3 Stocks to Sell and 3 Stocks to Buy for September

Key Takeaways

• Why Nvidia’s NVDA results were so important.
• Whether cybersecurity stocks still look attractive after their recent runup.
• What economic and earnings reports to keep on your radar this week.
• Which technology stocks look attractive after earnings.
• Should investors throw in the towel on The Trade Desk TTD?
• The sectors that have historically done well—and not so well—in September.
• Stocks to buy and sell for the month ahead.

In this new episode of The Morning Filter podcast, co-hosts Dave Sekera and Susan Dziubinski share what really mattered in the market last week (hint: Nvidia). They give an update on the prospects of cybersecurity stocks after Okta OKTA and CrowdStrike CRWD put up great results and before Zscaler ZS and Palo Alto Networks PANW report this week.

Tune in to find out what to watch for in the earnings from Broadcom AVGO and Lululemon LULU and whether Nvidia, Salesforce CRM or Marvell Technology MRVL look like stocks to buy after earnings. They close the show with sectors and stocks to buy and avoid in September.

Got a question for Dave? Send it to themorningfilter@morningstar.com.

Susan Dziubinski: Hello, and welcome to The Morning Filter podcast. I’m Susan Dziubinski with Morningstar. Every Monday before market open, I sit down with Morningstar Chief US Market Strategist Dave Sekera to talk about recent market activity, what investors should have on their radars for the week, some new Morningstar research, and a few stock ideas.

Now, we have a programming note for viewers. We will not be airing a new episode of The Morning Filter next Monday, Sept. 7, due to the Labor Day holiday, but we’ll be back bright and early on Monday, Sept. 14, just in time for that next Fed meeting.

What Mattered Last Week

All right, well, good morning, Dave. Let’s kick off today with some of your key takeaways from last week’s market activity.

David Sekera: Good morning, Susan. Well, if we’re on the topic of the Fed, the first thing to review will just be the statement that the new Fed Chair Warsh provided at the end of last week. Turns out he is a little bit more hawkish than I think the market had expected. So, if we look at the futures market, the market’s now pricing in a hike sooner rather than later. I think this morning it’s over a 60% probability the Fed’s going to hike at the September meeting. A week ago, I think that was only a 40% probability. Either way, it’s a 90% probability they’ll hike at least once by the December meeting. But in my mind, I don’t think it really matters. I mean, whether they hike in September, the October meeting, the December meeting, I don’t think in the big grand scheme of things which month they hike really is going to make a difference in the marketplace.

Honestly, when I think about the market activity last week, it was about Nvidia, Nvidia, and did I mention Nvidia? Now, I know we’ll address Nvidia NVDA earnings specifically later in the podcast, but I think really when you think about Nvidia and why it’s such a driver of the market, it’s not just because of the size of the market cap of the stock, but really when you think about artificial intelligence and you think about the AI build-out boom, they have really the most comprehensive view of any other player in AI out there. If you think about it, they’ve got the best visibility into all the AI platforms. They have relationships with Anthropic, OpenAI, XAI, all the big AI LLMs out there. They have relationships with all of the hyperscalers. They have relationships with everybody that’s building data centers.

Essentially, when you think about AI, Nvidia touches the entire AI economic chain. That’s why I think Nvidia earnings and their conference calls are so important because really you get that big comprehensive view of what’s going on across all of those different segments as opposed to a lot of the companies that really only talk about the individual market that they’re in.

I’d say the big takeaway following Nvidia earnings from our analyst team and looking at the valuations of all of the AI stocks overall, even though a lot of those commodity-oriented tech hardware stocks beginning a month ago, they’re a lot lower than where they were, we’re still cautious on a lot of those stocks. But if you look at those who are at the leading edge of AI, such as Nvidia, we still think they have a lot of room to run for now.

Dziubinski: We also saw some movement last week in software stocks. Talk a little bit about that.

Sekera: Sure. I think the market is just finally starting to get comfortable with the thought that the death of software has been greatly exaggerated. I’m sorry, having a little problem with my voice. So, yeah, just a little bit more coffee here. Our investment thesis on software has been for quite a while, even in the face of these software stocks having fallen for the past 12 to 18 months, that generally software companies are incorporating AI into their own products and services. They’re adding more economic value to their clients.

