The Dow Jones industrial average broke above 23,000 for the first time ever on Tuesday, nearly 53 trading days since the index first closed above 22,000. As investors celebrate the latest in a string of new records, many are wondering which stocks will lead the Dow to 24,000.
CNBC compiled data on the companies in the index to see which stocks Wall Street analysts are currently betting on to drive the market’s next leg higher. The table below shows the stock’s average 12-month price target from Wall Street analysts, its latest stock price and the difference between the two.
Strong performance in both large-cap tech and health care this year helps explain why both Apple and UnitedHealth make the cut. Analysts have been bullish on Apple’s latest iPhone generation and corresponding price increases.
UnitedHealth, the largest U.S. health insurer, remains insulated from the political firestorm surrounding health care since it has largely pulled back from offering plans in the individual insurance exchanges.
General Electric presents a tricky bet for investors: The company’s stock has steadily fallen throughout the year and may now present a value trade. Goldman Sachs told clients to expect both an EPS reset and a dividend cut soon on Tuesday.
But the dramatic 27 percent decline in the company’s stock price has spurred the curiosity of some value investors, drawn to the historically-low price. Market-beating investor Bill Nygren told CNBC’s “Halftime Report” explained why he’s bullish on GE shares even at a seemingly high price-to-earnings multiple on Tuesday.
“We aren’t owning this because they pay a high dividend, we’re owning this because we think they can improve earnings,” said Nygren. “This company is going to show much better than average growth, that they have higher-than-average quality businesses … We think this is a business that deserves to get back to a market multiple if not a premium.”
But analysts are not bullish on all of the Dow components.
American Express beat EPS estimates in their latest earnings report in July, but analysts remain uncertain on the credit card company’s long-term plan. The company’s revenues trend downward while some researchers believe there may not be much more fat to trim in operating costs.
Goldman Sachs‘s stock has been disappointing this year, down 1.33 percent year to date against the S&P 500 return of more than 14 percent and a rise of 2.4 percent for the SPDR S&P Bank ETF.
The stock fell more than 2.5 percent Tuesday after Goldman Sachs reported a 26 percent drop on bond trading in its earnings. Chief financial officer Marty Chavez said commodities were on their way to the worst full-year performance since Goldman went public in 1999.
To be sure, these Wall Street analyst forecasts are not perfect by any means. They tend to be too bullish, especially around times when a bull market is slowing down. Plus, sometimes the stocks with the biggest projected upside get that way because the shares keep dropping, yet the analysts are keeping their forecasts the same.
Still, the exercise does give you an idea about which stocks the Wall Street analyst crowd likes the most in the index, if it continues to go higher.
