Each stock on the list has received a buy rating from at least 60% of Wall Street analysts who cover the company. We then ranked those who remained on the screen based on their potential upside to their consensus 12-month price target.
Among the consumer stocks on the list are Disney, Walmart, McDonald’s, and Nike. The financial sector is represented by Goldman Sachs and Visa.
Apple, Salesforce, and Microsoft are among the technology companies represented. The only healthcare stock on the list is UnitedHealth.
Disney is the only stock on the list with a year-to-date loss. It is, however, the one with the greatest potential upside, at 23.9 percent.
In a note issued Monday, JPMorgan lowered its Disney+ subscriber estimates while maintaining an overweight rating on the company and a $230 price target for December 2022. The company is set to report earnings on November 10th.
“Disney’s early success in transitioning its business to a digital platform will likely continue to award the stock a higher multiple as conviction in its longer-term success and path to profitability grows,” the note said. “We continue to believe that the stock is appealing to long-term investors.”
Goldman Sachs shares have gained the most this year, up about 57 percent. The bank has a buy rating from roughly 60% of analysts, and the stock has an average upside of about 8%.
Goldman rose above $400 per share earlier this month after reporting better-than-expected earnings. According to analysts the shares should be higher due to the company’s strong investment banking and trading results, and they could reach $500 per share.
Momentum building
Fairlead Strategies founder Katie Stockton believes stocks will rise in the fourth quarter, but her charts indicate an overbought market. As a result, she shifted her long-term bullish bias to long-term neutral for the first time since the summer of 2020. Short-term, she is still optimistic.
“It’s quite uncommon. “We’re usually upbeat,” she explained.
Longer term, Stockton expects more volatility next year, but she sees no signs of a major sell-off.
“We’re bullish on a year-end rally, but we think it might be a good time to reduce exposure,” she said. Following the rally, she predicted that stocks would be more volatile and would trade sideways at best.
She stated that the market appears to be similar to how it was in late 2017. “It’s overbought, and there’s some evidence that the environment is similar to when we saw some upside follow through followed by a failure.” Then it went into a range-bound period” until 2018, she explained.
Stockton said it would be a negative if the CBOE’s Volatility Index (VIX) rose above 25, a level it briefly exceeded in late September.
However, there are some encouraging signs for the market.
A small-cap breakout is viewed as a positive for the broader market. According to Sluymer, the S&P 500 High Beta Index, a proxy for cyclicals, reached a new high on Monday. The index is the basis for the Invesco S&P 500 High Beta ETF, which also hit an all-time high on Monday.
“It’s more evidence that investors are embracing cyclicals and riskier stocks.” “I believe they will do well for the remainder of the fourth quarter,” Sluymer predicted. “The technical action still appears to be in good shape to me.”
Sluymer said he doesn’t see any major negatives on the horizon, but he does anticipate higher volatility in stocks next year.
