The "Magnificent Seven" stocks in the S&P 500 are about to get a run for their money, analysts say. But will investors figure it out in time?
Analysts say seven S&P 500 stocks, including SolarEdge Technologies, Warner Bros. Discovery and Etsy, will jump an average of 68.1% in 12 months, says an Investor's Business Daily analysis of data from S&P Global Market Intelligence and MarketSmith. That's the highest expected gain from any seven stocks in the S&P 500.
And it also blows away the average 15% gain analysts are calling for from the so-called Magnificent Seven stocks that drove a bulk of gains this year. But some of those lost steam in September as other sectors turn on the jets.
Would You Like To Make An Extra $5,298 On Your $10,000?
Straying from the Magnificent Seven could pay off handsomely if analysts are right.
If analysts' favorite seven stocks gain 68% in a year as analysts predict, that would turn a $10,000 investment spread evenly across the seven stocks into $16,808.
That's a big improvement from the $11,510 you'd have if you invested the same $10,000 into the Magnificent Seven stocks. The Magnificent Seven are Nvidia, Meta Platforms, Amazon.com, Microsoft, Apple, Alphabet and Tesla.
But which S&P 500 stocks are analysts' favorites now?
SolarEdge Good For A Double?
Analysts are all but pounding the table for SolarEdge, a maker of gear used in solar installations. They're calling for the stock to hit 294 a share in 12 months. If that's correct it would mark more than 103% upside.
That's much more upside than analysts see coming from any of the Magnificent Seven stocks. It's even more than the 40.6% gain analysts expect from Nvidia in a year's time, and that's the highest among the Magnificent Seven.
It's important to note analysts' target has been too high all year. Shares of SolarEdge are down nearly 50% this year. But it's not just a dead cat bounce play, either. Analysts think the company's adjusted profit will jump 55.5% this year and another 23% in 2024.
Analysts' Other 'Magnificent' Picks
Wall Street remains bullish on the still disjoined entertainment giant, Warner Bros. Discovery. Analysts think the stock will hit 20.11 in 12 months, which would be more than 71% upside.
This is a case of a stock analysts think will keep working. It's up 22% this year already, topping the roughly 18% gain by the S&P 500. Again, there's fundamental power behind analysts' prediction. Warner Bros. Discovery is expected to return to profitability this year, posting net income of $3.7 billion on an adjusted basis or 89 cents a share.
And next year, the company is seen hitting GAAP profitability. And analysts think adjusted profit will rise more than 50% to $1.34 a share.
Analysts Aren't Always Right
It's important to note that analysts' forecasts aren't always right, and are very often wrong. All but one of analysts' favorite stocks for the coming year are down this year so far.
Additionally, some of their top picks face huge hurdles. Analysts think General Motors stock will rally more than 53% in a year's time, even though its workforce is prepared to strike. And that's not even to include its poor showing in the EV market so far. GM's adjusted profit is expected to fall nearly 10% in 2024.
But one take-away is clear. Be careful about ignoring all S&P 500 stocks other than the Magnificent Seven. You might miss some bigger gains.
S&P 500 Stocks Better Than The Magnificent Seven?
Analysts' top picks for upside in 12 months
| Company | Ticker | Upside to analysts' target |
|---|---|---|
| SolarEdge Technologies | 103.3% | |
| Warner Bros. Discovery | 71.4 | |
| Etsy | 63.0 | |
| Alaska Air Group | 60.8 | |
| Insulet | 62.9 | |
| Moderna | 61.7 | |
| General Motors | 53.5 | |
| Average | 68.1% | |
| Magnificent Seven | ||
| Nvidia | 40.6% | |
| Meta Platforms | 16.9 | |
| Amazon.com | 16.6 | |
| Microsoft | 15.0 | |
| Apple | 14.3 | |
| Alphabet | 9.0 | |
| Tesla | -6.8 | |
| Average of Magnificent 7 | 15.1% |
Source: S&P Global Market Intelligence, IBD
Follow Matt Krantz on Twitter (X) @mattkrantz
An earlier version of the story listed the wrong price target for SolarEdge. But the percentage changes the story is based on and in the chart were correct.
