Sell the Rally as September Is the Worst Month for Stocks: 5 Warren Buffett Stocks to Move to Now

The recent rally out of the August lows has gotten everybody fired up again. The Magnificent 7 continue to push the markets higher while many of the rest of the S&P 500 stocks tread water. Artificial intelligence technology is real and groundbreaking and will appear in more and more applications as time goes on, but some of the exuberance is likely to mellow as the early glow fades.

Traditionally September is the worst month of the year for stocks. Since 1945, the large-cap S&P 500 index has delivered an average monthly return of negative 0.73% in September, the worst average performance of any month, according to CFRA chief investment strategist Sam Stovall.

The softer ADP report and the weaker gross domestic product were cited by traders for the continued late August strength in the equity markets. Last week’s PCE inflation reading was in line with estimates but rose during the month to get there. The ISM manufacturing data on Friday and the August nonfarm payrolls report both loom big for those trying to handicap the Federal Reserve’s next move.

We decided to screen the Berkshire Hathaway portfolio for more conservative mega-cap stocks that may be a good place to ride out what could be a stormy September. While the following five are Buffett favorites and rated Buy across Wall Street, remember that no single analyst call should ever be used as a basis to buy or sell a stock.

American Express

This stock has backed up recently and is offering the best entry point since late last year, despite posting solid second-quarter results. American Express Co. (NYSE: AXP) provides charge and credit payment card products and travel-related services worldwide. Its products and services include payment and financing products network services accounts payable expense management products and services, and travel and lifestyle services.

The company’s products and services also include merchant acquisition and processing, servicing and settlement, point-of-sale marketing and information products and services for merchants, and fraud prevention services, as well as the design and operation of customer loyalty programs. It sells its products and services to consumers, small businesses, midsized companies and large corporations through mobile and online applications, third-party vendors and business partners, direct mail, telephone, in-house sales teams and direct response advertising.

Shareholders receive a 1.50% dividend. Morgan Stanley has a $188 price target on American Express stock. The consensus target is $181.31, and shares closed trading on Friday at $159.62.

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