And yes, a lot of these smaller, very niche-y software providers might be at risk. The big, large, major platforms are not going away. Clients are not going to replace those software providers by trying to vibe code their own platforms. It’s just too much of a major business risk to a disruption of their own business. And at the end of the day, I still think there’s a lot of economies of scale of using these outsourced vendors as opposed to trying to do it in-house.

Cybersecurity Update

Dziubinski: We also saw cybersecurity stocks have a pretty good week last week, and that also ties back into that AI theme, right?

Sekera: Exactly. When I think about AI, I mean, yes, it’s providing this huge boost because of the AI build-out boom, but behind the scenes, you’ve also seen a big expansion in IT budgets across the board for cybersecurity due to AI, and that’s showing up in the results that we’re seeing for the past couple of quarters. We’re also seeing it show up in the forward guidance a lot of these companies are giving. Overall, this is not just a one- or two-quarter story. We still think this is a multiyear tailwind behind us. And in fact, our analyst team is looking for an acceleration of cyber software spending all the way into 2027.

Dziubinski: Let’s talk a little bit more about cybersecurity. We know that’s been a favorite industry of yours, but it’s been a while since we’ve discussed it. So we have Palo Alto PANW and Zscaler ZS reporting this week, and we had CrowdStrike CRWD and Okta OKTA report last week. Give us an update on the industry and some of the stocks. Are you still enthusiastic here, Dave?

Sekera: This is one where I think you need to separate the business dynamics from the valuation. Overall, I still look at the business dynamics of the cybersecurity industry as really one of the most attractive spaces to invest in right now, but stocks have just been on a tear thus far this year. So, it’s hard to know at this point which of these stocks is starting to get to be overextended here versus which ones still have a lot more room to run. So, I’m just going to run through some of our actions thus far this earnings season.

If you look at Fortinet FTNT, we raised our fair value after earnings to $143 a share from $108. That was a stock that was a pick of ours on Sept. 22, 2025. The stock has more than doubled since then. Even after raising our fair value, it’s now a 3-star-rated stock.

Okta, that one, we raised our fair value to $200 a share. That’s up from $124. That was a stock pick a number of times back in 2023, reiterated in 2024. Since those picks, that stock has more than doubled. It’s now a 3-star-rated stock as well.

Cloudflare NET, we raised our fair value to $266 from $235. That is now a 3-star-rated stock.

CrowdStrike, we bumped up our fair value there to $152 a share from $133. That’s a 2-star-rated stock. That’s one we think is still a little overextended here.

And if you remember back in March of this year, we talked about an ETF. So, for those investors that didn’t want to be taking the risk of buying individual cybersecurity stocks, I highlighted an ETF, its ticker was BUG, B-U-G. That stock is up 74% since then.

As you mentioned, we’ve got Palo Alto, they report tomorrow after market close, Zscaler on Sept. 3.

When I think about the valuations on these stocks, and I think about what’s been going on in cybersecurity overall, I think the risk here is still more to the upside than to the downside.

Dziubinski: All right. So at a 3-star rating, they’ll put them more on the watchlist, right?

Sekera: There’s a lot of momentum in these stocks. So if you want to go into these stocks being long, I’m not going to argue against that, but that’s just my own personal opinion. But yes, a 3-star-rated stock technically means that we think it’s trading within that valuation range that is pretty close to fairly valued on a risk-adjusted basis.

On Radar: Nonfarm Payrolls

Dziubinski: Got it. Let’s pivot over to the week ahead on some economic numbers. We have nonfarm payrolls coming out. Now, the market often makes a big deal about these numbers, but anyone who’s been watching or listening to our podcast knows that you’re not a big fan of these numbers, but are you going to be watching them, Dave? And if yes, what are you going to be looking for?

Sekera: Yes, I’ll have to take a look at the numbers when they come out, but overall, I just think that the payroll’s numbers are just generally very low-quality information, especially when you’re thinking about the economy overall. I mean, these numbers are revised multiple times after they’re released. Oftentimes they’re revised by pretty big numbers. So, when you get any one individual read, and it shows strength, weakness, whatever, a lot of times that added strength or weakness that you thought was in that payroll report gets revised away months or years later. So, I’ll watch it. I’m really watching more what the trend is necessarily than any one individual month post.

