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It’s been a rough half of the year for the S&P 500 — with it slipping nearly 3%. But that’s not stopping analysts from calling for an amazing next 12 months.
Wall Street analysts are expecting monster rallies in the next 12 months in 10 S&P 500 stocks, including SolarEdge Technologies (SEDG), Insulet (PODD) and Dexcom (DXCM), says a new report from FactSet’s John Butters. All these stocks are seen rising 62% or more in just a year’s time.
And that’s pretty impressive, given the high hopes analysts have for the S&P 500 itself. Analysts think the key benchmark stock index will jump 19% in 12 months to 5152.11, Butters says. That’s nearly double the typical total return in a given year.
Analysts may be bullish on the S&P 500 for the upcoming year. But investors must endure some pain in the meantime.
Part of the trouble is fundamental. The third quarter is wrapping up, and it wasn’t a great period for corporate profit growth. Analysts think S&P 500 profit for the third quarter will fall 0.2%. If that profit drop happens, it would mark the fourth straight quarter of S&P 500 earnings drops, Butters says.
But hope springs eternal on Wall Street. Analysts think S&P 500 companies will post 12.2% profit growth in 2024. That’s actually up from the 11.9% profit growth for the year they were calling for in June, Butters says.
Some stocks, though, stand to gain much more than others.
If there’s a common theme shared by all analysts’ favorite S&P 500 stocks, it’s that most are lagging this year. Will they finally shake off the malaise?
Analysts think so. Eight of analysts’ favorite 10 S&P 500 stocks for the next 12 months are down in 2023 so far. That certainly is the case with SolarEdge, a seller of solar power equipment. Analysts think the company’s stock will surge nearly 114% in 12 months. And if they’re right that would be a larger increase than by any other S&P 500 stock in that time.
It’s not a complete leap of faith. Several alternative-energy plays have been the best S&P 500 stocks since the Federal Reserve started hiking rates last year. What’s more, SolarEdge’s profit is expected to rise more than 55% this year and 22% the next.
But so far, SolarEdge is being left out. Shares are down 52% so far this year.
Analysts are similarly bullish on shares of Insulet. Analysts think the share of the maker of insulin delivery products for diabetics will rise more than 77% this year. That’s despite shares dropping 46% this year so far. But again, there’s fundamental evidence behind the bullishness. Analysts expect a 28.9% jump in the company’s adjusted profit this year.
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Some analyst favorites aren’t just rebound opportunities.
Analysts like airline United Airlines (UAL) and think its shares are good for a nearly 7o% gain in 12 months. And that’s on top of a more than 14% rise so far this year. Additionally, MGM Resorts (MGM) shares are expected to gain an additional 62% following a 9.2% rise this year.
It goes without saying that analysts are by no means always right. But they do study S&P 500 stocks closer than most. If they’re so bullish, it might be worth a second look.
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10/21/2023 The Dow Jones fell sharply with the other major stock indexes ahead of a busy week of high-profile earnings reports…
10/21/2023 The Dow Jones fell sharply with the other major stock…
Rising interest rates can present a challenging climb for investors. (© Dave Cutler)
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