Wall Street analysts don’t always get it right. But it’s good for investors to know when professional analysts with their jobs and reputations on the line single out a stock with a “buy” rating. Unfortunately, there are a lot of conflicting opinions among analysts, which can be confusing at times.
There’s no such thing as a 100 percent guaranteed winner when it comes to finding the best stocks to buy, but FactSet recently compiled a list of stocks that Wall Street analysts love most. Among stocks with at least three analyst ratings, these seven stocks have the highest percentage of “buy” ratings.
Of all the stocks covered by Wall Street, Amazon has the most pristine scorecard. Incredibly, all 45 analysts that cover Amazon have a “buy/outperform” rating for the stock. According to CNN, the average price target of those 45 analysts is $2,100, suggesting about 18 percent upside. Bank of America analyst Justin Post is among the bulls. Post says Amazon is perfectly positioned to capitalize on secular growth trends such as e-commerce, cloud computing, online advertising, mobile internet and connected devices. Bank of America has a “buy” rating and $2,100 price target for AMZN stock.
Marathon Oil Corp.
Amazon isn't a surprise for this list, but the second-most popular stock on Wall Street might be. All 20 of the analysts covering oil refiner Marathon Oil have “buy/outperform” ratings on the stock, and its average price target of $90 implies about 47 percent upside. CFRA analyst Stewart Glickman says inventory levels are falling, the Brent/West Texas Intermediate crude spread is widening and Marathon is making shrewd acquisitions, all bullish signs. As a result, Marathon’s earnings power should grow over time. CFRA has a “buy” rating and $78 price target for MPC stock.
Electronic testing and measurement equipment company Keysight is the only other stock with a perfect Wall Street rating. Only nine analysts cover Keysight stock, but all nine have “buy” ratings with an average price target of $90. Citi analyst Jim Suva says Keysight is the best way for investors to gain exposure to the mass upgrade to 5G wireless networks over the next couple of years, and Keysight is his top stock pick for 2019. Citi has a “buy” rating and $100 price target for KEYS stock.
The Wall Street scorecard for Permian Basin oil producer Diamondback may not be perfect, but it’s about as close to perfect as possible. Of the 37 analysts covering the stock, 36 have “buy” ratings and just a single analyst has a “hold” rating. Bank of America analyst Asit Sen says Diamondback’s production growth will lead its industry in coming quarters. It will also expand the stock’s earnings multiple and generate impressive free cash flow in 2020 and beyond, Sen says. Bank of America has a “buy” rating and $155 price target for Diamondback.
Like Diamondback, of the 26 analysts that cover global managed care organization UnitedHealth stock, there is only a single “hold” rating. The average analyst price target of $308 suggests about 27 percent upside. CFRA analyst Colin Scarola says United should outpace its peer group in earnings growth in the years ahead thanks to the strength of its Optum business. Scarola says margin improvements should help Optum grow its operating profit by at least 20 percent annually. CFRA has a “buy” rating and a $303 price target for UNH stock.
Equinix is the largest data center operator and a real estate investment trust that pays a 2.1 percent yield. Of the 26 analysts covering Equinix, the stock has only a single “hold” rating and an average price target of $492.50. Bank of America analyst Michael Funk says Equinix is uniquely positioned to service the growing market demand for network-neutral colocation. Given Equinix’s positioning and the high barrier to entry for competitors, Funk says the REIT is undervalued at current levels. Bank of America has a “buy” rating and $490 price target for EQIX stock.
Not one of the 44 analysts covering Google parent company Alphabet is bearish on the stock. However, two analysts have “hold” ratings on Alphabet, knocking it down to seventh on the list. The average analyst price target of $1,350 implies 15 percent upside. Morgan Stanley analyst Brian Nowak says Google’s core online advertising and search businesses are solid, and investors are starting to get more visibility on its Waymo autonomous vehicle business as well. Nowak values Waymo at $45 billion. Morgan Stanley has an “overweight” rating and $1,500 price target for GOOGL stock.