AVGO Earnings Watch

Dziubinski: Earnings season’s winding down, but we do have a couple of companies you’re watching this week, starting with Broadcom AVGO. Morningstar assigns Broadcom a $650 fair value estimate. Shares are trading way below that. First, what are you going to want to hear about? And second, do you think there’s any reason to buy Broadcom’s stock ahead of earnings?

Sekera: When I’m thinking about this earnings report, it’s not necessarily about the specific numbers to me when I’m looking at the results. I think the real big thing to be listened for is a combination of, one, not only are they not losing clients, but they’re still bringing in new clients as well.

The first thing we want to hear about on the not losing clients front is really just get confirmation that the deal between Marvell MRVL and Google is more about Google actually multisourcing its semiconductor needs as opposed to potentially replacing Broadcom as its supplier over time. And then on the new-customer front, you’ll be listening there pretty closely. I know our analyst team is hearing that Broadcom has been bringing more new customers onto its platform, so we’re hoping to hear more details about that.

But when I think about Broadcom overall and our investment thesis, I just have a quote here from you from our analyst team: “Broadcom’s growth potential over the next two years is being undervalued with 20 gigawatts of capacity for OpenAI and Anthropic alone creating the potential for $400 billion in cumulative revenue.”

So, overall, we think the company’s guidance has been pretty conservative. I think that to some degree has hindered the near-term stock appreciation in the AI play. So as soon as management provides an increase to that guidance, I think the guidance right now is for more than $100 billion in AI chip revenue in 2027. I think once they increase that guidance and the market gets comfortable that they’re continuing to supply Google and some of their other existing clients and see some new clients coming online, I think that could be a really big catalyst for this stock.

LULU: Earnings Preview

Dziubinski: Lululemon LULU also reports earnings this week, and the stock’s having a pretty tough year. It was a pick of yours back on the March 23 episode of The Morning Filter. Now Morningstar assigns Lululemon stock a $280 fair value, and again, shares trading well below that. Do you still like the stock, Dave, and what are you going to want to hear about?

Sekera: Unfortunately, I think I read the situation wrong as far as when I made my first recommendation into the stock. The stock peaked at the end of 2023, it had fallen 68% by the time that we first recommended it on The Morning Filter. At that point, it was trading well in the 5-star range. And our analyst team had noted there were several different catalysts out there that they thought should support the stock and lead to a turnaround.

Since I made that recommendation first, I think the stock’s fallen another 25%. So, obviously we were very wrong about the timing here. Now over the same time period, the analysts did reduce their fair value. They cut it to $280 from $295. So again, not a huge percentage reduction, but again, you never like to see us cutting our fair value at the same point in time that the stock has been falling as well.

At this point, when I open up our model, I still don’t think that our forecasts or anything are really too strong for what the company should be able to post. The five-year compound annual growth rate for revenue is 4.6%, so a combination of inflation plus a little bit of new product growth. We’re looking for a gradual recovery in operating margins. We think 2026 will be the low as far as margins and then still grow from there to what will be below their historical operating leverage or averages.

We’re looking for 12% earnings growth on a five-year compound on an annual growth basis. Stock only trades at 10.8 times our 2026 earnings estimate, only 9.5 times our 2027 earnings estimate. So, if we get any signs of acceleration in North America, I think that’d be very welcomed by the marketplace. And I think this is one that, at such a low valuation, really has the ability to run once we get some good news here.

NVDA: More Room to Run

Dziubinski: All right. Well, hopefully we’ll get some this week. We’ll see. Let’s cover some new research from Morningstar about a few tech companies that reported last week, and of course we have to start with Nvidia. The stock was up more than 8% after earnings, and Morningstar increased its fair value estimate on the stock by $30 to $310. Dave, unpack those results for us and tell us what led to that fair value increase.

Sekera: As far as the numbers go, very strong quarter. Second-quarter revenue came in at $96 billion. That’s up 106% year over year. Comparatively, their guidance was for $91 billion. So again, just huge growth numbers on a year-over-year basis as well as still easily beating the guidance that they provide to the marketplace. The guidance for this quarter is to grow again, going up to $108 billion, that’d be an 89% increase on a year-over-year basis. Coming into the quarter, the consensus was for $105 billion, so still underpromising and overproducing as far as that goes.

