Part of investing success is a good defense. And that means steering clear of the worst stocks in the S&P 500 — which analysts are already predicting.
Analysts expect 10 S&P 500 stocks, including Seagate Technology, Robert Half and Intel, to be among the worst 10 performers in the next 12 months, says an Investor's Business Daily analysis of data from S&P Global Market Intelligence and MarketSmith.
All these stocks are seen dropping 8.2% or more in that period. And that would sting as analysts forecast the S&P 500 at large to enjoy a solid 10%-plus gain in 2024, says John Butters of FactSet.
Why worry about what could go wrong following a solid 20% gain in the S&P 500 this year? There's plenty of reason to be cautious going into 2024, says Zehrid Osmani, manager of Global Long Term Unconstrained Senior Portfolio at Martin Currie. "We forecast corporate earnings growth to remain pedestrian and weak in 2024, with the ongoing risk of earning downgrades due to optimistic forecasts."
Finding The S&P 500's Weaknesses
Analysts are calling for a pretty solid 2024 for the S&P 500. But there are some pockets where they see likely weakness.
The real estate sector remains a spot of concern for analysts, Butters says. At a sector level, it's not a disaster. Analysts still see the sector as a whole gaining 5.3% in 2024. But that's still just half the gain expected from the S&P 500.
But with estimates, there's plenty of room for disagreement. No real estate stocks show up on analysts' worst-10 stock lists for 2024 from S&P Global Market Intelligence. FactSet's list, though, compiled last week shows real estate firm Crown Castle as the ninth-worst expected S&P 500 stock in the next 12 months. Analysts polled by FactSet think the cell tower operator's shares will fall more than 10% next year.
Where Else Are Warning Signs?
Seagate Technology is the S&P 500 stock analysts polled by S&P Global Market Intelligence are the most bearish on for the next 12 months. They're calling on the shares of the computer storage firm to fall 16.5% in the next 12 months. If accurate, that decline would erase part of the stock's impressive 56% gain this year. Analysts' negativity appears to be a commentary of the firm's nosebleed valuation. The company is trading for 432-times its expected fiscal 2023 adjusted profit of 19 cents a share. On the plus side, though, profit is seen jumping nearly 90% in fiscal 2024 and another 1,086% in fiscal 2025.
And then there's Robert Half. It's the second-most S&P 500 stock that analysts polled by S&P Global Market Intelligence are extremely negative on. And it's one of the stocks analysts polled by FactSet are bearish on, too. Analysts are expecting shares of the recruiting firm to fall more than 14% in the next 12 months. If accurate, that decline would erase the stock's 13.6% gain this year. And it's not just blind negativity. The company's profit this year is seen falling nearly 36%. What's more, analysts think the company's profit will only recover by 1.8% in 2024.
Will analysts get their calls for 2024 right? Not necessarily. But the fact these S&P 500 stocks are so widely questioned is worth knowing.
Analysts Top S&P 500 Pans For Next 12 Months
| Company | Ticker | Year-to-date % ch. | Implied decline in next 12 months | Sector |
|---|---|---|---|---|
| Seagate Technology | 55.8% | -16.4% | Information Technology | |
| Robert Half | 13.6 | -14.6 | Industrials | |
| Intel | 68.5 | -13.8 | Information Technology | |
| Expeditors International of Washington | 15.8 | -12.5 | Industrials | |
| Southwest Airlines | -12.9 | -9.8 | Industrials | |
| Paramount Global | -3.8 | -9.4 | Communication Services | |
| International Business Machines | 16.1 | -8.9 | Information Technology | |
| Etsy | -29.3 | -8.4 | Consumer Discretionary | |
| Expedia Group | 69.3 | -8.2 | Consumer Discretionary | |
| Fair Isaac | 91.4 | -8.2 | Information Technology |
