Analysts have the typical hopes for the S&P 500 in the next 12 months. But they're especially bullish on a small handful of stocks.
Ten stocks in the S&P 500, including biotech giant Moderna, Enphase Energy and Warner Bros. Discovery, are expected to rise more than 42% in the next 12 months, says FactSet. If these hopes pan out, that gain would make you more than 30% richer than simply owning the S&P 500 like many other investors. Analysts think the S&P 500 will rise just 9% in the next 12 months, says FactSet.
Picking S&P 500 stocks strong enough to beat the market is proving more difficult. The S&P 500 jumped 15% just this year so far — which in itself is already 50% better than the market usually does in an entire year.
And trying to outdo such a fast-rising S&P 500 is no small ask with profits skidding an estimated 7.2% in the soon-to-be-reported second quarter. "If 7.2% is the actual decline for the quarter, it will mark the largest earnings decline reported by the index since (the second quarter) of 2020," says John Butters of FactSet.
Picking S&P 500 Winners From Winners
Two of the S&P 500 stocks analysts think could rise the most in the next 12 months are already up. Warner Bros. Discovery is the best example.
The fragmented media conglomerate trying to stitch itself together is one of analysts' favorite calls for the next 12 month. Analysts' 12-month price target on the stock is roughly 50% higher than where the stock is trading now. That's an impressive amount of bullishness on a stock already up 37% this year.
Investors are all but betting on the company's return to profitability. Last year, it lost $1.67 a share. But this year, analysts think the company will make 71 cents a share, followed up with 59% growth next year. Casino Caesars Entertainment is the other S&P 500 stock up this year that analysts have high hopes for.
With that said, most of the S&P 500 stocks analysts are most bullish on are down this year.
Time For A Bounce?
Analysts are more bullish on vaccine maker Moderna than any other S&P 500 stock. Analysts think there's more than 60% upside in the shares' price in the next 12 months. That's dramatically better than what they expect the S&P 500 to do.
Shares, though, are down more than 30% this year. Why/ The company is suffering from somewhat of a post-Covid hangover. It became a household name during the pandemic as it was one of the first out with an effective vaccine. But with the lack of a similar global blockbuster, the company is seen losing $2.28 a share in 2023 and another $3.89 a share in 2024. But after that, losses are forecast to shrink in 2025 and the company to turn profitable in 2027. Of course, another blockbuster surprise wouldn't hurt.
Another example is Enphase Energy, a leader in making gear needed for solar power. Shares of the company are down 33.5% this year so far. Even so, analysts think it's good for more than 40% upside in 12 months, analysts say. Seems like analysts' conviction is driven by fundamentals in this case. The company's profit is expected to rise nearly 20% in 2023 and by another 33% in 2024.
So if you're just investing in the S&P 500, don't expect much of a surprise. But if analysts are right, you can still find explosive gains.
Analysts' Top 12-Month Picks
| Company | Symbol | Year-to-date % ch. | Sector | Upside to analysts' target* |
|---|---|---|---|---|
| Moderna | -31.7% | Health Care | 69.1% | |
| Enphase Energy | -33.5% | Information Technology | 55.7 | |
| Warner Bros. Discovery | 36.9% | Communication Services | 50 | |
| Caesars Entertainment | 21.5% | Consumer Discretionary | 47.9 | |
| SolarEdge Technologies | -6.2% | Information Technology | 47 | |
| Halliburton | -8.3% | Energy | 46.9 | |
| APA | -24.9% | Energy | 45.6 | |
| Etsy | -28.5% | Consumer Discretionary | 44.7 | |
| Bio-Rad Laboratories | -7.5% | Health Care | 43.8 | |
| AES | -26.8% | Utilities | 42.2 |
Sources: FactSet, S&P Global Market Intelligence, IBD, * - as of July 7
Follow Matt Krantz on Twitter @mattkrantz