Now, the real focus this quarter wasn’t necessarily that quarterly guidance. It’s going to be this new fiscal 2028 revenue guidance for next year. So they’re looking for a 70% increase in revenue. That put their revenue at about $700 billion, according to our numbers. Our prior estimate was $570 billion, so still just huge numbers that this company is putting up, even on top of already really large numbers that they’ve had.

The only negative this quarter would probably be the reduction in their gross margin. They’re forecasting a decline for it to go from 75% to 74% this quarter, falling as low as 71.5% in the January quarter. For fiscal 2028, looking at 72.5%, but really that was just due to the sharp rise that we’ve seen in memory prices. It’s nothing that really concerns us from a valuation perspective.

So overall, I’d say when we think about the industry and Nvidia, the color that it’s giving right now, one thing that they highlighted is that their own forecast for the top five US hyperscaler customers, they’re looking for them to spend $1.3 trillion on AI capex next year. So, a big bump up from what they’re spending even this year.

And then lastly, one of the things we’ve talked about on the past couple of shows is the concern that we’ve seen in the marketplace just about the amount of commitments and the guarantees that the company has made. I talked to Brian Colello, he’s our equity analyst who covers the company. He’s still very comfortable with the disclosure and the rationale that Nvidia has been providing to the marketplace. When he looks at his own forecast for Nvidia, and we look at our forecast across our AI coverage, I’d say our team really just thinks that the industry is growing into those future purchase and lease obligations, so not a concern from their point of view.

Dziubinski: Nvidia is trading at a pretty big discount to fair value as it was heading into earnings. How’s the stock look valuation-wise today? Is it still a buy?

Sekera: It is still a buy. Trades at a 30% discount to our fair value, puts it well into 4-star territory.

Unpacking MRVL’s Results

Dziubinski: Well, Marvell Technology stock fell 10% after the company reported what seemed like pretty good earnings. Dave, what happened here? And tell us if Morningstar made any changes to its fair value estimate, which was $217 before earnings.

Sekera: Honestly, I’m not sure why the market puked all over Marvell stock like they did. I think this is just one of those cases where the good results just weren’t necessarily good enough for the marketplace. Revenue was up 37% year over year. They increased their fiscal 2028 guidance by 10%. And even more importantly, management provided a view toward even more and even stronger growth past fiscal 2028 than they’ve provided in the past.

When I think about our investment thesis, I think just a synopsis of it would be, one, we think the company has a very differentiated portfolio of silicon across all the different needs for data centers. We’re seeing broad-based demand across their custom chips, their interconnect, their switching products, and so forth. And most recently, the company announced an agreement with Google, which further adds more upside to their longer-term growth forecast.

So, in this case, while the stock was falling in the marketplace, we went the other way. We raised our fair value up to $300 per share from $270, and that was really just due to increasing our medium-term growth forecast based on the information provided from this earnings report. The stock is at almost a 30% discount to fair value, puts it well into that 4-star range.

With this one, I would say look forward to their investor day on Oct. 6. We think that could be a potential good catalyst for the stock. We’re looking for the company to provide some more financial targets through calendar 2030, looking for more details on the ramp-up with that business for Google chips. So with all of that coming and the stock trading at those low levels, this could be another one that has more room to run to the upside.

CRM: Still a Buy?

Dziubinski: And then lastly, Salesforce CRM shot up more than 20% after earnings last week. What drove that pop in the stock?

Sekera: I think it’s like what we talked about last week, and I think the market saw what we wanted to see. I mean, it was a solid quarter, and again, they just put in quarter after quarter of that solid top-line growth. In this case, revenue was up 11%, which is toward the upper end of the guidance that management’s provided in the past. But even more encouragingly, I think we’re seeing more and more signals regarding demand and adoption of their AI products. In fact, we’re looking for more revenue acceleration in the second half of the year.

So I think it’s just a matter of the market’s finally coming around to our view that AI is not going to totally displace the software sector. Software companies are using AI to become more economically value-added to their clients.

