It might seem odd to think of Tesla stock as a loser in the S&P 500 — as it’s been all year. But now analysts say enough is enough, and it’s sufficiently beat up and primed to move higher.
And it’s not alone. Tesla (TSLA) is just one of eight formerly top S&P 500 stocks, also including consumer discretionary Penn National Gaming (PENN) and materials company Freeport-McMoRan (FCX), expected to rally in the next 12 months after falling into a bear market, says an Investor’s Business Daily analysis of data from S&P Global Market Intelligence and MarketSmith.
Investors would welcome a rally in these S&P 500 stocks. They’re all fallen winners, still up 90% or more in the past 12 months. And yet, all these S&P 500 stocks are now down 20% or more from their highs in the past 52 weeks, landing them in a bear market. That’s the opportunity, analysts say.
Now’s the time for investors to keep their watchlists ready and looking for opportunities. The market dropped nearly 2% in the past week, erasing $900 billion in wealth, says Wilshire Associates.
Tesla: S&P 500 Bad Boy Long Enough?
Tesla demonstrates an example of a fallen S&P 500 stock analysts are comfortable with now. Analysts are finally calling for a lift following a rough first half of the year.
Shares of the market leading maker of electric vehicles are now down 31% from its high of 900.40 a share. They’re off nearly 12% just this year, to close Friday at 623.33. Analysts correctly called the S&P 500 stock overvalued for years. And yet, now, analysts are coming to Tesla stock’s defense. Analysts think it should hit 654.03 a share in 12 months. If right, that would be nearly 5% upside.
No, that’s not a whopping gain for an S&P 500 stock that dominated in 2020. But simply seeing the stock move higher would be a welcome change. Additionally, analysts think fundamentals back up their target. Tesla’s profit is expected to jump more than 45% just this year to $6.68 a share. Profit growth is propping up Tesla’s still decent 75 IBD Composite Rating.
Big Upside In Store For Penn National?
If analysts’ upside potential on Tesla doesn’t thrill you, their view on gaming and racing company Penn National Gaming likely will.
Now that shares are down 48% from their 52-week high of 142, analysts’ 12-month price target is alluring. Analysts think the S&P 500 stock will be worth 110.43 a share in 12 months. If they’re right, that’s nearly 50% implied upside for the stock. Shares of Penn National Gaming are down 14.6% this year to 73.78. But the stock was such a huge winner, it’s still up nearly 133% in 12 months.
And some of the S&P 500 stocks analysts are hopeful about still command top-notch IBD rankings. Three of the eight fallen winners with the most implied update carry an IBD Composite Rating of 85 or higher. That means their charts and fundamentals outmatch 85% of all other stocks. Those three are materials companies Mosaic (MOS) and Freeport-McMoRan plus technology player Enphase Energy (ENPH).
How much upside do analysts see? Commodities miner Freeport-McMoRan still sports a 96 Composite Rating, despite falling more than 24% from its high. The S&P 500 stock, though, is still up 231% in the past 12 months, at 34.96. And analysts think it’ll be trading for 18% more, 41.31, in 12 months.
Analysts aren’t always right. They’re often wrong. But seeing them supporting Tesla is an interesting twist. Additionally, the S&P 500’s sell-off is a good time to know which winners you might get another shot at owning.
S&P 500 Winners Drop 20%, But Analysts See Upside
|Company||Symbol||Stock 12-month % ch.||% stock fall from 52-week high||Sector||Implied upside to analyst target||Composite Rating|
|Penn National Gaming||(PENN)||132.5%||-48.0%||Consumer Discretionary||49.7%||39|
|Mohawk Industries||(MHK)||90.4%||-22.1%||Consumer Discretionary||25.6%||78|
|Under Armour||(UAA)||102.5%||-25.1%||Consumer Discretionary||24.7%||73|
|Enphase Energy||(ENPH)||262.8%||-27.6%||Information Technology||18.3%||89|
Sources: IBD, S&P Global Market Intelligence
Follow Matt Krantz on Twitter @mattkrantz
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