3 Stocks to Sell and 3 Stocks to Buy for October 2026: Morningstar View

October opens with a clear message: narrow leadership, higher yields, and selective opportunity set the agenda. According to Morningstar research the broad United States market enters October at roughly a ten percent discount to composite fair value. That discount sits almost entirely inside seven giant artificial intelligence names while the rest of the market looks fairly priced. The implication favors hunting single-stock valuation discounts over making a blanket index bet this month.

September recap: narrow leadership and higher yields

September lived up to its poor seasonal reputation, yet the damage stayed contained rather than turning disorderly. According to MMBB quarterly review the ten year Treasury yield climbed sharply through September and settled well above five percent. The broad market gauge slipped only six tenths of a percent while value stocks fell four point nine percent. Growth finished nearly flat and core lost three percent, so the pain was concentrated and the style divergence was striking.

The split by market capitalization ran even wider as large caps gained seven tenths of a percent. Mid caps dropped four point seven percent and small caps lost one point eight percent overall. Only technology and communications finished higher, each up just over four point one percent on the month. Basic materials and financials fell more than seven percent while cyclicals and real estate dropped about six percent. Utilities lost five point seven percent, leaving breadth narrow and leadership concentrated in a handful of winners.

The bond market took a harder hit than equities as the core bond index declined two point six percent. The two year yield rose fifty four basis points to four point eight eight percent while the five year added sixty to five point zero nine. The ten year climbed fifty four basis points to five point two nine percent, breaking a closely watched threshold. Traders now eye five point two five as the line in the sand, with five point five and six percent as the next term premium checkpoints.

The recommended playbook is defensive without hiding: own dividend growers that beat inflation, fee-based inflation beneficiaries, and short-duration resilience. Avoiding cyclical consumer names and long-duration exposure looks like the cleanest way to protect capital through a choppy October. Even with mega-cap tech discounts on offer, the show argues for compounding through dividend growth rather than concentrating everything in seven stocks, keeping the quality filter tight.

Six names on the earnings radar

Constellation Brands opens the earnings watchlist with a one hundred seventy three dollar fair value and a nine point six forward earnings multiple. The model assumes average growth of three point seven percent between twenty twenty eight and twenty thirty one, with no dramatic catalyst assumed. The advice is patient: wait until after earnings before committing fresh capital to the brewer. In a soft consumer backdrop it still earns a modest slot as a defensive consumer holding for the portfolio.

Micron draws the harshest reassessment as fair value falls from eight hundred fifty dollars to seven hundred, leaving the stock overvalued. Revenue of thirty seven billion dollars in twenty twenty five is projected to reach one hundred eighty billion by twenty thirty one. Earnings per share could jump from under eight dollars to seventy dollars over the same span, which leaves no room for error. A steep cyclical downturn is expected from twenty twenty nine because memory remains a commoditized cyclical semiconductor business with brutal swings.

McCormick is framed as a merger story rather than a simple dip to buy blindly here. According to Investing market analysis the pullback in McCormick shares is being framed around the Unilever Foods combination plan. Combined fiscal twenty twenty five revenue of about twenty billion dollars could close around mid twenty twenty seven pending approvals. Regulators, shareholders, and leverage falling below three times within two years are the milestones to watch. Clean execution could return the spice maker to steady reliable compounder status over time.

Nike screens as fragile with headline sales down four percent and Greater China collapsing twenty two percent. According to Yahoo finance reporting Nike posted a four percent sales decline with Greater China down twenty two percent overall. Gross margin rose sixty basis points to forty two point eight percent and selling costs fell three percent, yet guidance stayed grim. Fiscal twenty twenty seven sales are guided to a high single digit decline with adjusted earnings of one point one five to one point three five dollars. The two point five billion dollar Pace savings plan is the key margin defense line to monitor.

Carnival produced one of the quarter's strongest surprises as ships sail full again. According to MarketBeat reporting Carnival delivered record bookings alongside strong deposit growth and improving fuel efficiency. Third quarter fiscal twenty twenty six brought record revenue near five point five billion dollars and net income near two billion, beating by one hundred million. Half of twenty twenty seven is already booked at record occupancy and pricing, with deposits up seven percent to seven point six billion. Around seven hundred fifty million dollars of fuel savings plus genuine pricing power anchor the bull case.