And so I think it’s really exemplified in this quote from our equity analyst, “Claudeforce, the newly announced anthropic partnership reinforces Salesforce strategy of serving as the governed data and workflow layer underneath multiple AI models and interfaces. Customers will be able to use Claude on top of Salesforce without replacing Salesforce as the system of record.”

Dziubinski: Salesforce was a pick of yours on the June 29 episode of The Morning Filter, and it’s up more than 50% since then, so you’re looking pretty good on this one, Dave. Morningstar assigns the stock a $280 fair value estimate. Is Salesforce stock still attractive?

Sekera: Well, first of all, I’m not looking good on this one, Susan. I would say our analyst and our analyst team are looking pretty good on this one.

Dziubinski: Fair enough.

Sekera: The stock’s only trading at a 7% discount, only has seven-tenths of a percent dividend yield. So it’s a 3-star-rated stock, but in my mind, it may not yet be time to start selling this one. It’s still below fair value, still very good strong upward momentum. I think a lot of investors out there probably underown software names. And if the company continues along the trajectory that it’s on, personally, I wouldn’t be surprised to see some fair value increases coming over the next couple of quarters. That’s just purely my own speculation at this point.

Having said all that, earnings-growth rate in our model, our five-year compound annual growth rate is 13%, so pretty strong, but the stock’s now trading at 18.5 times our 2026 earnings estimate. The stock price and the valuation are starting to get pretty full. It’s not nearly as cheap as it was, but again, this is one of those cases I think you maybe kind of just let the momentum continue to keep working for you for a while here. Let it go further into that overvalued territory before you start doing any profit-taking, but just my own opinion.

TTD: Throw in the Towel?

Dziubinski: On to our question of the week. As a reminder, if you have a question for Dave, you can send it to us via our email, which is themorningfilter@morningstar.com.

This week’s question comes from a longtime viewer, JC. JC wants an update on The Trade Desk TTD. Stock’s down 64% this year. Morningstar slashed its fair value estimate from a high of around $60 at the start of the year down to about $16 now. Is it time to throw in the towel on this one, Dave?

Sekera: Before we get to that, let’s just actually kind of review some of the background here. So this has been a sell recommendation a number of times over the past couple of years. In fact, this was one of the most overvalued stocks as compared to our valuation under our entire coverage as recently as December 2024.

And really, the reasoning why we had such a differentiated view from the marketplace, our analysts noted a couple of things. One, just some very high-profile fee disputes with major ad agencies Publicis, WPP, Omnicom; rising competition, they were losing market share; and this was one that we actually were concerned about how AI may disrupt or displace their business. Since December 2024, the stock has now dropped from, I think, of about $120 per share to now $13 and change.

I took a quick look at our model over the weekend just to see what we’re forecasting. Right now we’re looking for revenue, five-year compound annual growth rate, 3.7%. We’re looking for some operating margin expansion going up to 18.7% by the end of our forecast period, up from 13.2% this year. And to put that in context, it’s not back to its historical highs, but it’s definitely on the high end of the range. Over the past five years, it’s ranged as low as 7.2% up to 20.3%. There might be some more margin expansion potential there, but I think we’re already giving the company some pretty good credit as far as getting back to more normalized, well, actually high end of normalized operating region.

Earnings are expected to decline this year. We think that’s the low as far as earnings goes, so it’s going to average 12.5% growth thereafter, but yet the stock’s trading at 17.5 times this year’s earnings. Our stock, fair value, $16. I think it’s a matter of trying to understand what does a 3-star rating mean? I think a lot of times people get confused with what that means. So if it’s a 3-star-rated stock, as a long-term investor, I would say you should expect results that would be in line with the company’s cost of equity in the model if the company performs in line with our forecasts. Now, in this case, we assign the company Very High Uncertainty, and the cost of equity in our model is 10%.

As far as what to do with the stock today, of course, I can’t give personalized advice. I don’t know what the investor’s situation is. I don’t know how it fits in their portfolio, what they might have as far as gains and losses. But how I think about this type of situation overall, our whole goal here is to look for and invest in those stocks, so they’re trading at pretty significant margins of safety below fair value. When you are able to buy below fair value, we think that does a couple of things. One, it provides that cushion. So, if our investment thesis is wrong, things don’t pan out the way that we think, there should be less downside as the stock’s already trading below intrinsic valuation. And if you just have any market general selloff, in that case, these stocks should sell off less than the overall market.

