By Philip van Doorn
Investors unloaded stocks Tuesday after Federal Reserve Chairman Jerome Powell said it’s possible the central bank will remove stimulus faster than originally planned.
Powell, along with Treasury Secretary Janet Yellen, appeared before the Senate Banking Committee. He said it could make sense for the Federal Open Market Committee to wrap up its bond-buying program a few months earlier than anticipated, catching investors off-guard.
That would presumably accelerate the increase of long-term interest rates, setting up “competition” for the attention of income-seeking investors, who have looked to the stock market for yields during a long period of unprecedentedly low interest rates.
The Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +1.72% was down as much as 662 points (1.9%), while the benchmark S&P 500 Index /zigman2/quotes/210599714/realtime SPX +1.75% was also down as much as 1.9%.
Over the coming weeks, if the Fed has a clear change in direction, a sustained downturn in stocks could create new buying opportunities for long-term investors.
For those who don’t want to wait, a list of Wall Street’s favorite stocks, based on 12-month price targets, is below.
Stock screen for taper time
The interest-rate landscape may look quite a bit different a year from now. Sell-side analysts (the ones working for brokerage firms) will incorporate their own expectations for interest rates and their effect on companies’ costs and (for the financial sector) interest margins.
Starting with the S&P 500, there are 92 stocks rated “buy” or the equivalent among at least 75% of sell-side analysts polled by FactSet. Here are the 20 among the 92 with the highest upside potential, based on consensus 12-month price targets and share prices at about 12:20 p.m. ET on Nov. 30:
|Company||Ticker||Share “buy” ratings||Price – 12:20 p.m ET Nov. 30||Consensus price target||Implied 12-month upside potential|
|Global Payments Inc.||/zigman2/quotes/201234787/composite GPN||85%||$118.35||$198.79||68%|
|Alaska Air Group Inc.||/zigman2/quotes/200972303/composite ALK||93%||$47.85||$77.93||63%|
|Caesars Entertainment Inc.||/zigman2/quotes/205281174/composite CZR||93%||$87.76||$138.23||58%|
|T-Mobile US Inc.||/zigman2/quotes/204659678/composite TMUS||84%||$109.08||$168.08||54%|
|PayPal Holdings Inc.||/zigman2/quotes/208054269/composite PYPL||83%||$181.12||$276.54||53%|
|Fidelity National Information Services Inc.||/zigman2/quotes/207166559/composite FIS||76%||$103.37||$156.96||52%|
|PTC Inc.||/zigman2/quotes/202034776/composite PTC||76%||$106.52||$160.92||51%|
|Teleflex Inc.||/zigman2/quotes/209322043/composite TFX||75%||$301.03||$442.44||47%|
|News Corp. Class A||/zigman2/quotes/201755982/composite NWSA||88%||$21.58||$31.63||47%|
|Southwest Airlines Co.||/zigman2/quotes/201071949/composite LUV||87%||$43.49||$62.42||44%|
|Lamb Weston Holdings Inc.||/zigman2/quotes/205501174/composite LW||78%||$51.92||$73.57||42%|
|Visa Inc. Class A||/zigman2/quotes/203660239/composite V||92%||$193.97||$274.19||41%|
|Fiserv Inc.||/zigman2/quotes/204817680/composite FISV||84%||$95.32||$133.04||40%|
|Howmet Aerospace Inc.||/zigman2/quotes/202463214/composite HWM||85%||$27.88||$38.70||39%|
|Mastercard Inc. Class A||/zigman2/quotes/207581792/composite MA||89%||$313.46||$434.66||39%|
|Schlumberger Ltd.||/zigman2/quotes/201012972/composite SLB||85%||$28.61||$39.51||38%|
|Valero Energy Corp.||/zigman2/quotes/200735463/composite VLO||81%||$66.16||$90.76||37%|
|Boston Scientific Corp.||/zigman2/quotes/203726728/composite BSX||86%||$38.37||$51.64||35%|
|Cigna Corp.||/zigman2/quotes/208431372/composite CI||77%||$193.85||$260.54||34%|
|Leidos Holdings Inc.||/zigman2/quotes/202902477/composite LDOS||77%||$88.67||$116.90||32%|
Click on the tickers for more about each company. Click here for Tomi Kilgore’s detailed guide to the wealth of information for free on the MarketWatch quote page.