Clorox returns as a former pick updated for a boring-is-beautiful environment that suits the name. The twenty twenty three cyberattack, prebuy and destocking around planning software, plus resin and transport inflation, all damaged the business badly. Operating margin should rebound to fifteen percent in fiscal twenty twenty seven alongside a six point one percent dividend yield. Around seventy dollars, or nine point five times enterprise value and twelve times forward earnings, marks the next buy zone. Analyst Erin Lash coverage supports the boring winner thesis at the right entry price.

Three stocks to sell

SpaceX leads the sell list, driven more by financing structure than by narrative excitement. According to BrightTalk presentation archive the sixty two dollar fair value for SpaceX rests on deliberately conservative assumptions. Free cash flow stays negative through twenty twenty nine and twenty thirty at least, forcing reliance on debt and equity raises. Post-listing lockup supply, key-person risk, and doubts around Starship and Starlink add weight to the concern. A narrow economic moat cannot offset that combination at current prices today.

Robinhood earns a one-star sell because it trades at roughly double its fifty seven dollar fair value estimate. Five-year compound growth of eighteen percent in revenue and twenty one percent in earnings impresses, yet half the value sits in stage-three perpetuity assumptions. More than fifty percent of revenue comes from individual trading activity, and generous crypto assumptions add fragility to the model. The narrow moat looks debatable and the mid-cap growth label feels stretched here. At this price the stock resembles a bet on flawless execution and a lasting volatility premium dream.

Garmin is marked as a sell with a two-star rating at a twenty four percent premium to its two hundred thirty one dollar fair value. Five lineups across fitness, outdoors, auto, aviation, and marine look strong, but consumer sensitivity runs high through cycles. After averaging twenty one percent earnings growth over three years, an eight percent compound forecast at twenty nine times earnings looks generous. The narrow moat struggles to justify that pace going forward from here. Adding exposure before the premium fades means carrying unnecessary consumer cycle risk into weakness.

Three stocks to buy for October

S and P Global leads the buy list with four stars, a twenty seven percent discount, and a yield near one percent. Carrying medium uncertainty, the ratings and data franchise passes inflation to customers through pricing power and scale. Index and analytics revenue recurs reliably, keeping cash flow highly predictable across market cycles. Demand for data and benchmarks typically strengthens when market volatility rises and dispersion widens. That mix makes the name the basket's quality anchor and rewards patient buyers adding on weakness.

Intercontinental Exchange follows as the second buy with a seventeen percent discount, a one point four percent yield, and low uncertainty. Its wide moat rests on cost advantage, network effects, and intangible assets while margins run above thirty percent. The post-MarketAxess rally reflects confidence in trading volumes and recurring data revenue streams. A structure that benefits from volatility and inflation, paired with proprietary pricing data, compounds nicely over time. The business reads like a volatility-powered compounding machine suited to long holding periods and reinvested dividends.

Alliant Energy provides the income leg with a seventeen percent discount, four stars, and a three point four percent yield. Low uncertainty and a narrow moat from efficient scale support the IPL and WPL utility operations through cycles. Three gigawatts of contracted data-center demand plus fifty to sixty percent load growth into twenty thirty and twenty thirty one make growth visible. Fiscal twenty twenty six earnings guidance of three point three six to three point four six dollars targets the upper half. The second quarter result of sixty five cents versus sixty eight cents leaves the regulated growth thesis intact for holders.

The October plan reduces to six moves: trim three expensive and fragile names, then add three discounted quality franchises. September's narrow leadership and yields above five percent shrink the margin for error and reward selectivity over breadth. Leaning on tangible cash flows such as dividend growth, data monopolies, and regulated load expansion looks like the healthiest stance. The show argues for rebalancing with discounts and moats rather than fleeing in fear during volatility. Kept consistently, that discipline can turn October turbulence into durable risk-adjusted returns for investors.