Not sure which S&P 500 stocks to buy as the market's direction changes? Analysts don't seem to have that problem.
Analysts are pounding the table for 10 stocks in the S&P 500 they're most optimistic about, including Alexandria Real Estate, Lamb Weston and Delta Air Lines, says FactSet. All of these stocks are rated a "buy" by at least 93% and up to 100% of analysts who follow them.
What do they like?
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S&P 500 Analysts Turn More Bullish
You might think analysts would retrench as the S&P 500 is down 3.1% since August. But the opposite is actually the case.
More than 54.4% of all analysts 11,062 ratings on S&P 500 stocks are buys, says John Butters of FactSet. That's slightly higher than the 54.3% of ratings that were buys in the past five years on average. And the percent of buy ratings is up slightly, from 54% to 54.4%, from the end of August.
Analysts are especially bullish on the S&P 500 energy sector. More than 64% of the ratings of stocks in this sector are buys. That's higher than the 45% buy ratings on stocks in the consumer staples sector, which is the No. 2 highest.
Bullishness goes beyond ratings. Analysts now think S&P 500 earnings will come in 0.2% higher in the third quarter, Butters says. That's up from the 0% growth expected on June 30. This is the first time analysts bumped up earnings estimates since the fourth quarter of 2021.
Analysts' Top Buys: Alexandria Real Estate And Lamb Weston
Those who follow Alexandria Real Estate and Lamb Weston don't have any doubts these stocks are a buy. Every single analyst covering both stocks rate them a buy.
Alexandria, based in Pasadena, Calif., owns and rents office space used for life sciences. It's been a disruptive year for the company. Investors pushed the stock down more than 22% this year. Many worry companies that normally rent lab space are still trying to figure out the role of remote work. And Alexandria's earnings are likely to dip nearly 16% this year.
But long-term, the company is making the pitch that lab work must still be primarily done in physical labs and with teams. "This is the nature of life science companies research workflows, critical aspects of which clearly cannot be performed from home," Jenna Foger, the company's vice president said in the last call with investors.
Analysts agree. They're calling for the company's profit per share to rise nearly 43% in 2024.
Lamb Weston is a play on food. Investors already sent shares of the company up 11.6% this year. Lamb Weston is a giant in a niche market: frozen potatoes. Rising food prices are a lift. The company's profit in fiscal 2024 is seen rising 12%. That in-line with the S&P 500's expected 12% profit growth in calendar 2024, FactSet says.
Energy Is Where It's At With Analysts
Stocks in the S&P 500 energy sector are the only ones running higher in the second half so far. And that's not missed by analysts.
Three of the 10 stocks they think are the biggest buys are in the energy sector. That includes Targa Resources, Schlumberger and Halliburton. Soaring oil prices are lifting to the entire sector's bottom line — and stock prices.
And for analysts, it's time to buy.
Analysts Top S&P 500 Stock Buys
| Company | Symbol | YTD % ch. | % buy ratings | Sector |
|---|---|---|---|---|
| Alexandria Real Estate Equities | -22.1% | 100% | Real Estate | |
| Lamb Weston Holdings | 11.6% | 100% | Consumer Staples | |
| Delta Air Lines | 21.1% | 95% | Industrials | |
| Targa Resources | 14.8% | 95% | Energy | |
| Jacobs Solutions | 10.6% | 95% | Industrials | |
| Amazon.com | 67.5% | 94% | Consumer Discretionary | |
| Nvidia | 200.5% | 94% | Information Technology | |
| Schlumberger | 12.9% | 94% | Energy | |
| Halliburton | 7.2% | 93% | Energy | |
| T-Mobile US | 1.3% | 93% | Communication Services |
