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deep-dive:-20-stocks-that-investors-hate-but-wall-street-loves-as-the-s&p-500-nears-a-record-high
deep-dive:-20-stocks-that-investors-hate-but-wall-street-loves-as-the-s&p-500-nears-a-record-high

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Deep Dive: 20 stocks that investors hate but Wall Street loves as the S&P 500 nears a record high

Deep Dive

The rally for U.S. stocks from the March bottom has been remarkable, but most S&P 500 stocks are down for 2020

All is quiet outside the Las Vegas Sands’ Venetian resort. The company is among a group of large-cap U.S. stocks that are down at least 20% in 2020 but have buy ratings from more than 70% of Wall Street analysts.


Bloomberg

This has been an adventurous year for stocks, with almost a full rebound for the S&P 500 Index from the pandemic lows of late March. But the rally has not been as broad as you might think.

Below is a list of 20 stocks that are still down at least 20% for 2020, but also have majority “buy” or equivalent ratings among sell-side analysts.

The FAANG-led recovery

Ben Carlson said a lot with a tweet Wednesday morning:

This turnaround has been fueled by the tremendous increase in the money supply resulting from the timely action of the Federal Reserve and the federal government. Very low interest rates play their part. The yield on 10-year U.S. Treasury notes
BX:TMUBMUSD10Y
is 0.55%, while the dividend yield for the entire S&P 500 Index
US:SPX
is 1.70%, according to FactSet.

The S&P 500 was up 3.5% (with dividends reinvested) for 2020 through Aug. 4.

But the S&P 500 is weighted by market capitalization and therefore dominated by the FAANG stocks, to which we add Microsoft Corp.
US:MSFT
:

Company

Ticker

Total return – 2020

Share of S&P 500 market cap

Facebook, Inc. Class A

US:FB 22%

2.2%

Apple Inc.

US:AAPL 50%

6.9%

Amazon.com, Inc.

US:AMZN 70%

5.7%

Netflix Inc.

US:NFLX 58%

0.8%

Alphabet Inc. Class C

US:GOOG 10%

1.8%

Alphabet Inc. Class A

US:GOOGL 10%

1.6%

Microsoft Corp.

US:MSFT 36%

5.9%

 Source: FactSet

Together, the FAANG group plus Microsoft make up 25% of the S&P 500. Their outperformance this year has had a great effect on the entire index’s return.

Loved by Wall Street

Among the S&P 500, 292 stocks that were down for 2020 (with dividends reinvested) through Aug. 4. That may be a big surprise and it underscores the influence of the big tech names listed above.

Among those 292 stocks, 149 were down at least 20%.

Here are the 20 stocks among the S&P 500 down at least 20% this year that have the highest percentage “buy” or equivalent ratings among sell-side analysts polled by FactSet. The table is sorted by the percentage of “buy” ratings. (Scroll to the right to see all the data.):

Company

Ticker

Industry

Total return – 2020 through Aug. 4

Share ‘buy’ ratings

Closing price – Aug. 4

Cons. price target

Implied 12-month upside potential

Phillips 66

US:PSX Oil Refining/Marketing

-43%

95%

$61.85

$82.11

33%

Pioneer Natural Resources Co.

US:PXD Oil & Gas Production

-33%

92%

$99.52

$121.46

22%

Diamondback Energy Inc.

US:FANG Oil & Gas Production

-55%

91%

$41.07

$58.00

41%

AES Corp.

US:AES Electric Utilities

-20%

90%

$15.47

$17.75

15%

ConocoPhillips

US:COP Oil & Gas Production

-41%

89%

$37.64

$50.08

33%

Valero Energy Corp.

US:VLO Oil Refining/Marketing

-41%

86%

$53.02

$71.79

35%

Concho Resources Inc.

US:CXO Oil & Gas Production

-41%

86%

$51.47

$72.66

41%

Citigroup Inc.

US:C Financial Conglomerates

-35%

85%

$50.14

$69.38

38%

Las Vegas Sands Corp.

US:LVS Casinos/Gaming

-35%

84%

$43.73

$58.47

34%

General Motors Co.

US:GM Motor Vehicles

-29%

84%

$25.80

$38.44

49%

Baker Hughes Co. Class A

US:BKR Oilfield Services/Equipment

-36%

83%

$16.19

$20.56

27%

Hartford Financial Services Group Inc.

US:HIG Multi-Line Insurance

-32%

78%

$40.57

$51.56

27%

Citizens Financial Group Inc.

US:CFG Regional Banks

-38%

76%

$24.21

$29.28

21%

TechnipFMC PLC

US:FTI Oilfield Services/Equipment

-61%

75%

$8.26

$11.34

37%

Marathon Petroleum Corp.

US:MPC Oil Refining/Marketing

-36%

75%

$37.69

$47.79

27%

Ross Stores Inc.

US:ROST Apparel/Footwear Retail

-24%

74%

$88.38

$104.83

19%

Capital One Financial Corp.

US:COF Major Banks

-38%

74%

$63.24

$80.08

27%

Synchrony Financial

US:SYF Finance/Rental/Leasing

-35%

74%

$22.65

$28.36

25%

Raytheon Technologies Corp.

US:RTX Aerospace & Defense

-34%

74%

$57.51

$77.56

35%

Wynn Resorts Ltd.

US:WYNN Casinos/Gaming

-47%

72%

$72.75

$97.56

34%

 Source: FactSet

Don’t miss:This $20 billion bond fund produced outsized returns by capitalizing on market turmoil, and is set to do it again

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