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, Insulet and Dexcom, 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.
S&P 500 Faces Near-Term Test
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.
Analysts Look For SolarEdge And Insulet To Redeem Themselves
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.
Get Timely Stock Ideas And Analysis With Free IBD Newsletters
Not All S&P 500 Favorite Are Down
Some analyst favorites aren't just rebound opportunities.
Analysts like airline United Airlines 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 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.
Analysts' Favorite S&P 500 Stocks For The Upcoming 12 Months
| Company | Symbol | Target price | Upside | Sector |
|---|---|---|---|---|
| SolarEdge Technologies | 290 | 114.2% | Information Technology | |
| Insulet | 280 | 79.3 | Health Care | |
| Dexcom | 150 | 71.0 | Health Care | |
| FMC | 117 | 71.0 | Materials | |
| United Airlines | 73 | 68.7 | Industrials | |
| Moderna | 167 | 66.6 | Health Care | |
| Alaska Air Group | 62 | 65.0 | Industrials | |
| ResMed | 225.37 | 64.6 | Health Care | |
| Etsy | 105 | 64.0 | Consumer Discretionary | |
| MGM Resorts | 59.5 | 62.1 | Consumer Discretionary |
