(This is the first in a three-part series listing highly rated stocks that sell-side analysts expect to rise the most over the next 12 months. This article covers large-cap stocks. Part 2 covers mid-cap stocks and part 3 covers small-caps.)
What a difference a year makes.
At this time in 2018, investors were in the midst of a crumbling stock market on fears of an impending recession.
Fast-forward to Dec. 9, 2019, and the S&P 500 Index SPX, +0.29% was up 27.5% for this year, while the Dow Jones Industrial Average DJIA, +0.11% was up 22.5%. The estimated GDP growth rate for the third quarter was 2.1%, and the November employment figures were full of very good news.
With hourly wages continuing to rise at a faster rate than the economy is growing, and unemployment at its lowest rate (3.5%) in 50 years, Goldman Sachs recommended investors focus on companies with low labor costs relative to revenue.
Analysts’ favorite stocks among the S&P 500
Here are the 20 S&P 500 stocks covered by at least five sell-side analysts with 75% or more “buy” or equivalent ratings that have the highest 12-month upside potential implied by consensus price targets:
| Company | Ticker | Share ‘buy’ ratings | Share neutral ratings | Share ‘sell’ ratings | Closing price – Dec. 9 | Consensus price target | Implied 12-month upside potential | Total return – 2019 through Dec. 9 |
| TechnipFMC PLC | FTI, +1.26% | 78% | 19% | 3% | $18.85 | $28.73 | 52% | -1% |
| Diamondback Energy Inc. | FANG, +0.44% | 97% | 3% | 0% | $83.78 | $124.00 | 48% | -9% |
| Marathon Petroleum Corp. | MPC, -2.66% | 89% | 11% | 0% | $58.43 | $80.65 | 38% | 3% |
| Alexion Pharmaceuticals Inc. | ALXN, -1.53% | 83% | 17% | 0% | $112.48 | $151.10 | 34% | 16% |
| Pioneer Natural Resources Co. | PXD, +1.22% | 90% | 10% | 0% | $133.19 | $178.01 | 34% | 2% |
| EOG Resources Inc. | EOG, -0.23% | 86% | 14% | 0% | $74.51 | $98.97 | 33% | -14% |
| Concho Resources Inc. | CXO, +1.46% | 79% | 18% | 3% | $76.58 | $100.74 | 32% | -25% |
| Noble Energy Inc. | NBL, +1.10% | 83% | 17% | 0% | $21.81 | $28.45 | 30% | 19% |
| Baker Hughes Co. Class A | BKR, +1.52% | 86% | 14% | 0% | $22.25 | $28.82 | 30% | 7% |
| L3Harris Technologies Inc. | LHX, +0.77% | 95% | 5% | 0% | $193.62 | $246.61 | 27% | 46% |
| DuPont de Nemours Inc. | DD, +0.45% | 77% | 23% | 0% | $63.84 | $80.68 | 26% | -14% |
| NRG Energy Inc. | NRG, +1.41% | 80% | 10% | 10% | $38.56 | $48.22 | 25% | -2% |
| Amazon.com Inc. | AMZN, +0.55% | 96% | 4% | 0% | $1,749.51 | $2,178.08 | 24% | 16% |
| PayPal Holdings Inc. | PYPL, +1.82% | 81% | 17% | 2% | $103.78 | $127.67 | 23% | 23% |
| Lincoln National Corp. | LNC, -0.29% | 79% | 21% | 0% | $57.92 | $70.79 | 22% | 16% |
| salesforce.com Inc. | CRM, -0.01% | 93% | 7% | 0% | $157.48 | $190.31 | 21% | 15% |
| Quanta Services Inc. | PWR, +0.68% | 86% | 14% | 0% | $40.49 | $48.79 | 20% | 35% |
| Williams Companies Inc. | WMB, +1.11% | 79% | 21% | 0% | $22.90 | $27.59 | 20% | 8% |
| T-Mobile US Inc. | TMUS, -0.53% | 75% | 25% | 0% | $75.87 | $91.38 | 20% | 19% |
| IQVIA Holdings Inc. | IQV, -1.56% | 85% | 10% | 5% | $146.40 | $176.06 | 20% | 26% |
| Source: FactSet | ||||||||
You can click on the tickers for more about each company.
Only five of these stocks are down this year. However, 18 have underperformed the S&P 500 this year. Mark Hulbert looked at the Dow stocks and found that the worst stocks in a given year tend to rebound the following year.
The energy sector has been the weakest among the 11 sectors of the S&P 500 this year, returning only 7%. But analysts are sticking with their favorites and expect a better 2020.
