With just a few months left in 2023, investors need to identify solid ideas for 2024. Well-liked companies with improving outlooks are a solid, and relatively simple, place to start.
To identify those types of companies, Barron’s looked for the most popular stocks in the
S&P 500
based on Wall Street ratings that also have rising 2024 earnings estimates.
It’s a simple idea screen. Analysts, who are charged with knowing their coverage universe better than the average investor, feel good about these stocks. What’s more, the outlook is improving.
The 15 stocks with the highest Buy-rating ratios, which is the total number of Buy ratings divided by the total number of ratings, with earnings estimate momentum are:
Alexandria Real Estate Equities
(ticker: ARE),
Delta Air Lines
(DAL),
Amazon.com
(AMZN), construction-services firm
Jacobs Solutions
(J),
Nvidia
(NVDA), index provider
S&P Global
(SPGI), security-equipment provider
Axon Enterprise
(AXON), Casino real-estate investor
Vici Properties
(VICI), software firm
ServiceNow
(NOW), T-Mobile US (TMUS), Google parent
Alphabet
(GOOGL), diabetes-monitoring firm
DexCom
(DXCM), network-security firm
Palo Alto Networks
(PANW), Facebook parent
Meta
Platforms (META), and card firm
Visa
(V).
| Company / Ticker | Market Cap ($ bil) | Recent Price | PE Ratio (NTM) | Buy-Rating Ratio | 1-Year Total Return |
|---|---|---|---|---|---|
| Alexandria / ARE | $19.54 | $112.66 | 32.3 | 100% | -24% |
| Delta / DAL | 26.3 | 40.84 | 5.4 | 96 | 27 |
| Amazon / AMZN | 1479.7 | 143.10 | 37.2 | 95 | 6 |
| Jacobs / J | 16.5 | 131.36 | 16.0 | 95 | 7 |
| Nvidia / NVDA | 1118.1 | 451.78 | 30.4 | 95 | 226 |
| S&P Global / SPGI | 123.8 | 389.36 | 29.0 | 92 | 7 |
| Axon / AXON | 15.9 | 213.19 | 62.3 | 92 | 75 |
| Vici / VICI | 31.7 | 31.32 | 12.2 | 91 | -2 |
| ServiceNow / NOW | 123.6 | 605.94 | 55.4 | 90 | 33 |
| T-Mobile / TMUS | 165.0 | 140.26 | 16.0 | 89 | -5 |
| Alphabet / GOOGL | 1733.4 | 136.92 | 21.0 | 87 | 26 |
| Dexcom / DXCM | 41.8 | 107.29 | 66.5 | 87 | 14 |
| Palo Alto / PANW | 78.3 | 253.14 | 47.7 | 87 | 36 |
| Meta / META | 792.9 | 307.56 | 19.1 | 87 | 84 |
| Visa / V | 516.6 | 247.22 | 26.1 | 87 | 24 |
| S&P 500 | 38803.0 | 4488.60 | 18.9 | 55% | 7 |
Note: 1-year total return is equal weighted.
Source: Bloomberg.
The average Buy-rating ratio for the 15 stocks is about 91%. The average Buy-rating ratio for stocks in the S&P 500 is about 55%. The average return over the past 12 months is about 36%. The average stock in the S&P 500, not adjusting for market cap, is about 8%.
Estimated 2024 earnings are up an average of 4% over the past three months. Estimates for the average stock in the S&P 500 are up about 2%.
The 15 best-loved stocks from a year ago had a good 12 months, returning an average of about 22%, easily outpacing the market. The hit rate was better, too. Only three of 15, or 20% of the stocks, posted a negative return. About 42% of the stocks in the S&P 500 have suffered a negative return over the past 12 months.
There are some holdovers from the year-ago list: Alexandria,
Amazon,
Axon, ServiceNow, Alphabet, Jacobs, Dexcom, and Visa. They remain well-liked. The average return for those seven over the past year is about 20%
It seems Wall Street has done an OK job recently of picking winners. Rising estimates do seem to help stocks too.
Only 25% of the stocks with 2024 earnings estimates up over the past three months have a negative return over the past 12 months, compared with 42% for the overall index. The average return for stocks with rising estimates over the past 12 months is about 18%, also better than the 8% comparable return for the average stock in the S&P 500.
Sometimes it’s easiest to go with what’s working. That means sticking with Wall Street’s best ideas headed into a new year.
As always, a screen is only a starting point for investing. After narrowing the list of possible investments, the real work begins of researching companies, their strategies, competitive positions, industries, and management teams.
Write to Al Root at [email protected]
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