The 10 Best S&P 500 Stocks in October

The S&P 500 Index rose 8.3% in October, snapping back from its third-quarter lull from extreme global market volatility.

The index, along with other benchmarks, rallied in October as China and the European Central Bank committed to do whatever it takes to reinvigorate flagging growth. U.S. markets rallied earlier this week after the Federal Reserve held rates steady, though a December rate hike could still be in play.
The technology sector dominated stocks that had the best returns during the period, aided by strong earnings reports and continued consolidation in the semiconductor industry.
Here are the 10 best-performing S&P 500 stocks of the month, with ratings from TheStreet Ratings to let you know if you should buy or sell these stocks, despite strong performance.
TheStreet Ratings uses a quantitative approach to rating over 4,300 stocks to predict return potential for the next year. The model is both objective, using elements such as volatility of past operating revenues, financial strength, and company cash flows, and subjective, including expected equities market returns, future interest rates, implied industry outlook and forecasted company earnings.
Buying an S&P 500 stock that TheStreet Ratings rated a "buy" yielded a 16.56% return in 2014 beating the S&P 500 Total Return Index by 304 basis points. Buying a Russell 2000 stock that TheStreet Ratings rated a "buy" yielded a 9.5% return in 2014, beating the Russell 2000 index, including dividends reinvested, by 460 basis points last year.
 RIG data by YCharts 
10. Transocean Ltd. (RIG) Industry: Energy/Oil & Gas Drilling
October return: 22.52%

Transocean Ltd., together with its subsidiaries, provides offshore contract drilling services for oil and gas wells worldwide. The company primarily offers deepwater and harsh environment drilling services.

TheStreet Said: TheStreet Ratings team rates TRANSOCEAN LTD as a Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:
We rate TRANSOCEAN LTD (RIG) a SELL. This is driven by some concerns, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity, deteriorating net income, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.
Highlights from the analysis by TheStreet Ratings Team goes as follows:

• Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Energy Equipment & Services industry and the overall market, TRANSOCEAN LTD's return on equity significantly trails that of both the industry average and the S&P 500.
• Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 46.03%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 42.94% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
• The change in net income from the same quarter one year ago has exceeded that of the Energy Equipment & Services industry average, but is less than that of the S&P 500. The net income has significantly decreased by 41.7% when compared to the same quarter one year ago, falling from $587.00 million to $342.00 million.
• TRANSOCEAN LTD's earnings per share declined by 42.9% in the most recent quarter compared to the same quarter a year ago. The company has reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, TRANSOCEAN LTD swung to a loss, reporting -$5.25 versus $3.85 in the prior year. This year, the market expects an improvement in earnings ($3.35 versus -$5.25).
• Despite the weak revenue results, RIG has outperformed against the industry average of 31.2%. Since the same quarter one year prior, revenues fell by 19.1%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
• You can view the full analysis from the report here: RIG

 YHOO data by YCharts 
9. Yahoo! Inc. (YHOO) Industry: Technology/Internet Software & Services
October return: 23.21%
Yahoo! Inc. provides search and display advertising services on Yahoo properties and affiliate sites worldwide.
TheStreet Said: TheStreet Ratings team rates YAHOO INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
We rate YAHOO INC (YHOO) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and disappointing return on equity.
Highlights from the analysis by TheStreet Ratings Team goes as follows:

• Despite its growing revenue, the company underperformed as compared with the industry average of 10.2%. Since the same quarter one year prior, revenues slightly increased by 6.8%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
• Although YHOO's debt-to-equity ratio of 0.04 is very low, it is currently higher than that of the industry average. Along with this, the company maintains a quick ratio of 5.09, which clearly demonstrates the ability to cover short-term cash needs.
• The gross profit margin for YAHOO INC is rather high; currently it is at 67.91%. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, YHOO's net profit margin of 6.22% is significantly lower than the industry average.
• Net operating cash flow has significantly decreased to $137.28 million or 52.53% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
• The share price of YAHOO INC has not done very well: it is down 24.60% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. Looking ahead, other than the push or pull of the broad market, we do not see anything in the company's numbers that may help reverse the decline experienced over the past 12 months. Despite the past decline, the stock is still selling for more than most others in its industry.
• You can view the full analysis from the report here: YHOO

 URI data by YCharts 
8. United Rentals Inc. (URI) Industry: Industrials/Trading Companies & Distributors
October return: 24.66%
United Rentals, Inc., through its subsidiaries, operates as an equipment rental company. It operates in two segments, General Rentals; and Trench Safety, Power and HVAC (heating, ventilating and air conditioning), and Pump Solutions.
TheStreet Said: TheStreet Ratings team rates UNITED RENTALS INC as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:
We rate UNITED RENTALS INC (URI) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity, expanding profit margins, impressive record of earnings per share growth and increase in net income. We feel its strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.
Highlights from the analysis by TheStreet Ratings Team goes as follows:

• URI's revenue growth has slightly outpaced the industry average of 0.0%. Since the same quarter one year prior, revenues slightly increased by 0.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
• UNITED RENTALS INC has improved earnings per share by 22.3% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, UNITED RENTALS INC increased its bottom line by earning $5.18 versus $3.63 in the prior year. This year, the market expects an improvement in earnings ($7.98 versus $5.18).
• The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Trading Companies & Distributors industry average. The net income increased by 12.0% when compared to the same quarter one year prior, going from $192.00 million to $215.00 million.
• The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Trading Companies & Distributors industry and the overall market, UNITED RENTALS INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
• The gross profit margin for UNITED RENTALS INC is rather high; currently it is at 60.97%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 13.87% is above that of the industry average.
• You can view the full analysis from the report here: URI