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Deep Dive: Top stock picks for 2020: The best of the biggest

(This is the first in a three-part series listing highly rated stocks that sell-side analysts expect to rise the most over the next 12 months. This article covers large-cap stocks. Part 2 covers mid-cap stocks and part 3 covers small-caps.)

What a difference a year makes.

At this time in 2018, investors were in the midst of a crumbling stock market on fears of an impending recession.

Fast-forward to Dec. 9, 2019, and the S&P 500 Index SPX, -0.32% was up 27.5% for this year, while the Dow Jones Industrial Average DJIA, -0.29% was up 22.5%. The estimated GDP growth rate for the third quarter was 2.1%, and the November employment figures were full of very good news.

With hourly wages continuing to rise at a faster rate than the economy is growing, and unemployment at its lowest rate (3.5%) in 50 years, Goldman Sachs recommended investors focus on companies with low labor costs relative to revenue.

Analysts’ favorite stocks among the S&P 500

Here are the 20 S&P 500 stocks covered by at least five sell-side analysts with 75% or more “buy” or equivalent ratings that have the highest 12-month upside potential implied by consensus price targets:

Company Ticker Share ‘buy’ ratings Share neutral ratings Share ‘sell’ ratings Closing price – Dec. 9 Consensus price target Implied 12-month upside potential Total return – 2019 through Dec. 9
TechnipFMC PLC FTI, +0.83% 78% 19% 3% $18.85 $28.73 52% -1%
Diamondback Energy Inc. FANG, -0.75% 97% 3% 0% $83.78 $124.00 48% -9%
Marathon Petroleum Corp. MPC, +0.24% 89% 11% 0% $58.43 $80.65 38% 3%
Alexion Pharmaceuticals Inc. ALXN, -1.92% 83% 17% 0% $112.48 $151.10 34% 16%
Pioneer Natural Resources Co. PXD, +0.07% 90% 10% 0% $133.19 $178.01 34% 2%
EOG Resources Inc. EOG, -1.00% 86% 14% 0% $74.51 $98.97 33% -14%
Concho Resources Inc. CXO, -0.89% 79% 18% 3% $76.58 $100.74 32% -25%
Noble Energy Inc. NBL, -1.66% 83% 17% 0% $21.81 $28.45 30% 19%
Baker Hughes Co. Class A BKR, +0.00% 86% 14% 0% $22.25 $28.82 30% 7%
L3Harris Technologies Inc. LHX, +0.38% 95% 5% 0% $193.62 $246.61 27% 46%
DuPont de Nemours Inc. DD, -1.54% 77% 23% 0% $63.84 $80.68 26% -14%
NRG Energy Inc. NRG, +0.50% 80% 10% 10% $38.56 $48.22 25% -2%
Amazon.com Inc. AMZN, -0.04% 96% 4% 0% $1,749.51 $2,178.08 24% 16%
PayPal Holdings Inc. PYPL, +0.99% 81% 17% 2% $103.78 $127.67 23% 23%
Lincoln National Corp. LNC, -0.83% 79% 21% 0% $57.92 $70.79 22% 16%
salesforce.com Inc. CRM, +0.62% 93% 7% 0% $157.48 $190.31 21% 15%
Quanta Services Inc. PWR, -1.30% 86% 14% 0% $40.49 $48.79 20% 35%
Williams Companies Inc. WMB, +0.00% 79% 21% 0% $22.90 $27.59 20% 8%
T-Mobile US Inc. TMUS, +0.23% 75% 25% 0% $75.87 $91.38 20% 19%
IQVIA Holdings Inc. IQV, -0.56% 85% 10% 5% $146.40 $176.06 20% 26%
Source: FactSet

You can click on the tickers for more about each company.

Only five of these stocks are down this year. However, 18 have underperformed the S&P 500 this year. Mark Hulbert looked at the Dow stocks and found that the worst stocks in a given year tend to rebound the following year.

