One place where you can get ideas on the best stocks to buy is to review the top stocks analysts love.
At the beginning of 2023, Investor’s Business Daily published an article discussing the nine stocks analysts thought would deliver the best returns based on 12-month target prices. Of the nine, only Dish Network (NASDAQ:DISH) is down year-to-date, and it’s off by more than 57%.
So, there’s something to following the pros’ recommendations.
A quick Finviz.com screen of S&P 500 stocks tells me that there are 63 with an average analyst recommendation of less than 2.0. Lower is better in this situation.
The worst score is 3.5. There are two stocks in this lowly category. Approximately 387 are between 2.0 and 3.0, with 53 above 3.0. The companies I’m after are those in the group of 63.
To make things interesting, I’ll select from three different sectors and select three different share price categories: one below $100, one above $500 and one in between, with a median target price at least 5% higher than the share price.
TJX Companies (TJX)
Representing the consumer discretionary sector, TJX Companies (NYSE:TJX) has a recommendation rating of 1.80 and a share price under $100. The company’s share price jumped by more than 4% in mid-August after reporting results that were much better than expected.
On the top line, its revenue was $12.76 billion, $310 million higher than analyst expectations, while on the bottom line, it earned 85 cents a share, eight cents above the consensus estimate.
Despite it rarely delivering massive annual gains, TJX is one of those stocks analysts love as it provides enough meat on the bone for investors to keep coming back over the long haul. YTD, it’s up nearly 16% and 39% over the past year.
After the discount retailer reported its Q2 2023 results, Barron’s reported that Barclays analyst Adrienne Yih was very complimentary about its business:
“’TJX’s report is a testament to the strength of the Off-Price model in a consumer slowing backdrop,’ wrote Barclays analyst Adrienne Yih in a note to clients. ‘Inventory remains plentiful in quality and quantity, and consumers’ pressured wallets are seeking value via the Off-Price channel.'”
There is no question that TJX’s off-price business model is an enduring one that will continue to generate profitable growth.
Of the 25 analysts that cover its stock, 19 rate it Overweight or Buy, with a $99 median target price.
S&P Global (SPGI)
Representing the financial sector, S&P Global (NYSE:SPGI) has a recommendation rating of 1.70, according to Finviz.com, and a share price between $100 and $500.
The company best-known for its S&P Indices business is having a decent year in the markets. It’s up more than 17% YTD, about 103 basis points ahead of the index.
Of the 23 analysts that cover its stock, 21 rate it Overweight or an outright Buy, with a median target price of $450.50, 14% higher than its current share price.
The last time I called on SPGI was in July. The financial stock was one of three names that analysts generally liked. Nothing’s changed in that regard.
Well, not entirely. S&P Global reported its Q2 2023 results a week after my July article. They were decent if not a thing of beauty. Revenues rose 3% on an adjusted basis to $3.1 billion, while its operating income was $1.43 billion, 2% higher than Q2 2022.
At the midpoint of its guidance, the company expects revenues to grow 5% in 2023, with earnings per share of $12.45. That’s 11% higher than in 2022.
By hook or by crook, CEO Doug Peterson will continue to grow S&P Global profitably.
Representing the tech sector, Intuit (NASDAQ:INTU) has a recommendation rating of 1.80 and a share price over $500. The company’s share price jumped by more than 4% in mid-August after reporting results that were much better than expected.
On September 6, Intuit launched its first artificial intelligence (AI) product, Intuit Assist. It is part of CEO Sasan Goodarzi’s $20-billion bet on AI and big data that he made almost the day he became the company’s chief executive in 2019. Fortune’s Geoff Colvin recently reported that Goodrarzi said:
“At the end of the day, there are certain decisions you have to make. And the decision I made was, as a team, we’re going to bet the company on data and AI.”
Between TurboTax, QuickBooks, Credit Karma and Mailchimp, Intuit has a treasure trove of data from more than 177 million customers. Good data is critical to good AI. That puts Intuit heads above anyone else when rolling out AI-focused financial apps.
While the decisions made by Goodarzi back in 2019 involved risk, the CEO considers not taking action would have been equally risky:
“We are at the beginning of the journey with AI,” Goodarzi told Fortune. “In the next five to 10 years it will create new economies and destroy some economies, will create new experiences, fuel new company growth and make certain companies go out of business.”
In fiscal 2024 (July year-end), Intuit expects to grow its revenues and earnings by double digits, hence why it’s one of the stocks analysts love.
On the date of publication, Will Ashworth did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines