Following a 20% rally in the S&P 500 you might expect analysts to pull back a bit. But they're still pounding the table for clients to buy their favorite stocks.
Ten S&P 500 stocks, including NiSource, Lamb Weston and Amazon.com, win "buy" recommendations from the highest percentage of analysts in the index, says FactSet. Two of these stocks even have completely unanimous buy recommendations from the analysts following them.
That level of support makes these stocks very unusual. Analysts have 11,319 ratings on S&P 500 stocks. And of those, barely more than half, 54.9%, are buy recommendations, says John Butters of FactSet. In fact, 5% of the ratings are "sells."
So what are the types of stocks analysts are so positive on?
Analysts Pound The Table For S&P 500
Analysts are most bullish on two of the 11 S&P 500 sectors: energy and communication services. But that's not entirely reflected in the individual stocks with the highest percentage of buy ratings.
Specifically, 64% of the ratings on energy stocks are buys followed by 62% for communication services. And yet, among the 10 stocks with highest percentage of buy ratings none are in the communication services sector and only one is in energy.
When it comes to energy, equipment supplier Schlumberger is analysts' favorite. Of the stock's ratings, an impressive 96% are buys and 4% are holds. Not a single analyst rates the stock a sell, FactSet says. What's more, analysts think this stock will be trading for 32% more in 12 months' time than it is now, says data from S&P Global Market Intelligence. That's close to the 32.5% gain they're looking for from AI wunderkind Nvidia in that period. Interestingly, only 94% of Nvidia's stock analyst ratings are a "buy," slightly lower than Schlumberger's.
Analysts 100% Agree On Two S&P 500 Stocks
Seeing total agreement on two stocks in the S&P 500 is interesting. And it's happening.
Every single analyst rating NiSource's stock calls it a buy. The company, based in Merrillville, Ind., provides natural gas and electricity throughout Ohio, Virginia and Pennsylvania. The stock yields 3.7%, which might be part of the appeal (even though dividends are unpopular with investors now). The stock, suffering like many dividend payers, is down 3.6% this year. But dependability counts for something at a time where the future of interest rates is so uncertain. The company's earnings per share are seen rising every year until at least 2027.
The other S&P 500 stock with unanimous support is Lamb Weston, the king of frozen potatoes. The stock did so-so this year so far — rising 16.7% — not including the 1.1% dividend yield. Again it's a story of dependable growth. Like NiSource, Lamb Weston's profit per share is expected to rise every year from 2023 until at least 2028. And by a decent amount. Analysts foretell 26% profit growth in 2023 alone. And earnings per share is seen rising by a compound average annual 11.8% in the next five years.
Disagreement is certainly an important part of markets. But when you see so many in-the-know investors in agreement, it's worth noting.
Analysts Agree These Stocks Are A 'Buy'
Highest % of buy ratings in the S&P 500
| Company | Symbol | % buy ratings | Sector |
|---|---|---|---|
| NiSource | 100% | Utilities | |
| Lamb Weston | 100 | Consumer Staples | |
| Amazon.com | 98 | Consumer Discretionary | |
| Schlumberger | 96 | Energy | |
| Delta Air Lines | 96 | Industrials | |
| Nvidia | 94 | Information Technology | |
| Mondelez International | 92 | Consumer Staples | |
| Alexandria Real Estate Equities | 92 | Real Estate | |
| ServiceNow | 92 | Information Technology | |
| Axon Enterprise | 92 | Industrials |
