Each sector has a number of top stock picks waiting for the savvy investor to find. These are the stocks that the best analysts on Wall Street are bullish on, and have serious upside potential to boot.
Using TipRanks’ powerful stock screener, I set out to find the best stock in each sector that presents a compelling opportunity for investors. I filtered by sector and for stocks with only a “strong buy” analyst consensus rating. To get the best results, I selected ratings from analysts with a high success rate and average return per recommendation.
Now let’s delve into the top picks for each of these seven sectors: tech, services, consumer goods, financial, basic materials, industrial goods and healthcare.
Top Sector Stocks — Tech: Alphabet (GOOGL)
Tech giant Alphabet Inc (NASDAQ:GOOGL) still has big upside potential according to the best analysts on Wall Street. The 12-month $1,075 average analyst price target from only top analysts translates into 8% upside from the current share price. Meanwhile, in the last three months, the “strong buy” stock has received 23 buy ratings and just four hold ratings.
Alphabet released strong Q2 results on July 25, beating Street estimates on both the top and bottom line. Gross revenue of $26 billion came in 1% above the Street, while GAAP EPS of $8.90 was an impressive 6% above Street, mainly due to low tax payments.
RBC Capital’s Mark Mahaney points out that the results mark GOOGL’s 30th straight quarter (more than seven years) of around 20% organic revenue growth. Such growth is “unprecedented” says Mahaney, especially for an asset of this size ($100 billion revenue runrate).
Mahaney concludes: “We continue to believe GOOGL is one of the strongest, most consistent fundamental stories in Tech. And the valuation pitch remains constructive: @ $969 (in after-market).” The five-star analyst has a $1,050 price target on GOOGL.
Top Sector Stocks — Services: FleetCor Technologies (FLT)
FleetCor Technologies, Inc. (NYSE:FLT) provides payment services for businesses, and has the Street’s seal of approval. In the last year the stock has received just one hold rating — and in the last three months, eight top analysts have published buy ratings for FLT.
On July 13, Citigroup’s Peter Christiansen raised his FLT price target from $165 to $180, which works out as an impressive 17% upside from the current share price. He says that the second half of the year is an opportunity for strong results and multiple expansion. According to Christiansen, sentiment is beginning to improve on the stock and he notes an encouraging series of purchases by corporate insiders.
Indeed, over the last three months, insiders have snapped up FLT shares worth $1.13 million. Insiders upping their FLT investments include two directors, the Brazil CEO and FleetCor’s Central/ East European President. This is particularly interesting given that before these last three months, the stock only had insider sell transactions in the last year.
Top Sector Stocks — Consumer Goods: Micron (MU)
Semiconductor stock and Apple Inc. (NASDAQ:AAPL) supplier Micron Technology, Inc. (NASDAQ:MU) has soared by over 34% in the last six months, and despite a recent pullback, it looks like the stock still has plenty of upside potential left. TipRanks reveals that the stock has 15 buy, one hold and one sell rating in the last three months. The $41 average analyst price target suggests big upside potential of 28% from the current share price.
Top Mizuho Securities’ analyst Vijay Rakesh has this optimistic take on MU, which recently posted yet another beat and raise quarter: “Underlying supply/demand trends in NAND [flash memory] and DRAM [dynamic random-access memory] are still strong heading into the iPhone 8 launch and holiday season… We believe against a backdrop of strong fundamentals MU presents an attractive investment opportunity.” He calls his $38 price target (27% upside) “conservative.”
Top Sector Stocks — Financial: KeyCorp (KEY)
One of the largest banks in the U.S., KeyCorp (NYSE:KEY), has received back-to-back buy ratings for the last three months. And top analysts believe the stock has big upside potential of 19% (on average) from the current share price of $18. KeyCorp’s main subsidiary is KeyBank which has over 1,200 branches across the US.
Shares are showing some weakness following KeyCorp’s Q2 earnings results release on July 20. Prices slipped from $19.07 to $18.02 and have yet to recover.
Five-star Nomura analyst Bill Carcache tells investors to take advantage of these post-earnings prices by accumulating KEY shares. He says the sell-off has been overdone and has a $23 price target on KEY. This translates into serious 27.1% upside from the current share price.
Top Sector Stocks — Basic Materials: Vulcan Materials (VMC)
Alabama-based Vulcan Materials Company (NYSE:VMC) is the U.S.’s largest producer of construction materials, including gravel, sand, asphalt mix and concrete. An uptick in public construction projects has a big knock-on effect on Vulcan — the “Rock Star!” of the materials industry according to RBC Capital’s Robert Wetenhall.
Wetenhall, who is ranked No. 33 out of 4,627 analysts tracked by TipRanks, reiterated his VMC buy rating on July 23. His rating came with a bullish $154 price target which translates into 24.6% upside for VMC from its current share price. And Wetenhall knows what he is talking about — the five-star analyst has an 83% success rate and 13.1% average return on Vulcan specifically.
Top Sector Stocks — Industrial Goods: Delphi Automotive (DLPH)
This innovative vehicle parts manufacturer is a top stock to track. Going into the earnings confessional on Aug. 2, Delphi Automotive PLC (NYSE:DLPH) has a “strong buy” analyst consensus rating and 14% predicted upside. And the stock has a strong track record — Delphi beat estimates in all of the trailing four quarters. Now it has a high chance of meeting its Q2 EPS estimate of $1.65.
In fact, Jefferies recently listed Delphi as one of the best stocks to play the self-driving boom. Delphi has exposure to autonomous driving without the risk of, say, Tesla Motors (NASDAQ:TSLA). Analyst David Kelley says Delphi is “the best positioned to benefit from ongoing secular auto tech shifts.”
“DLPH’s role as the system integrator, or enabler of sensor fusion, is key in our view,” he wrote on July 25. Kelley has a $106 price target on Delphi (17.5% upside).
Top Sector Stocks — Healthcare: Edwards Lifesciences (EW)
Heart-focused medical company Edwards Lifesciences Corp (NYSE:EW) certainly has the Street’s backing. In the last three months, the stock has received seven buy ratings and only one hold rating from top analysts. Meanwhile, the average analyst price target suggests over 12% upside for EW over the next 12 months.
But the Street may well be underestimating EW. On July 26, Edwards Lifesciences raised its guidance for the full year 2017 following very strong heart valve sales. The low end of the new range now falls above Wall Street’s consensus.
Edwards adjusted 2017 earnings come in at $3.65 to $3.85 per share, whereas the previous range was just $3.43 to $3.55 per share. And for Q2, Edwards delivered an EPS of $1.08, easily beating the consensus estimate of 88 cents.
Which stocks are the top 25 analysts recommending right now? Find out here.
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