Think you missed your chance to profit on the S&P 500's most valuable stocks? Good news: analysts say there's still upside for most of them — just not Tesla.
Analysts think 70% of the S&P 500's 10 most valuable stocks could still jump up to 11% from here, including Visa, Amazon.com and Johnson & Johnson, says an Investor's Business Daily analysis of data from S&P Global Market Intelligence and MarketSmith. This supports recent IBD research showing that a good first half for the S&P 500 and Nasdaq is usually followed up by a strong second half.
"After pulling in their horns in 2022, Wall Street analysts are turning more bullish again," said Nicholas Colas of DataTrek Research.
S&P 500 Top 10 Worth More Than $12.7 Trillion
Why pay so much attention to the top 10 largest stocks in the S&P 500? Because they're driving the index.
Just these 10 stocks are worth $12.7 trillion altogether. Collectively, they account for roughly a third of the S&P 500's total value. And that's been a good thing this year. These top 10 companies' stocks are up an average of 74% just this year.
And amazingly, analysts still think some of them are bargains. The screaming buy in analysts' eyes is digital payments company Visa. Analysts think shares of the stock will be worth 266.61 a share in a year's time, or 11.4% more than what they're worth now. That's an impressive run for a stock already up 11.4%, albeit lagging the S&P 500.
As far as tech stocks go, Amazon.com is the giant analysts still have high hopes for. Analysts think the online retailer will trade for 129.87 a share in 12 months, or 10% more than they're trading for now. What's remarkable is that shares are already up nearly 55% this year.
Don't think, though, analysts are in love with all the giants. That's not the case.
Analysts Caution on Three Mega-Caps
Analysts are sounding alarms on some of these S&P 500 behemoths. Apple, for instance, became the first S&P 500 company to exceed $3 trillion in market value. But now that the stock is up 47% this year to 190.95 apiece, analysts think it's gone too far. Apple's stock price is now 2.3% higher than what analysts think the company should be worth in 12 months.
It's a similar story with Meta Platforms and Tesla. Shares of those giants are up 144.3% and 127.2%, respectively this year. But in those cases, analysts think Meta is nearly 5% overvalued and Tesla a whopping 24% past what it should be worth in 12 months.
Despite these warnings, though, analysts still think many of the giant winning stocks on the year have plenty of room left. And that's telling as many analysts are choosing to be more cautious than they were in 2022.
"Analysts' recommendations are somewhat a lagging indicator, but after the drubbing most analysts took last year we suspect they are being somewhat more cautious as they upgrade stocks," Colas said.
S&P 500 Giants With Most Stock Upside
| Company | Ticker | Market value ($ trillions) | Upside Left |
|---|---|---|---|
| Visa | $0.5 | 11.4% | |
| Amazon.com | 1.3 | 10.0 | |
| Johnson & Johnson | 0.5 | 9.7 | |
| Alphabet | 1.5 | 8.8 | |
| Nvidia | 1.1 | 7.9 | |
| Berkshire Hathaway | 0.8 | 7.2 | |
| Microsoft | 2.5 | 1.8 | |
| Apple | 3.0 | -2.3 | |
| Meta Platforms | 0.8 | -4.8 | |
| Tesla | 0.9 | -23.9 |
Sources: S&P Global Market Intelligence, IBD
Follow Matt Krantz on Twitter @mattkrantz
