Embrace the September Slump with This AI-Powered Pick

Welcome to the September Slump.

Historically speaking, the month of September is pretty awful for stocks (and bonds, for that matter).

You can see the average monthly performance for the four main indexes below: the Dow Jones Industrial Average, S&P 500, Nasdaq Composite, and Russell 2000.

And true to its reputation, the S&P 500 fell more than 2% on Tuesday, kicking off a notoriously dour month of trading.

What Is the September Slump?

Some say traders are sad to return from summer vacations. Other say firms are taking profits ahead of end-of-the-year statements. Regardless of the motivation behind it, this seasonal trend should be top of mind for traders right now.

We’ve already seen a significant pullback in Nvidia (NVDA) post-earnings.

Today’s weaker-than-expected jobs report only fueled the volatility with 142,000 jobs added in August compared to the expected 165,000 (indicating fewer opportunities for job seekers as the labor market slows).

In times of uncertainty, it’s nice to have your research ready to roll to capitalize on any pullbacks.

That’s why we put together a “September Slump Watchlist” for our MegaTrends subscribers this week, featuring some of our highest-conviction names bolstered by strong consumer sentiment and macro trends.

Paid-up members can access the full list here.

But we couldn’t leave our Derby City Daily readers out of the fun.

September doesn’t need to be a bummer when you have LikeFolio in your corner.

So, let me give you a sneak peek at one of the names topping our September Slump Watchlist…

A Top Pick for the September Slump

DocuSign (DOCU) was one of those companies that benefitted tremendously during the pandemic. As work went digital, more and more companies turned to its e-signature platform, and revenue growth accelerated significantly. So did DOCU’s stock price, cresting $300 a share in 2021.

As the world went back to “business as usual,” that outsized growth slowed, and DOCU shares suffered (currently trading under $60 a share).

But macro trends are finally starting to tilt in DocuSign’s favor once again.

Mortgage loan applications rose 1.6% in the last week of August. Earlier in the month, refinancing rates surged 35% in a single week (+118% year over year) as interest rates hit the lowest level in over a year.

Mortgage agreements aren’t the only contracts DocuSign powers – its document management technology facilitates remote agreements across the board.

This company has been on a multi-year journey to transition from an e-signature platform to contract lifecycle management. And recent earnings have proved DocuSign can deliver business stabilization and improved profitability, driven by high retention rates for existing customers and strong international growth.

AI: DOCU’s Next Major Growth Catalyst

Some have questioned DocuSign’s artificial intelligence (AI) acquisitions, including its recent $165 million deal for the AI-powered contract management startup Lexion.

We see this as a potential ace up its sleeve.

DocuSign aims to integrate Lexion’s advanced AI capabilities into its own offerings, allowing businesses to automate workflows, extract critical information from contracts, and streamline contract reviews and negotiations.

Lexion’s technology, including tools like AI Contract Assist and a seamless Q&A experience, helps users quickly locate information in documents and suggests revisions based on AI-driven recommendations, which will significantly enhance the functionality of DocuSign’s Intelligent Agreement Management (IAM) platform.

The company’s tools support various integrations, such as with Microsoft (MSFT) Word, Slack, and Salesforce (CRM), to simplify contract management tasks and provide a more comprehensive understanding of agreement data.

With this acquisition, we believe DocuSign is positioned to offer even more robust AI-driven solutions that will help customers accelerate their business processes, reduce risk, and increase operational efficiency.

LikeFolio Insights Reveal DOCU Gaining Momentum

LikeFolio data suggests these AI-powered improvements are gaining momentum on Main Street. DocuSign web visits are up 6% year over year, a notable improvement from +3% YoY last quarter:

Better yet, we don’t see signs of major traction from competing platforms. Dropbox Sign (DBX), Adobe Sign (ADBE), and other e-signature peers pale in comparison to DocuSign when it comes to mention volume and web visits.

Bottom line: DOCU looks to be entering another major growth phase – this time, propelled by artificial intelligence. We’re betting this stock will power higher on its AI investments and improving market conditions. And any September pullbacks could present an attractive entry point for investors.

Until next time,