Bulletin
Investor Alert

The Tell Archives | Email alerts

June 6, 2020, 8:32 a.m. EDT

Here are the 10 most under and overbought S&P 500 stocks, according to Goldman

Markets are looking ahead to 2021 earnings, but individual stocks aren’t necessarily reflecting changes in forecasts

new
Watchlist Relevance
LEARN MORE

Want to see how this story relates to your watchlist?

Just add items to create a watchlist now:

  • X
    HP Inc. (HPQ)
  • X
    Cincinnati Financial Corp. (CINF)
  • X
    Simon Property Group Inc. (SPG)

or Cancel Already have a watchlist? Log In

By Chris Matthews, MarketWatch


Getty Images

Stock-market investors are confident that the global economy can rebound quickly from the coronavirus epidemic, so much so that they are largely ignoring the sharp decline in corporate earnings under way in 2020 and focusing instead on performance in 2021, according to a research note by Goldman Sachs equity analyst David Kostin.

The focus on 2021 earnings helps partly explain, along with unprecedented fiscal and central-bank stimulus, the impressive performance of the major equity benchmarks in the context of the steepest economic contraction in nearly a century.

“Given uncertainty in the 2020 recovery path, investors have shifted focus to 2021 earnings,” Kostin wrote. “Consequently, share prices have moved tightly alongside [2021] consensus earnings-per-share revisions. During the three months following the equity-market peak on Feb. 19, the S&P 500 index declined by 14%, while consensus, bottom-up 2021 EPS estimates fell by 16%.”

Nevertheless, there has been significant divergence between individual stock prices and their expected earnings next year, and that’s why Kostin advised clients to “focus on stocks, not the index.”

The following chart shows the 3-month change in 2021 earnings expectations for 20 different S&P 500 stocks, followed by the change in price that this implies. The third column displays the actual change in price over that time. The companies are ranked by the greatest differences between implied and actual changes in stock price during the last 90 days.

“For some stocks, the share price drop during the past three months greatly exceeds the diminution in expected profits, while in other cases the reverse is true,” Kostin wrote.

Stocks that have sold off more than changes to earnings forecast seem to justify include HP Inc . /zigman2/quotes/203461582/composite HPQ +0.10% , Cincinnati Financial Corp . /zigman2/quotes/208697223/composite CINF -2.50%   Simon Property Group Inc . /zigman2/quotes/209746667/composite SPG -2.59% , Nordstrom Inc . and Gap Inc . /zigman2/quotes/206554267/composite GPS -3.40% .

Those which have significantly outperformed what earnings forecasts would imply include MarketAxess Holdings Inc . /zigman2/quotes/202710814/composite MKTX -2.50%  , MGM Resorts International /zigman2/quotes/209932643/composite MGM -1.23%  , DexCom Inc . /zigman2/quotes/201324608/composite DXCM +1.42%  , Cabot Oil & Gas Corp . /zigman2/quotes/205804016/composite COG -3.65%  and Take-Two Interactive Software Inc . /zigman2/quotes/204008930/composite TTWO +0.46%  

/zigman2/quotes/203461582/composite
US : U.S.: NYSE
$ 28.67
+0.03 +0.10%
Volume: 25.01M
June 18, 2021 4:04p
P/E Ratio
10.17
Dividend Yield
2.70%
Market Cap
$34.44 billion
Rev. per Employee
$1.07M
loading...
/zigman2/quotes/208697223/composite
US : U.S.: Nasdaq
$ 113.82
-2.92 -2.50%
Volume: 1.42M
June 18, 2021 4:00p
P/E Ratio
6.02
Dividend Yield
2.21%
Market Cap
$18.34 billion
Rev. per Employee
$1.43M
loading...
/zigman2/quotes/209746667/composite
US : U.S.: NYSE
$ 125.33
-3.33 -2.59%
Volume: 4.23M
June 18, 2021 4:00p
P/E Ratio
34.86
Dividend Yield
4.15%
Market Cap
$47.11 billion
Rev. per Employee
$1.37M
loading...
/zigman2/quotes/206554267/composite
US : U.S.: NYSE
$ 31.28
-1.10 -3.40%
Volume: 7.54M
June 18, 2021 4:03p
P/E Ratio
27.73
Dividend Yield
1.53%
Market Cap
$11.81 billion
Rev. per Employee
$117,949
loading...
/zigman2/quotes/202710814/composite
US : U.S.: Nasdaq
$ 449.54
-11.55 -2.50%
Volume: 647,288
June 18, 2021 4:00p
P/E Ratio
56.25
Dividend Yield
0.59%
Market Cap
$17.07 billion
Rev. per Employee
$1.14M
loading...
/zigman2/quotes/209932643/composite
US : U.S.: NYSE
$ 40.86
-0.51 -1.23%
Volume: 6.58M
June 18, 2021 4:00p
P/E Ratio
N/A
Dividend Yield
0.02%
Market Cap
$20.04 billion
Rev. per Employee
$122,907
loading...
/zigman2/quotes/201324608/composite
US : U.S.: Nasdaq
$ 418.29
+5.84 +1.42%
Volume: 1.00M
June 18, 2021 4:00p
P/E Ratio
83.43
Dividend Yield
N/A
Market Cap
$40.45 billion
Rev. per Employee
$301,047
loading...
/zigman2/quotes/205804016/composite
US : U.S.: NYSE
$ 15.33
-0.58 -3.65%
Volume: 14.82M
June 18, 2021 4:02p
P/E Ratio
22.49
Dividend Yield
2.87%
Market Cap
$6.13 billion
Rev. per Employee
$2.79M
loading...
/zigman2/quotes/204008930/composite
US : U.S.: Nasdaq
$ 171.28
+0.78 +0.46%
Volume: 1.60M
June 18, 2021 4:15p
P/E Ratio
33.71
Dividend Yield
N/A
Market Cap
$19.81 billion
Rev. per Employee
$519,287
loading...

This Story has 0 Comments
Be the first to comment
More News In
Markets

Story Conversation

Commenting FAQs »

Partner Center

World News from MarketWatch

Link to MarketWatch's Slice.