The energy sector has been the weakest among the 11 sectors of the S&P 500 this year, returning only 7%. But analysts are sticking with their favorites and expect a better 2020.

The Dow 30

Here are the 30 components of the Dow Jones Industrial Average, sorted by percentage of “buy” or equivalent ratings among analysts polled by FactSet:

Company Ticker Share ‘buy’ ratings Share neutral ratings Share ‘sell’ ratings Closing price – Dec. 9 Consensus price target Implied 12-month upside potential Total return – 2019 through Dec. 9
Visa Inc. Class A V, +0.90% 92% 5% 3% $182.92 $205.18 12% 40%
Microsoft Corp. MSFT, +0.52% 88% 12% 0% $151.36 $161.72 7% 51%
UnitedHealth Group Inc. UNH, +0.62% 85% 15% 0% $277.54 $299.56 8% 13%
Merck & Co. Inc. MRK, -0.51% 81% 19% 0% $88.72 $97.50 10% 18%
Walt Disney Co. DIS, +0.19% 76% 20% 4% $146.21 $157.64 8% 34%
United Technologies Corp. UTX, -0.64% 75% 25% 0% $146.22 $162.94 11% 40%
Nike Inc. Class B NKE, -0.04% 73% 24% 3% $96.63 $104.66 8% 32%
McDonald’s Corp. MCD, -0.13% 73% 27% 0% $194.68 $224.17 15% 12%
Chevron Corp. CVX, -0.40% 72% 28% 0% $117.30 $136.09 16% 12%
Walmart Inc. WMT, -0.04% 67% 30% 3% $119.36 $130.24 9% 31%
Coca-Cola Co. KO, +0.19% 59% 41% 0% $54.07 $58.90 9% 18%
Johnson & Johnson JNJ, -0.62% 58% 42% 0% $140.50 $150.47 7% 12%
Home Depot Inc. HD, -0.44% 58% 39% 3% $216.53 $241.00 11% 29%
Cisco Systems Inc. CSCO, -0.61% 57% 43% 0% $43.90 $52.43 19% 4%
Apple Inc. AAPL, +0.32% 57% 29% 14% $266.92 $261.63 -2% 72%
Boeing Co. BA, -0.75% 48% 52% 0% $351.21 $393.57 12% 11%
American Express Co. AXP, +0.21% 46% 50% 4% $120.46 $133.04 10% 28%
Procter & Gamble Co. PG, +0.00% 45% 46% 9% $124.87 $128.79 3% 40%
Caterpillar Inc. CAT, -0.88% 44% 44% 12% $142.83 $143.64 1% 16%
Pfizer Inc. PFE, -1.10% 42% 58% 0% $38.32 $41.89 9% -9%
Goldman Sachs Group Inc. GS, -0.86% 40% 52% 8% $221.81 $237.68 7% 36%
JPMorgan Chase & Co. JPM, -1.11% 40% 48% 12% $134.41 $125.00 -7% 42%
Intel Corp. INTC, +0.45% 38% 41% 21% $56.53 $57.72 2% 23%
Dow Inc. DOW, -1.55% 36% 59% 5% $53.27 $55.95 5% N/A
Verizon Communications Inc. VZ, -1.30% 30% 70% 0% $61.01 $62.18 2% 13%
International Business Machines Corp. IBM, -0.80% 29% 62% 9% $133.92 $149.17 11% 23%
Exxon Mobil Corp. XOM, -0.91% 20% 76% 4% $69.66 $78.64 13% 7%
Travelers Companies Inc. TRV, -0.22% 18% 65% 17% $135.45 $141.06 4% 16%
3M Co. MMM, -0.08% 5% 79% 16% $169.83 $173.38 2% -8%
Walgreens Boots Alliance Inc. WBA, -0.94% 4% 78% 18% $58.71 $57.21 -3% -11%
Source: FactSet

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