Analysts rarely agree on much. So when they do — especially on the best S&P 500 stocks to buy — it's worth hearing them out so you can do your own research.
Ten S&P 500 stocks, including energy firm Targa Resources, industrial Axon Enterprise and Alexandria Real Estate Equities, are ranked "buys" by the highest percentage of analysts, says research from FactSet. Analysts are in complete agreement four of these stocks are buys. And the rest are close to unanimously supported, winning buy ratings from 93% or more of analysts. None of the stocks have sell ratings.
Seeing analysts in near 100% agreement on these stocks helps investors monitor Wall Street's thinking on S&P 500 stocks. Analysts are clearly looking for the next big winners in the S&P 500. And it's not just tech — somewhat of a surprise as the sector is a runaway leader this year.
"At the sector level, analysts are most optimistic on the energy, communications services, and information technology sectors, as these three sectors have the highest percentages of buy ratings," says John Butters of FactSet.
Buying The Next Big S&P 500 Winners
Just seven big-cap tech outperformers are driving the S&P 500's 13.3% gain this year. Analysts, though, see many opportunities outside of tech to make money in the S&P 500.
They rate 54.8% of the companies in the S&P 500 a buy, FactSet says. That's actually slightly higher than the 54.2% of the S&P 500 with buy ratings in the past five years on average.
More importantly, analysts buy ratings are moving higher. "The overall percentage of buy ratings has increased over the past four months (from 53.2%)," Butters said. And analysts upped their buy rating percentage on 10 of the 11 S&P 500 sectors. Consumer discretionary is the only sector to see the proportion of buy ratings decline.
Make no mistake, though. Analysts aren't giving up on tech. They still rate 60% of the sector's stocks a buy, 36% a hold and 4% a sell.
Analysts Agree: Buy These Stocks
What are the kinds of S&P 500 stocks analysts concur should be bought? One example is Targa Resources, a Houston-based oil transportation company. All 19 of the analysts actively covering the stock rate it a buy.
It's somewhat of a contrarian call. Shares are down nearly 5% this year as shares of S&P 500 energy stocks have lagged all year. But investors are missing an opportunity to get in ahead of a profit boom, analysts say. The company's adjusted profit per share is expected to rise more than 33% this year to $5.17 a share, says S&P Global Market Intelligence. And that's a big reason analysts think this stock will rally more than 40% in the next 12 months to 98.68 a share.
Analysts, though, aren't just looking for beaten-down stocks. They're also in complete agreement you should buy Axon Enterprise. And shares of the nonlethal Taser devices used in security are already up nearly 15% this year. Analysts think that's just a start the rally, and they're calling for Axon shares to rise another more than 25% in the next 12 months. And like Targa, analysts see big profit growth on the way. The company's bottom line is expected to rise more than 43% this year.
Of course, it's important to note analysts' buy ratings don't always pan out. And it's always important to do your own research. But when so many people who watch S&P 500 stocks this closely agree, it's telling you something.
Buy These S&P 500 Stocks, Analysts Say
Stocks with the highest percentage of buy ratings
| Company | Symbol | YTD | Buy | Sector |
|---|---|---|---|---|
| Targa Resources | -4.7% | 100% | Energy | |
| Axon Enterprise | 14.6% | 100% | Industrials | |
| Alexandria Real Estate Equities | -24.9% | 100% | Real Estate | |
| Bio-Rad Laboratories | -12.2% | 100% | Health Care | |
| Halliburton | -22.0% | 97% | Energy | |
| Delta Air Lines | 29.8% | 95% | Industrials | |
| VICI Properties | -4.9% | 95% | Real Estate | |
| Jacobs Solutions | -4.5% | 95% | Industrials | |
| Schlumberger | -13.1% | 94% | Energy | |
| Alaska Air Group | 14.7% | 93% | Industrials |
Sources: FactSet, IBD, S&P Global Market Intelligence
Follow Matt Krantz on Twitter @mattkrantz
