25 Stocks to Avoid as October Trading Gets Underway

Subscribers to Chart of the Week received this commentary on Sunday, Oct. 4.

We are only two days into October, and there is already no shortage of volatility. Another surge in Treasury yields and crude prices saw stocks plummet Thursday, but by Friday, a cooldown in both alongside weaker-than-expected nonfarm payrolls data for September is boosting sentiment. As investors begin to look toward this month’s upcoming Federal Open Market Committee (FOMC) meeting and more inflation and jobs data, join us in taking a look at 25 stocks you should not bet on during this season of uncertainty.

Schaeffer’s Senior Quantitative Analyst Rocky White has pulled a list of 25 of the worst stocks trading on the S&P 500 index (SPX) in the month of October, going back 10 years. Two well-known names from very different industries landed near the top of the list.

Casual Mexican-inspired food chain Chipotle Mexican Grill (CMG) has been on a downward trajectory on the charts, sliding to a three-year low of $28.04 back in early June. Since hitting a record high of $68.55 in mid-2024, the shares have more than halved and now sport a roughly 20% year-over-year deficit. CMG is at $32.37 at last check.

CMG has been branded as the worst stock to own in October, with the equity finishing the month higher just twice in the last decade. Averaging a median deficit of 4.7%, a similar move would put CMG back at the round $30 threshold by the end of the month.

Used car retailer CarMax (KMX) is pulling back from its late-September pop that took shares within a chip-shot of their August annual high, last seen down 1.4% at $55.10. Today’s slide looks to be captured by the 120-day moving average, a previous line of support between January and March.

Also seeing a win rate of just 20%, KMX has given back an average of 3.5% during the past 10 Octobers, suggesting more losses could be in store. In fact, from the security’s current price point, a drop of this magnitude would put CarMax stock back near $53 -- at a multi-month low.

For both stocks, it looks like bears are slowly moving in, though plenty of room for continued pessimism remains. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and Nasdaq OMX PHLX (PHLX), CMG and KMX sport 10-day put/call volume ratios of 1.04 and 1.31, ranking in the 79th and 78th annual percentiles, respectively.

Both stocks have exceeded options traders' volatility expectations during the past year, too, per CMG and KMX’s respective Schaeffer's Volatility Scorecard (SVS) ratings of 72 and 78 out of 100. So, while we wait to find out how Treasury yields and crude prices fare for the remainder of fall, hopefully these names will at least give you some notice of where you may not to put your hard-earned cash.