research contained in this report is subject to change, and Phillip Securities Research shall not have any responsibility to maintain or update the information or Research made available or to supply any corrections, updates or releases in connection therewith.
Any opinions, forecasts, assumptions, estimates, valuations and prices contained in this report are as of the date indicated and are subject to change at any time without prior notice. Past performance of any product referred to in this report is not indicative of future results.
This report does not constitute, and should not be used as a substitute for, tax, legal or investment advice. This report should not be relied upon exclusively or as authoritative, without further being subject to the recipient’s own independent verification and exercise of judgement. The fact that this report has been made available constitutes neither a recommendation to enter into a particular transaction, nor a representation that any product described in this report is suitable or appropriate for the recipient. Recipients should be aware that many of the products, which may be described in this report involve significant risks and may not be suitable for all investors, and that any decision to enter into transactions involving such products should not be made, unless all such risks are understood and an independent determination has been made that such transactions would be appropriate. Any discussion of the risks contained herein with respect to any product should not be considered to be a disclosure of all risks or a complete discussion of such risks.
Nothing in this report shall be construed to be an offer or solicitation for the purchase or sale of any product. Any decision to purchase any product mentioned in this report should take into account existing public information, including any registered prospectus in respect of such product.
Phillip Securities Research, or persons associated with or connected to Phillip Securities Research, including but not limited to its officers, directors, employees or persons involved in the issuance of this report, may provide an array of financial services to a large number of corporations in Singapore and worldwide, including but not limited to commercial / investment banking activities (including sponsorship, financial advisory or underwriting activities), brokerage or securities trading activities. Phillip Securities Research, or persons associated with or connected to Phillip Securities Research, including but not limited to its officers, directors, employees or persons involved in the issuance of this report, may have participated in or invested in transactions with the issuer(s) of the securities mentioned in this report, and may have performed services for or solicited business from such issuers. Additionally, Phillip Securities Research, or persons associated with or connected to Phillip Securities Research, including but not limited to its officers, directors, employees or persons involved in the issuance of this report, may have provided advice or investment services to such companies and investments or related investments, as may be mentioned in this report.
Phillip Securities Research or persons associated with or connected to Phillip Securities Research, including but not limited to its officers, directors, employees or persons involved in the issuance of this report may, from time to time maintain a long or short position in securities referred to herein, or in related futures or options, purchase or sell, make a market in, or engage in any other transaction involving such securities, and earn brokerage or other compensation in respect of the foregoing. Investments will be denominated in various currencies including US dollars and Euro and thus will be subject to any fluctuation in exchange rates between US dollars and Euro or foreign currencies and the currency of your own jurisdiction. Such fluctuations may have an adverse effect on the value, price or income return of the investment.
To the extent permitted by law, Phillip Securities Research, or persons associated with or connected to Phillip Securities Research, including but not limited to its officers, directors, employees or persons involved in the issuance of this report, may at any time engage in any of the above activities as set out above or otherwise hold an interest, whether material or not, in respect of companies and investments or related investments, which may be mentioned in this report. Accordingly, information may be available to Phillip Securities Research, or persons associated with or connected to Phillip Securities Research, including but not limited to its officers, directors, employees or persons involved in the issuance of this report, which is not reflected in this report, and Phillip Securities Research, or persons associated with or connected to Phillip Securities Research, including but not limited to its officers, directors, employees or persons involved in the issuance of this report, may, to the extent permitted by law, have acted upon or used the information prior to or immediately following its publication. Phillip Securities Research, or persons associated with or connected to Phillip Securities Research, including but not limited its officers, directors, employees or persons involved in the issuance of this report, may have issued other material that is inconsistent with, or reach different conclusions from, the contents of this report.
The information, tools and material presented herein are not directed, intended for distribution to or use by, any person or entity in any jurisdiction or country where such distribution, publication, availability or use would be contrary to the applicable law or regulation or which would subject Phillip Securities Research to any registration or licensing or other requirement, or penalty for contravention of such requirements within such jurisdiction.
This report is intended for general circulation only and does not take into account the specific investment objectives, financial situation or particular needs of any particular person. The products mentioned in this report may not be suitable for all investors and a person receiving or reading this report should seek advice from a professional and financial adviser regarding the legal, business, financial, tax and other aspects including the suitability of such products, taking into account the specific investment objectives, financial situation or particular needs of that person, before making a commitment to invest in any of such products.
This report is not intended for distribution, publication to or use by any person in any jurisdiction outside of Singapore or any other jurisdiction as Phillip Securities Research may determine in its absolute discretion.
IMPORTANT DISCLOSURES FOR INCLUDED RESEARCH ANALYSES OR REPORTS OF FOREIGN RESEARCH HOUSES Where the report contains research analyses or reports from a foreign research house, please note: (i) recipients of the analyses or reports are to contact Phillip Securities Research (and not the relevant foreign research house) in Singapore at 250 North Bridge Road, #06-00 Raffles City Tower, Singapore 179101, telephone number +65 6533 6001, in respect of any matters arising from, or in connection with, the analyses or reports; and (ii) to the extent that the analyses or reports are delivered to and intended to be received by any person in Singapore who is not an accredited investor, expert investor or institutional investor, Phillip Securities Research accepts legal responsibility for the contents of the analyses or reports.
If Distribution is to Australian Investors This report is produced by Phillip Securities Pte Ltd and is being distributed in Australia by Phillip Capital Limited (Australian Financial Services License No. 246827). This report contains general securities advice and does not take into account your personal objectives, situation and needs. Past performance is not a reliable indicator of future performance. Please read the Disclosures and Disclaimers set out above. By receiving or reading this report, you agree to be bound by the terms and limitations set out above. Any failure to comply with these terms and limitations may constitute a violation of law. This report has been provided to you for personal use only and shall not be reproduced, distributed or published by you in whole or in part, for any purpose. If you have received this report by mistake, please delete or destroy it, and notify the sender immediately.