So, in this case, I think this could be a pretty good opportunity to sell, or at least a portion of it, even though it is a 3-star-rated stock, which means you should generate 10% cost-of-equity-type returns. And in this case, you can use those capital losses to offset gains where you might have elsewhere.

I think one of the biggest questions we get from investors today is what to do with some of these stocks that they have hundreds or thousand percent type of gains, and they don’t want to have to pay taxes on them. So in this case, maybe sell a portion of it today, watch for any potential upward momentum. If you get that upward momentum, moves into 2-star territory, I think that would be then a great opportunity to exit at higher levels.

Dziubinski: All right. Well, it is time for the picks portion of our program, and today we’re talking about three stocks to buy and three stocks to sell in September. As Dave and I were saying before the show, we can’t really believe we’re talking about September already, but we are. Dave, how did you arrive at the buys and sells that we’re going to talk about?

Sekera: Well, I mean, generally, if you look at the results historically over a long enough time period, September historically is the weakest month of the year for the US market. Now, of course, past performance, not an indicator of future performance, yada, yada, yada, all those kind of disclaimers. I’m not necessarily looking for any big huge selloff this September, but we did want to position that if we did have any kind of selloff, we want to be in those sectors that historically have performed the best.

And so for buys, we screened for stocks; it’s really kind of the same screen I typically go for. Stocks that are four or five stars, have an economic moat, whether wide moat. Ideally, I prefer those stocks with Low or Medium Uncertainty, but certainly willing to buy High Uncertainty stocks if you have enough margin of safety.

Took a quick look through the charts on those stocks that came up after we went through that screen. And in this case, I just ended up picking a handful of those that I thought it looked like a pretty good market setup based on the charts, based on those characteristics, if the market were to have any kind of general pullback in September.

Buy: Consumer Defensive Stocks

Dziubinski: All right, so let’s start this week with your buys for September. Now, your first one is from the consumer defensive sector. So first, tell us why you like consumer defensive stocks in September.

Sekera: This is one where you have to differentiate between the consumer defensive stocks versus the consumer defensive sector overall. From a sector perspective, we think the sector is overvalued because of Walmart WMT and Costco COST, and we’ve talked ad nauseam about why we think those stocks are so overvalued and how it skews the sector valuation too high.

But in this case, when we look at a lot of the individual stocks, we think a lot of the stocks in that sector are undervalued. So, now in a September selloff, historically, the consumer defensive sector tends to do pretty well. Investors will rotate into those defensive sectors where they sell off less to the downside. That’s how I ended up coming up with the consumer defensive sector pick.

Dziubinski: Your stock pick in that sector is Mondelez MDLZ, which we’ve talked about on the podcast before. Why do you still like the stock?

Sekera: Among all the different food names which generally are undervalued, it’s still my top pick among the food names. It’s a 4-star-rated stock at a 19% discount, pretty healthy dividend yield at 3.3%. We rate the company with a Low Uncertainty and a wide economic moat.

I think the first time we made this one as a pick was on Oct. 27, 2025. We’ve re-recommended this stock a couple of times. I think we highlighted it in January of this year when the stock had slipped a little bit, but we still had a very positive view on the long-term trajectory for the company.

Fundamentally, Mondelez has been performing better than most of the food companies. If you took a look at last quarter, they had 2.2% organic sales growth. North America, that was 3.4% organic sales growth, which was a sequential improvement from the first quarter. Now, Europe, is still pretty weak. I’d like to see maybe Europe at least stabilize, if not necessarily turn around.

But when I think about Mondelez and why Mondelez is my top pick, its emerging-market exposure is still the basis for why I think it’s the best pick of the food names. Forty percent of the total sales, 7.4% sales growth in the second quarter. As a long-term investor, we think that’s where the most growth is going to come in the food sector globally over the next couple of years.

Took a quick look at our model, revenue, 3.3% five-year compound annual growth rate. We’re looking for continued margin expansion off of their lows more toward historical averages. After this year, we’re looking for 9.2% earnings growth from 2028 through 2030, trades at 20 times this year’s earnings, but that drops to 18 times next year’s earnings. So, still a very attractive name in our view.

