MW Nvidia and AMT stand out on this new list of Wall Street's 20 favorite stocks
By Philip van Doorn
Nvidia remains on the list, but its ranking has fallen as its share price has soared
Late in December, MarketWatch published a list of favorite large-cap stocks for 2024 among analysts working for brokerage firms. Now it is time for a refresh, in part because shares of Nvidia, which topped the December list, were up 54% this year through Friday.
Below is a new list of analysts' favorite stocks among the S&P 500 SPX, followed by a deeper dive into data for this group, to look ahead at projected revenue and earnings results through 2025 and to look back at returns on invested capital over the past five years.
Through Friday, the S&P 500 had returned 4.6% for 2024, although the U.S. benchmark index had pulled back 5.4% so far in April. Among the index components, 57% had positive returns this year through Friday, with dividends reinvested.
Along with the broad index's decline this month, Nvidia's stock $(NVDA)$ has dropped 16%.
Read: Nvidia's sharp stock selloff sparks this analyst's call to buy the dip
Here is how the 11 sectors of the S&P 500 have performed, along with forward price-to-earnings ratios and comparisons of those valuations with historic averages. The full index is at the bottom:
Sector 2024 return 2023 return 2022 return Return since end of 2021 Forward P/E Current P/E to 5-year average Current P/E to 10-year average Current P/E to 15-year average
Energy 14.5% -1% 66% 87% 12.7 119% 68% 78%
Communication Services 14.4% 56% -40% 7% 18.5 97% 98% 105%
Financials 7.8% 12% -11% 8% 14.9 100% 105% 111%
Industrials 6.1% 18% -5% 18% 20.7 98% 110% 120%
Consumer Staples 5.0% 1% -1% 5% 19.9 99% 102% 111%
Materials 4.3% 13% -12% 3% 20.3 116% 122% 130%
Utilities 4.2% -7% 2% -2% 16.0 88% 92% 100%
Information Technology 3.3% 58% -28% 17% 25.6 110% 133% 150%
Health Care 2.3% 2% -2% 2% 18.8 112% 114% 125%
Consumer Discretionary -2.3% 42% -37% -12% 24.3 78% 93% 107%
Real Estate -9.7% 12% -26% -25% 15.9 81% 84% 84%
S&P 500 4.6% 26% -18% 8% 19.8 102% 110% 121%
Source: FactSet
One theme among market bears is that the stocks are trading high relative to average price-to-earnings valuations. The forward price-to-earnings ratios are based on rolling weighted consensus earnings-per-share estimates among analysts polled by FactSet.
Current forward P/E ratios are compared with historic averages, and you can see on the table that six sectors of the S&P 500 are trading below their five-year average levels, with the consumer discretionary sector cheapest by this measure. Five of the sectors trade below their 10-year averages, and only two - energy and real estate - trade below their 15-year averages. Energy is cheapest when comparing current P/E with the 10-year and 15-year averages.
The new list of analysts' favorite stocks in the S&P 500
Analysts who work for brokerage firms (known as sell-side analysts) typically set 12-month price targets for stocks. For this screen, we began with the S&P 500 and narrowed the list to 497 companies covered by at least five analysts polled by FactSet. We narrowed further to the 80 with at least 75% buy or equivalent ratings. That is down from 92 when we prepared the previous list in December.
Among these 80 companies, here are the 20 with the most upside potential for the next 12 months implied by consensus price targets:
Company Ticker Share buy ratings Closing price Consensus price target Implied 12-month upside potential Forward P/E Zoetis Inc. Class A ZTS 89% $146.50 $223.99 53% 24.5 Carnival Corp. CCL 81% $14.12 $20.84 48% 12.0 Aptiv PLC APTV 80% $69.63 $100.91 45% 11.3 Insulet Corp. PODD 83% $166.25 $236.02 42% 50.9 Las Vegas Sands Corp. LVS 86% $45.46 $62.53 38% 15.1 Advanced Micro Devices Inc. AMD 80% $146.64 $201.42 37% 34.5 Lamb Weston Holdings Inc. LW 100% $81.00 $110.00 36% 13.1 Schlumberger Ltd. SLB 94% $49.85 $67.44 35% 13.4 Prologis Inc. PLD 75% $103.49 $139.30 35% 36.3 American Tower AMT 77% $171.30 $228.82 34% 23.5 News Corp Class A NWSA 78% $24.02 $31.88 33% 28.8 SBA Communications Corp. Class A SBAC 83% $196.06 $259.40 32% 37.6 Live Nation Entertainment Inc. LYV 86% $89.96 $118.38 32% 45.6 First Solar Inc. FSLR 86% $175.04 $229.63 31% 11.1 United Airlines Holdings Inc. UAL 77% $51.38 $67.04 30% 4.9 MGM Resorts International MGM 78% $42.42 $55.20 30% 16.7 Global Payments Inc. GPN 84% $122.10 $158.54 30% 10.1 Nvidia Corp. NVDA 88% $762.00 $989.01 30% 28.9 Bio-Techne Corp. TECH 86% $62.12 $80.40 29% 31.4 VICI Properties Inc VICI 88% $27.89 $35.74 28% 10.3 Source: FactSet
Nvidia remains on the list. However, the 12-month implied upside for the stock, based on the consensus price target, is "only" 30%, pushing it down to 18th on the new list.
Click on the tickers for more about each company.
Click here for Tomi Kilgore's detailed guide to the wealth of information available for free on the MarketWatch quote page.
Looking ahead - expected growth rates for revenue and profit
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April 22, 2024 12:20 ET (16:20 GMT)
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