Top Stocks for June 2023

Top U.S. stocks for June include First Solar Inc. (FSLR), Nvidia Corp. (NVDA), and Penumbra Inc. (PEN). The share prices of all have more than doubled in the past year, as the Russell 3000, a capitalization-weighted stock market index used as a benchmark for the entire U.S. stock market, has returned 1%.

Below, we list the top five stocks in each category: value, growth, and momentum. All data below is as of May 26.

Best Value Stocks

Value investing is a factor-based investing strategy that involves picking stocks you believe are trading for less than what they are intrinsically worth, usually measured by the ratio of the stock’s price to one or more fundamental business metrics. A widely accepted value metric is the price-to-earnings (P/E) ratio. Value investors say that if a business is cheap compared with its intrinsic value (as measured by its P/E ratio, in this case), then the stock price may rise faster than others as the price comes back in line with the worth of the company. These are among the stocks with the lowest 12-month trailing P/E ratio.

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• Southwestern Energy Co.: An oil and natural gas explorer and producer with properties in Pennsylvania, Ohio, West Virginia, and Louisiana. In June 2022, the company authorized a $1 billion share repurchase program that can continue through the end of 2023. In the first quarter, Southwestern reported net income of $1.9 billion, swinging from a net loss of $2.7 billion in the year-ago quarter, and a 28% year-over-year revenue decline.
• Chesapeake Energy Corp.: Chesapeake explores and develops oil and gas properties throughout the U.S. In February, Chesapeake Energy agreed to sell a portion of its Eagle Ford assets to global chemicals company INEOS for approximately $1.4 billion. In the first quarter of 2023, Chesapeake Energy's revenue nearly tripled from the year before and net income totaled $1.4 billion, or $9.60 a share.
• First Citizens BancShares Inc.: This is a holding company that offers banking services such as deposit products, consumer loans, and commercial leases. First Citizens' net income surged in the most recent quarter after the lender acquired the assets and liabilities of Silicon Valley Bank at a steep discount.
• Ovintiv Inc.: Ovintiv owns and operates various natural gas and oil properties in the U.S. and Canada.
• DISH Network Corp.: A TV service provider that offers programming packages, Sling TV, and wireless subscriber plans. On May 8, the company released its first-quarter earnings results. Net income fell 46%, and overall revenue declined by 9% compared with the same period in 2022. DISH lost over half a million Pay-TV subscribers in the first quarter, and its retail wireless segment posted a 9% reduction in subscribers compared with the previous year.

Fastest-Growing Stocks

These are the top stocks as ranked by a growth model that scores companies based on a 50/50 weighting of their most recent quarterly year-on-year (YOY) percentage revenue growth and their most recent quarterly YOY earnings per share (EPS) growth.

Both sales and earnings are critical factors in the success of a company. Therefore, ranking companies by only one growth metric makes a ranking susceptible to the accounting anomalies of that quarter (such as changes in tax law or restructuring costs) that may make one or the other figure unrepresentative of the business in general. Companies with quarterly EPS or revenue growth of more than 1,000% were excluded as outliers.

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• Mirati Therapeutics Inc.: A biotechnology company that develops novel medications for the treatment of cancer. The company's flagship medication is Krazati, which treats metastatic non-small cell lung cancer. Note Mirati Therapeutics doesn't have an EPS growth figure in the table above because the company reported a loss per share in the most recent quarter.
• Rivian Automotive Inc.: This is an electric vehicle manufacturer that produces SUVs, trucks, and delivery vans. Note Rivian Automotive doesn't have an EPS growth figure in the table above because the company reported a loss per share in the most recent quarter.
• Apollo Global Management Inc.: A private equity firm that invests in buyouts, distressed assets, and acquisitions. In March, Apollo Global announced that a fund managed by affiliates agreed to acquire Univar Solutions, a specialty chemical distributor, in an all-cash transaction totaling $8.1 billion. On April 17, the company announced a $500 million investment in education technology company Cengage Group. Note Apollo Global Management doesn't have an EPS growth figure in the table above because the company reported a net loss per share for the first quarter of 2022.
• Chesapeake Energy: See company description above. Note Chesapeake Energy doesn't have an EPS growth figure in the table above because the company reported negative EPS in the 2022 first quarter.
• Norwegian Cruise Line Holdings Ltd.: This is a cruise company offering international itinerary packages. Note Norwegian Cruise Line doesn't have an EPS growth figure in the table above because the company reported a net loss per share in the most recent quarter.