Buy: Utilities Stocks

Dziubinski: All right. Now you also like utilities stocks in September, so walk through your rationale.

Sekera: Utilities stocks are just one of those classic defensive sector names: very stable earnings, high dividend yields. So, I think when people are looking for that risk-off trade, utilities is just a natural go-to for a lot of parts of the marketplace. And historically, the utilities sector has outperformed the S&P 500 generally in September.

Dziubinski: Your pick in the sector is Alliant Energy LNT, and actually Alliant has been one of your top dividend stock picks for 2026. And we talked about it a little bit in a bonus episode of the podcast in July. So if you’re a dividend investor and you missed that bonus episode, take a look for it. Dave, remind us why you like Alliant.

Sekera: The stock is currently a 4-star-rated stock, 12% discount, pretty healthy dividend yield, 3.2%. Like a lot of utilities, we rate it with a Low Uncertainty and a narrow economic moat. It was also a recommendation on the Jan. 12 episode of The Morning Filter. And I think the market is just giving you that second bite of the apple on this one. It went from $65 a share up to $78 because of rising interest rates over the past couple of weeks. It’s now fallen back to $68, which then puts it back into that 4-star territory after going up into 3-star territory.

And for those of you that might’ve missed some of the times we talked about it earlier, it’s a regulated entity. It’s a parent of two regulated utility companies, Interstate Power and Light, Wisconsin Power and Light. Generally, we’re forecasting our earnings growth to come in at the high end of management guidance, which is for 5% to 7% growth through 2027. We expect growth to accelerate thereafter. That’s based on the company’s updated four-year capital investment plan that’s up 24% from its prior plan. They are benefiting from data center construction, so we think that provides some additional growth as well.

Buy: Healthcare Stocks

Dziubinski: All right. And then, of course, you like healthcare stocks in September. And again, that’s another traditionally defensive sector, right?

Sekera: Healthcare, one, has just had some pretty good momentum here the past couple of months. I’m hoping that momentum carries through September as well. But historically it’s a defensive sector, and it’s outperformed when you have any kind of downturn either in the economic cycle or just any kind of general market selloff.

Dziubinski: And your pick in the healthcare sector is Baxter BAX. Why do you like it?

Sekera: Baxter’s a 4-star-rated stock, trades at a pretty healthy discount to intrinsic valuation. The margin of safety there is 35%. Now, they did cut their dividend, I think it was maybe a year ago, one cent per share. So not necessarily attractive from that point of view. We rate the company as a narrow economic moat based on switching costs and intangibles.

And fundamentally, and I think we talked about this on a recent episode, their second-quarter numbers are finally starting to look better. So both revenue and earnings in the second quarter came in much better than expected. Management increased their guidance. They gave an earnings range for 2026 of $1.95 to $2.15 a share. The stock at that midpoint is only trading at 12.5 times earnings. Overall, our analyst has noted that she sees early success relative to expectations as far as the new management team improving operating efficiencies.

And our model, I don’t know, seems relatively conservative. Five-year compound annual growth rate of revenue only 3.4%. We’re looking for operating margin expansion going up to 12.5% by 2030. That’d be up from the lows of 6.2% this year. So, that really only gets them back to historically normalized averages. Looks to me like the stock bottomed out earlier this year, getting pretty good momentum. We’re seeing higher lows. I think this one’s set up pretty well.

Avoid: Technology Stocks

Dziubinski: Dave, let’s pivot over to three stocks to sell in September, all of which are from sectors that have historically underperformed during the month. We’ll talk tech first. Why is this one to tread lightly in September?

Sekera: As you would expect if you have any kind of market selloff, the high-growth stocks, in particular tech, are the ones that usually sell off the furthest and the fastest to the downside. I think that’s why tech as a general sector would be one you probably want to tread lightly on. Having said that, we do still think there’s a number of individual AI names that we like, but certainly a sector that, if you had the market sell off, probably sells off most.

And then I’d also just note here that if we did have any kind of increase in interest rates, that’s certainly been on the radar. If the 10-year were to start hitting a five handle and go over 5%, my big concern with the tech sector is because it’s generally growth stocks, growth stocks have very long duration. The reason just because the free cash flow that really is the basis for the valuation is all further out into the future. If you start discounting that free cash flow at higher rates, that just naturally lowers the present value you’d be willing to pay for those stocks today.

