Each sector has a number of top stock picks waiting for the savvy investor to find. These are the top sector stocks that the best analysts on Wall Street are bullish on, and they all have serious upside potential to boot.
Here I focus on stocks that look set to outperform both in the next couple of months and through into the new year as well.
Using TipRanks’ powerful stock screener, I set out to find the best stock in each sector that presents a compelling opportunity for investors in 2018. 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, healthcare, financial, industrial goods, services, consumer goods and basic materials.
Top Sector Stocks — Tech: Facebook (FB)
If you track one tech stock into 2018, make it Facebook Inc (NASDAQ:FB). This “strong buy” stock has received 30 buy ratings from analysts over the last three months — vs just one hold and one sell rating. And the best part is that these analysts say FB can soar by almost 18% over the next twelve months.
Top RBC Capital analyst Mark Mahaney says FB is the “best growth story in tech.” And in light of the stock’s impressive earnings results for Q3, he has ramped up his price target to $230 from $195. This new price target is FB’s highest yet. Plus is comes in at 28% above the current share price. “FB reported a very strong Q3, with results coming in well ahead of expectations and growth trends remaining very impressive” comments Mahaney on November 2.
He also sees plenty of room for expansion: “We believe that FB’s current low market shares — less than 20% of Global Online Advertising & mid-single-digit % of Global Total Advertising — will help it maintain premium growth for a long time. And FB still has several new large revenue growth drivers (Instagram monetization, Messaging Platform monetization, Camera/AR, AI AND Video).”
Note that Mahaney has a strong track record on his FB recommendations. According to TipRanks he has a 97% success rate and 29% average return across 29 FB ratings.
Top Sector Stocks — Healthcare: Array Biopharma (ARRY)
Array Biopharma Inc (NASDAQ:ARRY) is focused on discovering and developing targeted small-molecule drugs to treat cancer. This top stock has received only buy ratings from analysts in the last three months. That’s right — there are no hold or sell ratings here. Even better, these seven analysts have an average price target on the stock of $14.57. That works out at close to 34% upside from the current share price.
Why are analysts so bullish? Cantor Fitzgerald analyst Mara Goldstein explains: “The company is on the cusp of commercialization with a PDUFA date at the end of 2Q18 for binimetinib (bini) and encorafenib (enco), destined for the melanoma market. We have long believed that the tolerability profile of bini/enco combined with efficacy is enough to secure a place in the melanoma market, and the recent positive BEACON data in mCRC could expand the market opportunity.”
She has a $15 price target on the stock, which assumes a 2022 combined revenue of $700 million. In the meantime the key date to watch out for is, as Goldstein says, June 30 2018. On this crunch date, the U.S. regulatory office will reveal if they will approve or reject Array’s drug candidates for advanced cancer patients.
Top Sector Stocks — Financials: Visa Inc (V)
Payments giant Visa Inc (NYSE:V) is already up an impressive 43% year-to-date. And analysts are optimistic that the stock can continue its steady growth trajectory. In the last three months, Visa has received 14 buy ratings and only three hold ratings. Meanwhile the $123 price target speaks of over 10% upside potential from the current share price.
At the end of October, Visa reported results above expectations, with International Transaction revenues well above expectations. Each segment topped estimates, points out top Cantor Fitzgerald analyst Joseph Foresi. He ramped up his price target for Visa from $120 to $123 on Oct. 26.
Foresi reveals: “We like Visa’s opportunity to capitalize on the global conversion of cash into credit, international opportunities, and digital payment tailwinds… We remain attracted to Visa’s dominant position in the global card network market and its strong, recognizable international brand.” Note that Foresi seems to know what he is talking about — on TipRanks he is ranked No. 51 out of over 4,700 analysts.
Top Sector Stocks — Industrial Goods: Ametek (AME)
For those of you who haven’t heard of Ametek, Inc. (NYSE:AME), this is a leading global manufacturer of electronic devices with annual sales of approximately $4 billion. TipRanks reveals that this is a key stock to track into 2018. In the last three months, AME has scored seven straight buy ratings from the Street. Their average price target on the stock of $74 comes in 10% above the current share price.
