The major indexes may be trading near record highs and valuations might be stretched, but industry analysts say dozens of quality stocks are priced for big upside in the next 12 months or so.
True, it's getting harder to spot bargains, what with the benchmark S&P 500 up by 33% on a price basis since its early April low. The "growthier" but riskier Nasdaq Composite gained nearly 50% since it bottomed in spring.
That has taken a lot of potential upside out of many of Wall Street's top S&P 500 stocks. But high hopes for third-quarter earnings season and rising estimates for corporate profits have the bulls on the move.
A weaker dollar is another tailwind, as it makes U.S. companies' goods and services cheaper overseas.
The fact that the Federal Reserve is expected to cut interest rates at least once more before the end of the year is also boosting stocks.
"Huge excitement over AI has been a big driver, but so has an incredibly resilient consumer, strong household and corporate balance sheets, inflation coming back to earth, a now dovish Fed, and record profits and profit margins," writes Ryan Detrick, chief market strategist at Carson Group. "The fourth year of a bull market tends to be quite strong, something we think could happen once again over the next 12 months."
The bottom line is that although markets tend to get a bit choppy around this time of year, the fundamental outlook for equities remains bright.
Analysts still spy big bargains
As long as a company's earnings prospects are rising faster than its share price, its stock can very much look like a bargain, and therefore a potential market beater. To get a sense of where to start digging for such finds, we screened the S&P 500 by implied upside to industry analysts' average price targets.
What we found: 30 stocks in the S&P 500 have implied upside of at least 30% over the next 12 months or so, according to data from S&P Global Market Intelligence.
But before we get to the S&P 500 stocks that could rally the most based on price targets, a caveat is in order.
Price targets are a blunt tool when it comes to sussing out cheap stocks. Committing capital based on a single data point is not an investment process.
It's also important to note that stocks with the most upside potential don't necessarily get consensus Buy recommendations from the very same analysts whose models spit out the target prices.
With that warning out of the way, if you're looking for widely traded stocks with the most upside potential, the names listed below aren't a bad place to start.
Company (Ticker) |
Price Target |
Upside to price target |
Consensus recommendation score |
Consensus recommendation |
|---|---|---|---|---|
Moderna (MRNA) |
$44.30 |
66% |
2.83 |
Hold |
DexCom (DXCM) |
$99.71 |
53% |
1.44 |
Strong Buy |
MGM Resorts (MGM) |
$47.42 |
50% |
1.91 |
Buy |
Fiserv (FI) |
$181.85 |
48% |
1.52 |
Buy |
LKQ (LKQ) |
$42.10 |
44% |
1.83 |
Buy |
Charter Communications (CHTR) |
$373.60 |
44% |
2.36 |
Buy |
News Corp. (NWSA) |
$37.52 |
44% |
1.67 |
Buy |
GoDaddy (GDDY) |
$189.00 |
43% |
2.06 |
Buy |
SLB (SLB) |
$45.91 |
42% |
1.48 |
Strong Buy |
EPAM Systems (EPAM) |
$208.20 |
42% |
1.69 |
Buy |
Coterra Energy (CTRA) |
$32.58 |
41% |
1.67 |
Buy |
CDW (CDW) |
$206.80 |
40% |
1.91 |
Buy |
Devon Energy (DVN) |
$45.83 |
39% |
1.77 |
Buy |
Align Technology (ALGN) |
$177.43 |
37% |
2.12 |
Buy |
International Flavors & Fragrances (IFF) |
$81.96 |
36% |
1.80 |
Buy |
Smurfit WestRock (SW) |
$56.59 |
36% |
1.41 |
Strong Buy |
The Trade Desk (TTD) |
$69.53 |
36% |
2.19 |
Buy |
Norwegian Cruise Line Holdings (NCLH) |
$31.21 |
35% |
1.74 |
Buy |
Targa Resources (TRGP) |
$205.42 |
35% |
1.32 |
Strong Buy |
Chipotle Mexican Grill (CMG) |
$54.73 |
35% |
1.58 |
Buy |
Weyerhaeuser (WY) |
$32.00 |
35% |
1.62 |
Buy |
CarMax (KMX) |
$58.86 |
35% |
2.53 |
Hold |
Salesforce (CRM) |
$334.38 |
34% |
1.60 |
Buy |
Stanley Black & Decker (SWK) |
$86.60 |
34% |
2.47 |
Buy |
Oneok (OKE) |
$93.32 |
34% |
2.05 |
Buy |
Adobe (ADBE) |
$454.18 |
34% |
2.03 |
Buy |
Tyler Technologies (TYL) |
$677.39 |
34% |
1.84 |
Buy |
Corpay (CPAY) |
$376.64 |
33% |
1.85 |
Buy |
Zoetis (ZTS) |
$189.15 |
33% |
1.83 |
Buy |
Comcast (CMCSA) |
$39.09 |
33% |
2.27 |
Buy |
Data as of October 14, courtesy of S&P Global Market Intelligence.
