If the idea is to buy low, then going shopping for stocks when markets are flirting with record highs might not seem like the greatest idea. But there are always select names set to outperform — and that's especially true when market leadership is comparatively narrow.
Although a number of the Magnificent 7 stocks have done much of the bull market's heavy lifting, that hardly means these names are doomed to underperform from here. Indeed, as we'll see below, three of Wall Street's top five stocks to buy now hail from the Magnificent 7. Companies from the real estate, aerospace and, uh, french fry sectors are also ably represented.
Here's how we found the top S&P 500 stocks to buy now. It's well known that industry analysts are reluctant to slap Sell ratings on the names they cover. There are a bunch of reasons for this, some more defensible than others. What's less commonly understood is that Strong Buy recommendations, while not nearly as rare as Sell calls, are in somewhat short supply too.
If you run a screen of the S&P 500 using data from S&P Global Market Intelligence, you'll see that analysts assign a consensus recommendation of Sell to a total of two stocks. At the other end of the ratings spectrum stands the Street's highest recommendation of Strong Buy. A total of 25 stocks make the cut there, as you can see in the chart below.
But first a note on our methodology: S&P Global Market Intelligence surveys analysts' stock recommendations and scores them on a five-point scale, where 1.0 equals Strong Buy and 5.0 means Strong Sell. Any score of 2.5 or lower means that analysts, on average, rate the stock a Buy. The closer the score gets to 1.0, the stronger the Buy call.
In other words, lower scores are better than higher scores.
Have a look at the chart below to see the 25 stocks in the S&P 500 that score an elite Strong Buy recommendation from industry analysts. Investors who fear it's too late to buy Amazon.com (AMZN), Microsoft (MSFT) or Nvidia (NVDA) will be happy to see they easily made the list.
Analysts are projecting S&P 500 earnings growth will accelerate to 9.7% in the second quarter and S&P 500 companies will report an impressive 10.8% earnings growth for the full calendar year in 2024.
Assuming an average annual return rate of about 10% (a typical historical average), a $10,000 investment in the S&P 500 could potentially grow to approximately $25,937 over 10 years.
Looking ahead, analysts expect (year-over-year) earnings growth rates of 9.6%, 8.7%, and 17.7% for Q2 2024, Q3 2024, and Q4 2024, respectively. For CY 2024, analysts are calling for (year-over-year) earnings growth of 10.7%.
As a whole, analysts are optimistic about the outlook for stock prices in 2024. The consensus analyst price target for the S&P 500 is 5,090, suggesting roughly 8.5% upside from current levels.
The analysts also hiked their 2025 earnings estimate for the S&P 500 to $270 from $250, and said they see a forward price-to-earnings multiple of 20.5 times for the index - citing improving U.S. economic growth and "superior margin expansion" from higher-margin stocks in the information-technology XX:SP500.
S&P 500 3 Year Return is at 20.44%, compared to 32.26% last month and 43.16% last year. This is lower than the long term average of 23.24%. The S&P 500 3 Year Return is the investment return received for a 3 year period, excluding dividends, when holding the S&P 500 index.
Introduction: My name is Geoffrey Lueilwitz, I am a zealous, encouraging, sparkling, enchanting, graceful, faithful, nice person who loves writing and wants to share my knowledge and understanding with you.
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