Stocks With the Most Momentum

Momentum investing is a factor-based investing strategy that involves buying a stock whose price has risen faster than the market as a whole. Momentum investors believe that stocks that have outperformed the market will often continue to do so because the factors that caused them to outperform won't suddenly disappear. In addition, other investors seeking to benefit from the stock’s outperformance will often purchase it, further bidding up its price.

These are the stocks that had the highest total return over the past 12 months.

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• First Solar Inc.: A solar energy company that makes cadmium telluride solar modules for commercial and industrial uses. Early this year, First Solar sold its 141 MW power plant located in Chile to the company Toesca for an undisclosed amount. On April 27, the company reported first-quarter earnings, with net sales declining by 45% to $548 million. Nonetheless, the company reported net income of $43 million, swinging to a profit from a $43 million loss in the year-ago quarter. The company's stock price rose by approximately 25% in the two weeks after earnings.
• NVIDIA Corp.: This is a semiconductor company that derives most of its revenue from selling graphics processing units (GPUs) for gaming PCs. On May 24, the company reported first-quarter fiscal year 2024 earnings. Nvidia reported 14% growth in data-center revenue and expanded artificial intelligence (AI) development with multiple partnerships and the introduction of AI Foundations, a generative AI language learning model. Following this earnings report, the company's share price rose by 24%, bringing it briefly to a $1 trillion market cap.
• Penumbra Inc.: Penumbra develops and sells minimally invasive medical devices that help remove blood clots from the body.
• Netflix Inc.: An entertainment streaming company that offers a wide range of original and licensed movies and TV shows.
• Axon Enterprise Inc.: Axon manufactures and sells conducted-energy weapons under the Taser brand, and cloud-based video equipment and software for use by law enforcement. Axon has experienced steady growth over the past year. Axon's YOY revenue jumped 34% in the first quarter on the release of multiple new products and 51% growth in cloud sales.
  

Top-Stock Investing Advantages

To become a top stock, a company most likely produces positive trends in its earnings, revenue, and share price. Momentum in these areas indicates a well-run business that has the potential to keep generating profit and creating shareholder value.

Investors can use free stock-screening sites like Finviz to find top stocks, filtering by both fundamental and technical metrics. For example, a trader could find a top stock by scanning for companies that are trading at a new 52-week high or that have reported higher earnings consistently over the past five years.

Liquidity

Top stocks typically receive extensive media coverage and are followed by leading Wall Street analysts. This usually means more liquidity, leading to better prices and faster trade executions. Moreover, top stocks with ample liquidity are more difficult for larger players to manipulate, helping to keep a fair and orderly market in them.

Top-Stock Investing Risks

Missed Opportunities

Investing only in top large-cap stocks means that investors may miss profitable opportunities in other areas of the stock market. Some of the most significant gains come from small-cap stocks under the radar. For example, an unknown small biotechnology company may announce a breakthrough discovery that propels its share price higher. Even if investors favor trading top stocks, allocating a portion of capital to other stock groups helps avoid missing compelling opportunities.

Trend Reversals

The trend is your friend—until it's not. Even top large-cap stocks with a track record of earnings growth and creating shareholder value encounter unforeseen challenges. For example, cruise line companies, such as Carnival Corp. (CCL) and Norwegian Cruise Line Holdings Ltd. (NCLH), reported increased revenue in the years leading up to the pandemic but watched their top line sink to unprecedented lows for several years due to no-sail orders and a collapse in passenger demand during the worldwide health crisis.

When investing in top stocks, investors should always use a stop-loss order to protect against sudden trend reversals.

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As of the date this article was written, the author does not own any of the above stocks.