The Best-Performing Stocks In October

October marked the third straight down month for the markets, as the major indexes posted negative returns last month.

The S&P 500 was down 1.4% in October, closing the month at 4,194. The large-cap benchmark remains up 9.2% for the year, although it has plummeted 8.6% since July 31, when it hit a high of 4,589. The Dow Jones Industrial Average also fell 1.4% in October, while the Nasdaq Composite slipped 2.8% for the month.

However, there were certainly some bright spots last month. Here are the best performers on the S&P 500 in October.

1 . Allstate, up 15.5%

You know it was a rough month on the markets when an insurance stock like Allstate (NYSE:ALL) was the best performer on the S&P 500, gaining 15.5% for the month. However, that’s not a knock on Allstate, as it did what good value stocks often do: zig when the market zags.

Of course, Allstate is an insurance stock, which tend to do well in down markets because people always need insurance. Additionally, insurance companies’ rates go up in times of higher-than-normal inflation. High interest rates also boost their investment income, as most of their portfolio is in fixed-income investments, which benefit from higher yields.

Allstate does not post earnings until Nov. 2, so we’ll be watching for those numbers. However, it did receive a boost in October when 10-year Treasury yields surpassed 5% for the first time since 2007. This boosted insurance stocks, as it should buoy their investment income.

It was also reported Wednesday morning that Allstate, along with Allianz, was investing in “insurtech” firm Next Insurance, which expands its addressable market into small business insurance. Look for more on that in Thursday earnings report.

The stock is down by about 5% year to date.

2. Dollar General, up 14.7%

It has been a rough year for the discount retailer Dollar General (NYSE:DG), as its stock price has plummeted 52% year to date. However, it got some of that back last month, as its share price rose 14.7% in October.

The major catalyst for Dollar General appeared to be a change at the top, as the company hired Todd Vasos as its new CEO on Oct. 12.  Investors reacted favorably to the move, as the retailer’s stock price shot up almost 13% in the following days, accounting for most of the monthly gains.

Vasos had been CEO of Dollar General from 2015 through 2022, when he retired, handing the reins over to former Chief Operating Officer Jeff Owen. However, Owen’s year at the helm was marred by declining sales — at a time when the company’s value proposition should have been higher as a discount retailer.

The rehiring of Vasos not only establishes a seamless transition, but his tenure as CEO was highly successful, as the chain added more than 7,000 stores and increased annual sales by more than 80%. Dollar General was also considered a “Most Admired Company” by Fortune.

During his “retirement,” Vasos still served on the company’s board, so he is well aware of the issues that need to be addressed. Finally, given that he is only 62, Vasos’ rehiring is not a stopgap measure, as Dollar General said he will lead the company for the “foreseeable future.”

3. RTX, up 14.1%

The third-best performer on the S&P 500 in October was aerospace and defense contractor RTX Corp. (NYSE:RTX), formerly known as Raytheon. RTX stock climbed 14.1% in October and was trading at around $81 per share as of Wednesday morning, although it remains down by about 19% YTD.

RTX got a big bump after releasing its third-quarter earnings on Oct. 24. The gains were not so much due to its performance last quarter, but rather, for its outlook. The quarter saw a net sales decline of 21% year over year and a net loss of 68 cents per share. However, that was mainly due to issues related to a manufacturing defect with one of its engines, which resulted in a $1.53-per-share drag on earnings.

However, the rally centered on RTX’s record $190 billion in backlog orders, consisting of $115 billion in backlog in its commercial aerospace business and $75 billion in its defense arm. The firm also boosted its full-year sales and earnings guidance for 2023 based on the high and growing demand for its services. In addition, RTX approved $10 billion worth of share repurchases, raising its commitment to between $36 billion and $37 billion through 2025.

Looking ahead

While a good month should put these stocks on your radar, their longer-term prospects should be more deeply probed before making a buy decision. All three of these stocks have value propositions worth considering, as Dollar General and Allstate are cheap with potential catalysts, while RTX’s services appear to be in higher demand.

However, as always, it’s a good idea to do your research first.

This post originally appeared at ValueWalk.com.

Category: Stocks