Mizuho’s top stock picks from here, including a new chip play
Mizuho has released its top stock picks for September, and there’s one chipmaker to watch. It’s been a rough start to the month for stocks, including those in the semiconductor sector. A week ago, Nvidia fell 9% in the first trading session of September, wiping out about $279 billion in value, the largest one-day market cap loss for any U.S. stock in history. The VanEck Semiconductor ETF (SMH) fell nearly 12% last week, its worst weekly loss in more than four years. What’s more, all three major averages posted steep weekly losses, with the S&P 500 posting its worst week since the regional banking crisis in 2023. With the new trading month underway, Mizuho has highlighted its 24 highest conviction ideas across six sectors. The Wall Street firm’s latest additions to its top picks list include chip giant Micron Technology and oil and gas company Coterra Energy. Here are some of the firm’s top stock picks for September. Micron is one of the key names on Mizuho’s list. Shares fell 10% last week amid signs of weakness in the sector, and have fallen even further over the past three months, down more than 33%. But with potential tailwinds from greater AI adoption in the coming year, Mizuho sees Micron as “well-positioned” in the AI arms race, especially given its gains in the high-bandwidth memory market. “We also see continued price improvements, primarily in traditional DRAM and NAND, as a driver of MU’s continued upside, as on-device AI requires additional content but demand for such devices remains muted,” analyst Vijay Rakesh wrote in a note to clients. Energy Transfer remains one of the firm’s top picks for September due to its attractive free cash flow yield, growth prospects and discounted valuation. With a $20 price target, the stock has an implied upside of nearly 26% as of Friday’s close. The stock has gained more than 15% this year. Like Mizuho, Wolfe Research recently added Energy Transfer to its Alpha List for the month, which is expected to see significant upside going forward. Lowe’s is one of three names on the list that Mizuho is more bullish on than the Wall Street consensus. Of the 36 analysts covering the retailer, 16 have a buy or strong buy rating on the stock, while 18 are neutral, according to LSEG. The average price is around $256, implying an upside of about 5% from Friday’s close. Meanwhile, Mizuho’s $280 target implies an upside of nearly 15%, and the firm sees Lowe’s as “decisively positioned” to benefit from an expected recovery in demand in the industry. “The home improvement industry is moving into the later stages of its post-pandemic digestion, with Lowe’s set to weather a more pronounced decline in DIY spending starting in Q3,” analyst David Bellinger wrote in an analyst note. He added that any future easing by the Federal Reserve “could unleash significant pent-up demand.” “We envision a scenario where existing home sales rebound to a more favorable ~4.5 million annualized level, driving up industry demand,” Bellinger said. Mizuho isn’t alone in this view, as Lowe’s was also added to JPMorgan’s September focus list. The stock is up more than 9% this year.
