Did you miss huge runs in the S&P 500's "moneymaker" stocks this year? Don't worry. Many are still way below where they were.
Eight stocks in the S&P 500 up 35% or more this year — including Warner Bros. Discovery, SVB Financial Group and also individual investor favorite Tesla — are still trading for discounts of 40% or more from their 52-week highs, says an Investor's Business Daily analysis of data from S&P Global Market Intelligence and MarketSmith.
Some see opportunity. "A common narrative on Wall Street so far this year is that equity prices are breaking out into a new and sustainable rally," said a Wells Fargo Investment Institute report cowritten by Chris Haverland, the bank's global equity strategist, who is more cautious on the S&P 500's surge this year.
The S&P 500's Turnaround Leaves Much Damage
The SP 500's 6.4% rally this year is impressive. But if you look further, you'll see just how deeply discounted stocks are vs. where they were.
The SPDR S&P 500 ETF Trust remains more than 12% below its 52-week high notched on March 29, 2022. And individual stocks have an even longer way to climb back. The average S&P 500 stock is up 6.6% this year. But it's also nearly 18% away from the 52-week high.
That's why savvy investors who know how to pick their spots realize there's plenty of time left to participate in the rally.
Big S&P 500 Winners Still Down Big
Take newly merged entertainment giant Warner Bros. Discovery. It's one of the top stocks in the S&P 500, jumping more than 51% to 14.37.
But even following such a massive run-up, shares of the home of Batman and The Discovery Channel are still nearly 54% below their high point of 31.12 notched on Feb. 10, 2022. Analysts think the shares are roughly 48% undervalued compared with where they will be in the next 12 months. But they're calling for them to rise to just 21.21, which is still nearly 32% less than their high.
Another example is SVB Financial, which surged more than 37% this year to 315.75, along with strength in the S&P 500 financial sector. But even after that rally, shares are still at 50% of the Feb. 16, 2022, high. And analysts aren't waiting for any miracles. They're calling for the stock to actually sink more than 7% in the next 12 months.
Tesla's 68% Run Leaves Plenty On The Table
You're not wrong to be impressed with the nearly 70% surge in Tesla's share price this year to 207.32. It's one of the top stocks in the S&P 500.
But it's also important to note that the rally is only tiny step out of the massive hole Tesla is in. Shares of Tesla are still down more than 46% from their 52-week high of 384.29 on April 5, 2022. And analysts don't see TSLA reaching those rarefied heights again anytime soon. Tesla shares are expected to fall nearly 7% in the next 12 months.
Even the most bullish analyst on Wall Street thinks Tesla will only trade for 320 a share in 12 months. That's still nearly 17% below Tesla's old high.
This year's stock rally is welcome and has repaired some damage. But don't assume the S&P 500 will race to old highs.
"The opportunity to position for an eventual early-cycle rebound should arrive later this year, but now is not yet that time," Wells Fargo said.
Big Rallies Can't Erase Losses
S&P 500 stocks up 30% or more this year are still down 40% from highs
| Company | Ticker | Year-to-date change | Change from high | Sector |
|---|---|---|---|---|
| Warner Bros. Discovery | 51.5% | -53.8% | Communication Services | |
| SVB Financial Group | 37.2 | -52.0 | Financials | |
| Carnival | 43.1 | -51.7 | Consumer Discretionary | |
| Tesla | 68.3 | -46.1 | Consumer Discretionary | |
| Expedia Group | 34.1 | -46.0 | Consumer Discretionary | |
| Paramount Global | 29.0 | -44.5 | Communication Services | |
| Align Technology | 52.3 | -41.8 | Health Care | |
| Caesars Entertainment | 28.7 | -40.4 | Consumer Discretionary |
Sources: IBD, S&P Global Market Intelligence
Follow Matt Krantz on Twitter @mattkrantz
