2 Sectors, 4 Stocks to Buy This November
Investors looking for swing plays in November need to keep an open mind.
I know what you’re thinking: “It’s still October. Can’t we please enjoy Halloween before yammering on about the holiday season?”
Or maybe even “The last thing I want to read about right now is anything politics.”
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Don’t worry. I’m on your side.
That’s why I’m going to look at some of the best investing options for November … without even considering the month’s two biggest events.
November’s 2 best sectors aren’t the usual suspects
All I’m going to say about Black Friday is that it’s not as big a factor here as you’d think it would be.
The consultant set expects another banner shopping year in 2026, according to recent estimates from Bain & Co. Their research shows that some $85 billion should be spent between Black Friday and Cyber Monday — almost 9% more than during the same period last year.
That number ignores the rest of the month, which is increasingly falling victim to the mushrooming blob that is “early Black Friday” sales.
But it’s enough to set up the idea that (at least as far as headlines are concerned) the month would seem to belong to retailers, and thus consumer discretionary stocks … and to a lesser extent, tech stocks, which power and even produce many of the big-ticket products pushed during the holiday rush.
In reality? Not so much.
|
Sector |
SPDR proxy ETF |
20-yr. avg. November total return |
|
Industrials |
XLI |
3.48% |
|
Materials |
XLB |
2.94% |
|
Financials |
XLF |
2.86% |
|
Healthcare |
XLV |
2.67% |
|
Consumer discretionary |
XLY |
2.57% |
|
Energy |
XLE |
2.35% |
|
Communication services |
XLC |
2.20%* |
|
Consumer staples |
XLP |
2.20% |
|
Real Estate |
XLRE |
2.09%* |
|
Technology |
XLK |
1.96% |
|
Utilities |
XLU |
0.96% |
|
Average |
Row 12 – Cell 1 |
2.36% |
* The XLC was launched in 2018, while the XLRE was launched in 2015, amid changes that created these specific sectors. Each of these sectors’ percentages represent their actual returns multiplied by a market-average-difference factor to approximate how they might have performed in those environments.
The consumer discretionary sector has been historically fine during November, but there’s nothing to suggest that Black Friday pushes the sector as a whole forward. And why would it? Many of those names are competing against one another for the same consumer dollars, and Wall Street generally expects people to spend during that period.
Sure, I could try to handicap individual consumer names anyways, but that would boil down to a childless man trying to divine the next Tickle Me Elmo, Furby or Grogu. Not happening.
And technology has been relatively weak during November — both before and after the 2018 sector shake-up in which names such as Meta Platforms (META) and Alphabet (GOOGL) became communication services stocks.
We should’ve been listening to “Santa Baby” for hints. Eartha Kitt wasn’t asking for dolls and iPhones. She wanted convertibles and mines, which belong to the realms of industrials and materials.
What about the election?
What about it?
You find me someone who predicted all of the market-moving political events of even the past 18 months, and I’ll ask you to get their stock picks for me, too.
Personally? I side with Dan Burrows, who dropped this recent gem about what the midterms mean for your portfolio:
“Predictions about which sectors are set to outperform or lag are too often just plain wrong. Recall that ahead of President Donald Trump’s first term, investors were advised to load up on Big Oil and small-cap stocks (wrong and wrong) and avoid Big Tech and renewable energy names (wrong and wrong, again).”
So if we’re going to do this, we’re going to do this by the numbers. And over the past 20 years, materials and industrials boast at minimum top-five average returns in all Novembers, all election Novembers, and all midterm Novembers.
Each of the picks below enjoys some of the highest analyst ratings in their sectors, as determined by their average broker recommendations, courtesy of S&P Global Market Intelligence.
Data is as of October 29.
2 industrial stocks to buy in November
(Image credit: Getty Images)
SPX Technologies (SPXC) is an industrial manufacturing and infrastructure equipment company that specializes in heating, ventilation and air conditioning (HVAC), as well as detection and measurement.