Following a strong earnings report, Oppenheimer’s Christopher Glynn reiterated his bullish analysis of this top stock. Indeed “AME issued a more pronounced guidance raise than previous raises” notes Glynn. Glynn, a five-star analyst, now has a $75 price target on AME — 11% upside potential from the current share price.
He likes the company’s expansion strategy and says: “AME continues to target 5-year time frame for doubling EPS, with M&A team of ten dedicated professionals, and each business with an acquisition strategy (at levels of 16 divisions, ~45 business units). AME’s current $1.8B in available liquidity stands against a pipeline rich with good quality deals, while pricing remains characteristically rich, and returns disciplines intact.”
Top Sector Stocks — Services: UnitedHealth (UNH)
UnitedHealth Group Inc (NYSE:UNH) is best known as the U.S.’s largest health insurer, with more than 45 million members. At the same time, the company has also expanded into the lucrative prescription market with its fast-growing Optum unit. It now boasts over 400 surgery centers and fills more than 100 million prescriptions per month.
“UNH has been one of our longest-standing recommendations on our [global breakout] list, and is a good example of the persistence of market leadership. We still see upside in the uptrend, and we accordingly recommend buying the stock” writes top Oppenheimer analyst Michael Wiederhorn. Wiederhorn is not only one of the top 100 analysts on TipRanks, he also has an incredible 100% success rate and 29.4% average return on UNH stock.
Indeed, the stock is already up by 31% year-to-date, and is now trading just below record highs of $213. But analysts are confident that the stock has upside potential still to run. Their average price target of $228.50 translates into upside of over 7%.
Top Sector Stocks- Consumer Goods: Apple (AAPL)
iPhone giant Apple Inc. (NASDAQ:AAPL) is still a prime stock to track into 2018. With a “strong buy” consensus rating, analysts have published 24 buy ratings and 5 hold ratings on AAPL over the last three months. These analysts say Apple can move higher by over 8.5% in the next 12 months.
Some top analysts are much more bullish. One of these is five-star analyst Brian White from Drexel Hamilton. He has just published the stock’s highest price target yet of $235 — a whopping 35% upside from the current share price. He explains: “With a strong start to the iPhone X, an excellent 4Q:FY17 report, and trading just over 12x our CY:18 EPS estimate (ex-cash), we believe Apple has attractive upside over the next 12 months.”
Encouragingly for investors, Apple’s post-earnings call “was the most upbeat that we have heard in quite some time” says White. Better-than-expected results include 4Q:FY17 sales of $52.6 billion (up 12% YoY) and pro forma EPS of $2.07. This easily beat the Street EPS estimate of just $1.87. He attributes this to “the momentum of this iPhone cycle, combined with the positive trends across the company’s non-iPhone portfolio. [And] after falling for six consecutive quarters, Greater China revenue returned to growth (up 12% YoY) in 4Q:FY17.”
Top Sector Stocks — Basic Materials: MasTec (MTZ)
Last but by no means least we have basic materials stock MasTec, Inc. (NYSE:MTZ). This “Strong Buy” stock is a multinational infrastructure engineering and construction company based in Florida. Mastec boasts a workforce of nearly 10,000 skilled professionals, and an extensive wholly owned fleet of construction equipment. It also boasts top marks from the Street.
In the last three months, analysts have published seven buy ratings on MTZ. Meanwhile the $55.50 average analyst price target suggests big upside potential of over 28%. Top Canaccord Genuity analyst Robert Burleson has just ramped up his price target to $58 from $55. The move comes following impressive results for the third quarter. And due to the Q3 earnings beat, management has now raised full-year guidance to $6.3 billion in revenues (from $6 billion) and EPS of $2.80 (up from $2.73).
Now Burleson is increasingly bullish about the stock’s potential. He says “We reiterate a BUY on MTZ ahead of what we expect to be increasing 2018 estimates and an expanding multiple. With all segments poised for growth in 2018, a more diversified positive top line performance is likely to be enhanced on the bottom line by better Oil and Gas margins and a generally improving pricing and mix environment from large projects.”
Which stocks are the top 25 analysts recommending right now? Find out here.
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