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3 stocks that are most attractive during October: Shopify, Starbucks, Boeing

Daily moves within a few percent on the most well-known stock indices suggest that equity markets have been more volatile in recent weeks than in the first half of this year. But which titles are pulling the hardest in such wild times? We bring you a summary of top 3 most traded stocks this month so far. What's behind their popularity and what's the outlook for the future? Find out in today's article.

Shopify - from hero to zero

The headline aptly describes Shopify's stock performance in recent years. The company, which builds a platform for e-commerce stores, had a golden time during the coronavirus. Its stock peaked at the end of last year when it broke even at $1,700. You're probably familiar with Shopify, but if you haven't looked at its stock in a while, you'll probably be shocked. In fact, the current price is around $25. It should be noted, however, that Shopify stock went through a 10:1 split at the end of June. Even so, Shopify's capitalization is down more than 80% since the beginning of the year. It is thus a clear candidate for the worst-ever large US company on the stock markets. Why did Shopify suffer such a crash?
 

Shopify is a typical example of a growth company doing business in a fast-paced online environment. Such companies attracted investors in boom times and even during the coronavirus pandemic, as Shopify provided a platform for many people to set up their online stores. The company even managed to become profitable in 2020 and 2021. However, since the beginning of the year, investors have been taking their hands off the growth stock and along with some negative news, Shopify has paid the price. With inflation rising, the company's margins have suffered significantly as smaller eshops tend to offer cheaper goods than established stores. However, this gets more complicated as inflation rises and Shopify's already thin margins take a beating. This can be seen in the company's earnings, which lost nearly $2.7 billion in the first half of the year.

 

Shares of Shopify on the MT4 platform on the D1 timeframe along with the 50 and 100-day moving averages
Shares of Shopify on the MT4 platform on the D1 timeframe along with the 50 and 100-day moving averages
 

In addition, the company's sales are also falling short of expectations. This is obviously negative for the stock, but doubly so for the growth stocks. Investors can still stomach a net loss, it can be linked to a massive investment in marketing, for example, but investors don't like to see a declining pace of sales. In its last earnings, Shopify warned of the further impact of interest rates on its business. Thus, given the outlook for further rate hikes in the US into the first quarter of next year, Shopify cannot now be described as a good opportunity. Risk factors remain and the market still has room to take, with current capitalization still over USD 30 billion.

Starbucks - surprising performance

Starbucks shares have performed relatively well so far this year. However, we emphasize the word relatively. After all, the stock has depreciated 25% since the beginning of the year, which is obviously not a miraculous performance. But it is about the same decline that the S&P 500 has realized so far. This is quite surprising for such a cyclical stock. Starbucks coffee is loved by some and hated by others, but we can agree that, at least in price, it is one of the more premium coffees. However, it is this kind of consumption that we should avoid first in times when we are all tightening our belts. And replace it, if necessary, with a cheaper substitute. But that's not quite happening yet, thanks to Starbucks' strong brand. In fact, the stock is up 25% since this year's low. What's behind Starbucks' success? And what is the outlook?

 

It's that brand premiumness that helped the company get through the third fiscal quarter without breaking a stride, at least in the all-important U.S. market. Sales and profits beat estimates, and Starbucks has not seen Americans willing to cut back on coffee despite rising inflation. However, all is not rosy and more risks are looming for Starbucks. Already, international sales fell by 18% in the last quarter, and by 44% in China. China is still fighting the coronavirus with a zero-covid policy, which means entire areas are closed. Revenues from the Chinese market are therefore likely to be very weak for the rest of the year. Moreover, inflation is making the company's labor costs more expensive.
 

Starbucks shares on the MT4 platform on the D1 timeframe along with the 50 and 100-day moving averages
Starbucks shares on the MT4 platform on the D1 timeframe along with the 50 and 100-day moving averages


In addition, high-interest rates are starting to take effect in the US and the labor market is slowly cooling. Once again, we are coming up against interest rates, which are now linked to practically everything. The next expected rise in US rates will push up unemployment. With higher unemployment levels, Starbucks sales could decline. If both Europe and the U.S. fall into recession and China's tough fight with the coronavirus persists, Starbucks' current capitalization seems fairly optimistic. Economic results at the end of October will tell us more. However, we must not underestimate the strength of the brand and its popularity among the younger generation.

Boeing - a takeoff to its former glory?

The troubled US aircraft manufacturer has had a tough few years, but it would seem that better times are on the horizon. Demand for travel is growing globally and is already virtually higher than before the coronavirus. Even rising global inflation does not seem to have shaken it yet. This is water on the mill of aircraft manufacturers such as Boeing and Airbus. Moreover, Boeing is an important partner of the US military, which provides it with a supply of government contracts. The current tense geopolitical situation should encourage governments to invest in weapons and defense systems. Of course, it would be even more positive for Boeing if Republicans were at the helm. Boeing should soon start delivering the 787 Dreamliner, which has been on hold for more than two years. The company has also won several contracts, such as for the production of 100 737s for Delta Airlines.

 

Boeing shares in the MT4 platform on the D1 timeframe along with the 50 and 100-day moving averages
Boeing shares in the MT4 platform on the D1 timeframe along with the 50 and 100-day moving averages


However, all is not positive; like its planes, Boeing is facing strong headwinds. The global transport chain is still tense, making it difficult for Boeing to produce. So is rising inflation, which is making some costs more expensive. China, which still hasn't allowed the 737 Max to return to the skies, remains a major obstacle. This is the very model that was involved in accidents in 2018 and 2019. So the uncertainty around China continues to linger and the world's most populous country now clearly prefers Airbus. In addition, Boeing's economic results to date have not been miraculous, and although the company managed to turn a profit in the second quarter after a long time, sales fell short of expectations. As a result, they are likely to be lower this year than a year earlier. Revenue from government contracts is also down - by about 10% in the last quarter. The aforementioned factors could send Boeing's stock even lower. But we'll be wiser again at the end of October when Boeing reports results for the latest quarter.

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