The company is off by nearly 20% year to date amid general weakness in the industrial sector (and small- and mid-cap industrials specifically), but it maintains a highly convicted bull camp of 13 Buys versus one Hold and zero Sells.
“Our confidence in sustained HVAC outgrowth is unchanged, D&M remains well positioned to leverage critical infrastructure and defense technology spending, and we see no reason to question SPX’s proven M&A playbook and flywheel value creation runway,” Oppenheimer analyst Bryan Blair, who rates SPXC at Outperform (equivalent of Buy), wrote in an early October note. “Combining that setup with increasingly attractive valuation, SPXC remains among our top picks and we believe recent weakness affords a strong buying opportunity in shares.”
While SPXC currently trades at 19 times next year’s earnings and a PEG (price/earnings-to-growth) of 1, which indicates it is merely fairly priced, Oppenheimer says the stock warrants a premium compared to its peers.
GXO Logistics (GXO) is a contract logistics provider offering warehousing, distribution, order fulfillment and e-commerce services. It followed the rest of the market south during the March swoon, then it never really got up off the mat despite posting a pair of better-than-expected quarterly results.
But Wall Street continues to believe in GXO — unanimously, in fact. The company has 17 ratings, all of which are Buys, according to S&P Global Market Intelligence data.
“GXO remains near the top of our ‘misunderstood-and-undervalued’ list, trading at trough valuation levels despite having a highly visible and predictable earnings profile,” say Jefferies analysts, who rate the stock at Buy. “The company’s underlying commercial signals are the strongest they have been in years, with a record $2.7 billion sales pipeline and accelerating wins in strategic B2B verticals like aerospace and life sciences.”
And GXO has a potential November catalyst: its Investor Day, scheduled for Monday, November 16. Jefferies believes it “will be a significant catalyst for a multiple re-rate as investors gain confidence in the company’s structural margin expansion and robust free cash flow generation.”
2 materials stocks to buy in November
(Image credit: Getty Images)
One of the best-rated materials-sector stocks on the market right now also made a list of undervalued stocks just a couple of months ago.
I’m talking about Smurfit Westrock (SW), which is a global provider of containerboard, corrugated containers and other paper-based packaging products. Yes, a boffo holiday shopping season would indeed benefit Smurfit, whose fortunes have been lifted by worldwide growth in e-commerce. But it would take a better-than-expected result for the entire online shopping season, which we wouldn’t really be able to confirm until December.
Here’s a more material headline: paperboard producer Paperworks recently said it would raise prices on all grades of recycled paperboard by $60 per ton, which Truist analysts believe is positive for several industry names, including Smurfit, which it rates at Buy.
And if you’re buying with more than November in mind, Argus Research’s Alexandra Yates (Buy) sees “long-term upside potential and expects earnings growth congruent with growth in e-commerce and growth in demand for sustainable paper and packaging goods.” They’re two of the unanimously Buy-rated 17 analysts on this value-priced name.
Smurfit also pays us a generous dividend that currently yields 4.4%.
Lastly, there’s Newmont (NEM), the world’s largest gold mining company, though it produces far more than the yellow metal. Its Peñasquito operation in Mexico is one of the world’s largest silver mines; it produces copper, silver, zinc, lead and molybdenum, too.
Newmont has the largest analyst following of these four stocks, which makes a unanimous consensus less likely. But it still boasts 19 Buys to three Holds and one Sell, which is still mighty bullish.
The stock is up by double digits, albeit in roller-coaster fashion. But UBS analyst Daniel Major (Buy) believes there’s more room to roll, writing in September that “clarity on cash returns and ability to grow [gold equivalent ounces] production per share through the combination of sustained share buybacks and modest improvement in production differentiates Newmont vs gold peers.”
He adds that the company’s August agreement to settle a joint-venture dispute with rival Barrick (B) eliminated a significant overhang on the stock — and that the market is underappreciating how much relief that provides.
And while Newmont doesn’t mine for platinum, it does own shares in Canada’s Metallic Minerals, which does. I hope that’s enough for Catwoman.
