DEEP DIVE
© Bloomberg All is quiet outside the Las Vegas Sands’ Venetian resort. The company is among a group of large-cap U.S. stocks that are down at least 20% in 2020 but have buy ratings from more than 70% of Wall Street analysts.
This has been an adventurous year for stocks, with almost a full rebound for the S&P 500 Index from the pandemic lows of late March. But the rally has not been as broad as you might think.
Below is a list of 20 stocks that are still down at least 20% for 2020, but also have majority “buy” or equivalent ratings among sell-side analysts.
The FAANG-led recovery
Ben Carlson said a lot with a tweet Wednesday morning:
As of this morning, on a total return basis, SPY is now less than 1% away from its all-time highs
Was down 34% at the lows 4 months ago
March feels like 7 years ago in market cycle terms pic.twitter.com/1hVxj2N6Vt
— Ben Carlson (@awealthofcs) August 5, 2020
This turnaround has been fueled by the tremendous increase in the money supply resulting from the timely action of the Federal Reserve and the federal government. Very low interest rates play their part. The yield on 10-year U.S. Treasury notes (BX:TMUBMUSD10Y) is 0.55%, while the dividend yield for the entire S&P 500 Index (SPX) is 1.70%, according to FactSet.
The S&P 500 was up 3.5% (with dividends reinvested) for 2020 through Aug. 4.
But the S&P 500 is weighted by market capitalization and therefore dominated by the FAANG stocks, to which we add Microsoft Corp. (MSFT):
| Company | Ticker | Total return – 2020 | Share of S&P 500 market cap |
| Facebook, Inc. Class A | (FB) | 22% | 2.2% |
| Apple Inc. | (AAPL) | 50% | 6.9% |
| Amazon.com, Inc. | (AMZN) | 70% | 5.7% |
| Netflix Inc. | (NFLX) | 58% | 0.8% |
| Alphabet Inc. Class C | (GOOG) | 10% | 1.8% |
| Alphabet Inc. Class A | (GOOGL) | 10% | 1.6% |
| Microsoft Corp. | (MSFT) | 36% | 5.9% |
| Source: FactSet |
Together, the FAANG group plus Microsoft make up 25% of the S&P 500. Their outperformance this year has had a great effect on the entire index’s return.
Loved by Wall Street
Among the S&P 500, 292 stocks that were down for 2020 (with dividends reinvested) through Aug. 4. That may be a big surprise and it underscores the influence of the big tech names listed above.
Among those 292 stocks, 149 were down at least 20%.
Here are the 20 stocks among the S&P 500 down at least 20% this year that have the highest percentage “buy” or equivalent ratings among sell-side analysts polled by FactSet. The table is sorted by the percentage of “buy” ratings. (Scroll to the right to see all the data.):
| Company | Ticker | Industry | Total return – 2020 through Aug. 4 | Share ‘buy’ ratings | Closing price – Aug. 4 | Cons. price target | Implied 12-month upside potential |
| Phillips 66 | (PSX) | Oil Refining/Marketing | -43% | 95% | $61.85 | $82.11 | 33% |
| Pioneer Natural Resources Co. | (PXD) | Oil & Gas Production | -33% | 92% | $99.52 | $121.46 | 22% |
| Diamondback Energy Inc. | (FANG) | Oil & Gas Production | -55% | 91% | $41.07 | $58.00 | 41% |
| AES Corp. | (AES) | Electric Utilities | -20% | 90% | $15.47 | $17.75 | 15% |
| ConocoPhillips | (COP) | Oil & Gas Production | -41% | 89% | $37.64 | $50.08 | 33% |
| Valero Energy Corp. | (VLO) | Oil Refining/Marketing | -41% | 86% | $53.02 | $71.79 | 35% |
| Concho Resources Inc. | (CXO) | Oil & Gas Production | -41% | 86% | $51.47 | $72.66 | 41% |
| Citigroup Inc. | (C) | Financial Conglomerates | -35% | 85% | $50.14 | $69.38 | 38% |
| Las Vegas Sands Corp. | (LVS) | Casinos/Gaming | -35% | 84% | $43.73 | $58.47 | 34% |
| General Motors Co. | (GM) | Motor Vehicles | -29% | 84% | $25.80 | $38.44 | 49% |
| Baker Hughes Co. Class A | (BKR) | Oilfield Services/Equipment | -36% | 83% | $16.19 | $20.56 | 27% |
| Hartford Financial Services Group Inc. | (HIG) | Multi-Line Insurance | -32% | 78% | $40.57 | $51.56 | 27% |
| Citizens Financial Group Inc. | (CFG) | Regional Banks | -38% | 76% | $24.21 | $29.28 | 21% |
| TechnipFMC PLC | (FTI) | Oilfield Services/Equipment | -61% | 75% | $8.26 | $11.34 | 37% |
| Marathon Petroleum Corp. | (MPC) | Oil Refining/Marketing | -36% | 75% | $37.69 | $47.79 | 27% |
| Ross Stores Inc. | (ROST) | Apparel/Footwear Retail | -24% | 74% | $88.38 | $104.83 | 19% |
| Capital One Financial Corp. | (COF) | Major Banks | -38% | 74% | $63.24 | $80.08 | 27% |
| Synchrony Financial | (SYF) | Finance/Rental/Leasing | -35% | 74% | $22.65 | $28.36 | 25% |
| Raytheon Technologies Corp. | (RTX) | Aerospace & Defense | -34% | 74% | $57.51 | $77.56 | 35% |
| Wynn Resorts Ltd. | (WYNN) | Casinos/Gaming | -47% | 72% | $72.75 | $97.56 | 34% |
| Source: FactSet |
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