The Dow 30
Here are the 30 components of the Dow Jones Industrial Average, sorted by percentage of “buy” or equivalent ratings among analysts polled by FactSet:
| Company | Ticker | Share ‘buy’ ratings | Share neutral ratings | Share ‘sell’ ratings | Closing price – Dec. 9 | Consensus price target | Implied 12-month upside potential | Total return – 2019 through Dec. 9 |
| Visa Inc. Class A | V, -0.14% | 92% | 5% | 3% | $182.92 | $205.18 | 12% | 40% |
| Microsoft Corp. | MSFT, +0.38% | 88% | 12% | 0% | $151.36 | $161.72 | 7% | 51% |
| UnitedHealth Group Inc. | UNH, +0.35% | 85% | 15% | 0% | $277.54 | $299.56 | 8% | 13% |
| Merck & Co. Inc. | MRK, -0.13% | 81% | 19% | 0% | $88.72 | $97.50 | 10% | 18% |
| Walt Disney Co. | DIS, +1.02% | 76% | 20% | 4% | $146.21 | $157.64 | 8% | 34% |
| United Technologies Corp. | UTX, +1.31% | 75% | 25% | 0% | $146.22 | $162.94 | 11% | 40% |
| Nike Inc. Class B | NKE, +0.18% | 73% | 24% | 3% | $96.63 | $104.66 | 8% | 32% |
| McDonald’s Corp. | MCD, -0.12% | 73% | 27% | 0% | $194.68 | $224.17 | 15% | 12% |
| Chevron Corp. | CVX, -1.41% | 72% | 28% | 0% | $117.30 | $136.09 | 16% | 12% |
| Walmart Inc. | WMT, -0.12% | 67% | 30% | 3% | $119.36 | $130.24 | 9% | 31% |
| Coca-Cola Co. | KO, +0.33% | 59% | 41% | 0% | $54.07 | $58.90 | 9% | 18% |
| Johnson & Johnson | JNJ, +0.71% | 58% | 42% | 0% | $140.50 | $150.47 | 7% | 12% |
| Home Depot Inc. | HD, -1.81% | 58% | 39% | 3% | $216.53 | $241.00 | 11% | 29% |
| Cisco Systems Inc. | CSCO, +0.41% | 57% | 43% | 0% | $43.90 | $52.43 | 19% | 4% |
| Apple Inc. | AAPL, +0.85% | 57% | 29% | 14% | $266.92 | $261.63 | -2% | 72% |
| Boeing Co. | BA, +0.60% | 48% | 52% | 0% | $351.21 | $393.57 | 12% | 11% |
| American Express Co. | AXP, -0.22% | 46% | 50% | 4% | $120.46 | $133.04 | 10% | 28% |
| Procter & Gamble Co. | PG, +0.31% | 45% | 46% | 9% | $124.87 | $128.79 | 3% | 40% |
| Caterpillar Inc. | CAT, +0.79% | 44% | 44% | 12% | $142.83 | $143.64 | 1% | 16% |
| Pfizer Inc. | PFE, -0.68% | 42% | 58% | 0% | $38.32 | $41.89 | 9% | -9% |
| Goldman Sachs Group Inc. | GS, -0.31% | 40% | 52% | 8% | $221.81 | $237.68 | 7% | 36% |
| JPMorgan Chase & Co. | JPM, -0.24% | 40% | 48% | 12% | $134.41 | $125.00 | -7% | 42% |
| Intel Corp. | INTC, +0.85% | 38% | 41% | 21% | $56.53 | $57.72 | 2% | 23% |
| Dow Inc. | DOW, -0.06% | 36% | 59% | 5% | $53.27 | $55.95 | 5% | N/A |
| Verizon Communications Inc. | VZ, -0.24% | 30% | 70% | 0% | $61.01 | $62.18 | 2% | 13% |
| International Business Machines Corp. | IBM, -0.11% | 29% | 62% | 9% | $133.92 | $149.17 | 11% | 23% |
| Exxon Mobil Corp. | XOM, -0.14% | 20% | 76% | 4% | $69.66 | $78.64 | 13% | 7% |
| Travelers Companies Inc. | TRV, -0.67% | 18% | 65% | 17% | $135.45 | $141.06 | 4% | 16% |
| 3M Co. | MMM, +0.64% | 5% | 79% | 16% | $169.83 | $173.38 | 2% | -8% |
| Walgreens Boots Alliance Inc. | WBA, -0.68% | 4% | 78% | 18% | $58.71 | $57.21 | -3% | -11% |
| Source: FactSet | ||||||||
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