Growth stocks are falling out of favor this month.
The IVW growth ETF has gained 1% in September, less than a quarter of the rise seen on the IVE value ETF. Some of Wall Street’s favorites this year have also been left out in the cold — Chipotle, Starbucks, PayPal, AMD and Disney have all dipped after leading the market earlier in the year.
“You have to be increasingly a little bit more selective. We have seen a little bit of a sign of value shifting more into favor and money moving out of growth in the last week, so it really is dependent on a per-stock basis,” technical analyst Mark Newton of Newton Advisors said Wednesday on CNBC’s “Trading Nation.”
Newton says Chipotle, PayPal and Starbucks could continue their pullback into September. All have outperformed the broader market this year, with Chipotle’s 85% rise topping the tape.
“One I do like is Disney, however. It made a breakout of a four-year chart back a few months ago,” said Newton. “The stock broke out, I believe, in the early part of this year, so that’s been consolidating a bit. I wouldn’t call that weakness as meaningful. If anything, it’s alleviated a lot of its overbought status.”
Disney could get as high as $155, says Newton. That would implies 14% upside and would mark a new high.
Mark Tepper, president of Strategic Wealth Partners, agrees that Disney is the standout pick.
“When you have a company where you like their thesis like Disney, and suddenly the price becomes more attractive, you need to give it a closer look,” said Tepper. “We own Disney. We continue to believe in them.”
He added that the mighty American consumer should continue to carry growth at Disney.
“The fundamental growth story for the company hasn’t changed at all. The U.S. consumer is still the strong point of the economy,” Tepper said. “Right now, the biggest catalyst is Disney+, which launches in November, and they’ve just got a huge library of content and it’s world class from Disney to Marvel, Pixar, Lucasfilm. And we all know that it’s all about content.”
Disney+ does face headwinds — a crowded streaming field that already includes Netflix, Amazon Prime and Hulu. Apple just announced pricing details of its own service set to launch Nov. 1.
Disclosure: Strategic Wealth Partners holds Disney shares.