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Aug. 8, 2020, 4:22 p.m. EDT

20 stocks that investors hate but Wall Street loves as the S&P 500 nears a record high

The rally for U.S. stocks from the March bottom has been remarkable, but most S&P 500 stocks are down for 2020

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By Philip van Doorn, MarketWatch


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:

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 /zigman2/quotes/211347051/realtime BX:TMUBMUSD10Y -4.68%  is 0.55%, while the dividend yield for the entire S&P 500 Index /zigman2/quotes/210599714/realtime SPX -1.16% 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. /zigman2/quotes/207732364/composite MSFT +1.07% :

Company Ticker Total return - 2020 Share of S&P 500 market cap
Facebook, Inc. Class A /zigman2/quotes/205064656/composite FB 22% 2.2%
Apple Inc. /zigman2/quotes/202934861/composite AAPL 50% 6.9%
Amazon.com, Inc. /zigman2/quotes/210331248/composite AMZN 70% 5.7%
Netflix Inc. /zigman2/quotes/202353025/composite NFLX 58% 0.8%
Alphabet Inc. Class C /zigman2/quotes/205453964/composite GOOG 10% 1.8%
Alphabet Inc. Class A /zigman2/quotes/202490156/composite GOOGL 10% 1.6%
Microsoft Corp. /zigman2/quotes/207732364/composite 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 /zigman2/quotes/207448059/composite PSX   Oil Refining/Marketing -43% 95% $61.85 $82.11 33%
Pioneer Natural Resources Co. /zigman2/quotes/206736173/composite PXD   Oil & Gas Production -33% 92% $99.52 $121.46 22%
Diamondback Energy Inc. /zigman2/quotes/201200230/composite FANG   Oil & Gas Production -55% 91% $41.07 $58.00 41%
AES Corp. /zigman2/quotes/209256253/composite AES   Electric Utilities -20% 90% $15.47 $17.75 15%
ConocoPhillips /zigman2/quotes/207605056/composite COP   Oil & Gas Production -41% 89% $37.64 $50.08 33%
Valero Energy Corp. /zigman2/quotes/200735463/composite VLO   Oil Refining/Marketing -41% 86% $53.02 $71.79 35%
Concho Resources Inc. /zigman2/quotes/208942254/composite CXO   Oil & Gas Production -41% 86% $51.47 $72.66 41%
Citigroup Inc. /zigman2/quotes/207741460/composite C   Financial Conglomerates -35% 85% $50.14 $69.38 38%
Las Vegas Sands Corp. /zigman2/quotes/208792014/composite LVS   Casinos/Gaming -35% 84% $43.73 $58.47 34%
General Motors Co. /zigman2/quotes/205226835/composite GM   Motor Vehicles -29% 84% $25.80 $38.44 49%
Baker Hughes Co. Class A /zigman2/quotes/205323712/composite BKR   Oilfield Services/Equipment -36% 83% $16.19 $20.56 27%
Hartford Financial Services Group Inc. /zigman2/quotes/207281914/composite HIG   Multi-Line Insurance -32% 78% $40.57 $51.56 27%
Citizens Financial Group Inc. /zigman2/quotes/205410375/composite CFG   Regional Banks -38% 76% $24.21 $29.28 21%
TechnipFMC PLC /zigman2/quotes/207530935/composite FTI   Oilfield Services/Equipment -61% 75% $8.26 $11.34 37%
Marathon Petroleum Corp. /zigman2/quotes/209634297/composite MPC   Oil Refining/Marketing -36% 75% $37.69 $47.79 27%
Ross Stores Inc. /zigman2/quotes/202639496/composite ROST   Apparel/Footwear Retail -24% 74% $88.38 $104.83 19%
Capital One Financial Corp. /zigman2/quotes/204480509/composite COF   Major Banks -38% 74% $63.24 $80.08 27%
Synchrony Financial /zigman2/quotes/203661733/composite SYF   Finance/Rental/Leasing -35% 74% $22.65 $28.36 25%
Raytheon Technologies Corp. /zigman2/quotes/203237915/composite RTX   Aerospace & Defense -34% 74% $57.51 $77.56 35%
Wynn Resorts Ltd. /zigman2/quotes/208845907/composite WYNN   Casinos/Gaming -47% 72% $72.75 $97.56 34%
 Source: FactSet

Don’t miss: This $20 billion bond fund produced outsized returns by capitalizing on market turmoil, and is set to do it again

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Philip van Doorn covers various investment and industry topics. He has previously worked as a senior analyst at TheStreet.com. He also has experience in community banking and as a credit analyst at the Federal Home Loan Bank of New York.

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