Dziubinski: You have two stocks that you’re suggesting selling in September from the tech sector. Both look way overvalued, and we’ve talked about these both before as sells: Sandisk SNDK and Ciena CIEN. Remind us why they’re sells today.

Sekera: Just taking a look at the valuations of these two stocks. Sandisk is a 2-star-rated stock, trades at almost a 50% premium over fair value, and that’s already after hitting its highs and starting to roll over. It’s a company we rate with a Very High Uncertainty, no economic moat.

Sienna, similar story, 2-star-rated stock, 40% premium, Very High Uncertainty. We do rate it with a narrow economic moat, but in this case, when I look at the two companies, I still think they’re really just generally commodity-oriented tech hardware. At some point, supply’s going to end up catching up with the demand that we have.

A lot of these companies are already redesigning or redeploying a lot of their assets to increase supply for those products that have the highest margins and have the most demand out there. A lot of these companies are already building new capacity, building new facilities. In fact, our analyst team is forecasting that 2028 will be the peak as far as earnings for all of these tech commodity-type of companies.

In this case, the upside leverage that you’ve been experiencing out to the upside, at some point that leverage is going to work the exact opposite to the downside. Once you have enough supply, prices are going to fall, margins are going to contract. I think earnings drop like a rock, and then on top of that, you’ll have multiple contraction at the same point in time.

Avoid: Discretionary Stocks

Dziubinski: All right. And you’re also a little leery about consumer discretionary stocks in September. Why?

Sekera: It’s twofold. One, if you do have any general market selloff, this is going to be one that’s going to be falling to the downside faster than the broad market averages, but it’s also just because the consumer discretionary sector is going to be much more economically sensitive. So, I would expect that to underperform to the downside just because if you do get a negative wealth effect with the markets going down, I think you’d see a lot of these stocks get hit pretty hard.

Dziubinski: All right. And then your stock to sell here is Brinker EAT. Now, I don’t think we’ve talked about Brinker on the podcast before, or if we have, it’s been a really long time. Tell us about it and why it’s a sell.

Sekera: You’re right. I don’t think we have talked about Brinker in the past. And the reason that it’s coming up now is because the stock has had such a big run. It’s now trading at a 66% premium, puts it well into 1-star territory. We rate the company with a Medium Uncertainty and a narrow economic moat, that narrow economic moat really being based on the fixed-cost leverage that the company gets by being able to spread out costs across a very large restaurant chain. Now in this case, we think a Medium Uncertainty means we should be able to better model free cash flow further out into the future than we would a lot of other companies. So with that Medium Uncertainty, I don’t think a stock should trade that far above its fair value.

Now, given that we do already rate it with a narrow economic moat, that means we also incorporate in our model that the company will be able to generate excess returns on invested capital for at least the next 10 years before being competed away. So, when I think about the dynamics of our valuation, I think we’re already giving it a lot of benefit here in our model that we think the market is taking way too far.

I opened up our model over the weekend. We’re looking at a five-year compound annual growth rate of 4% for revenue. We’re looking for peak operating margins this year at 10.6%, fading to 9.9% by 2030. Just to put that in context, the historical average for this company was 6.5%. So they’re already operating at margins well above what they’ve modeled in the past. The restaurant business historically is just a low-margin business, a very tough business. It’s one that if we have any kind of economic downturn, I wouldn’t be surprised to see those types of margins evaporate pretty quickly.

We’re looking for earnings growth after this year of 7.3%, yet the stock trades at 21.5 times earnings. So, the market is pricing in significantly more growth, significantly more operating margin expansion than what we currently forecast.

Dziubinski: Well, thank you for your time this week, Dave. Viewers and listeners who’d like more information about any of the stocks Dave talked about today can visit Morningstar.com for more details.

Now, as a reminder, we won’t be airing a new episode of The Morning Filter next Monday due to the Labor Day holiday, but we hope you’ll join us on Monday, Sept. 14 for a new episode of The Morning Filter at 9 a.m. Eastern, 8 a.m. Central. In the meantime, please like this episode and subscribe. Have a great week.