It’s Valentine’s Day. That makes it a good time to check in on stocks that Wall Street has strong feelings for.
Barron’s has run screens of best-loved stocks a few times—and a few times on Valentine’s Day. For the holiday, we typically look for a combination of strong Buy-rating ratios and the potential for gains based on analysts’ price targets.
The Buy-rating ratio is simply the number of Buy calls on a stock-ratings divided by the total number of ratings. Upside just compares the average analyst price target to where the stock is currently trading.
The criteria for any screen come down to preferences. There is no set way to run a screen. Different universes of stocks can be used: The
Russell 1000
or
Nasdaq Composite,
for example, offer alternatives to the
S&P 500.
The important thing is that any screen is simple and makes some sense. Looking for top Buy-rating ratios isn’t a bad idea. Analysts are the ones paid to know what’s going on at a company and in an industry.
The 2023 Valentine’s Day screen identified 12 stocks in the
S&P 500
with strong Buy-rating ratios and upside of at least 10%. There were some big winners on the list, such as
Amazon.com
and
Alphabet.
Overall, however, returns were about as appetizing as a half-eaten year-old box of chocolates. The dozen stocks rose an average of 6% over the past year, trailing the S&P 500 by some 14 percentage points.
This year, the Valentine’s Day screen focuses on quality over quantity. We looked for the half-dozen stocks with the highest Buy-rating ratios in the S&P 500, according to FactSet. The six included shares of utility
NiSource,
Amazon,
Microsoft,
energy distributor
Targa Resources,
Delta Air Lines,
and energy services provider
Schlumberger.
| Company / Ticker | Market Value (billion) | Recent Price | Buy-Rating Ratio | Target Price | 2024E P/E |
|---|---|---|---|---|---|
| NiSource / NI | $10.5 | $25.28 | 100% | $29.30 | 14.8 |
| Amazon / AMZN | 1,751.7 | 168.64 | 96.7 | 206.40 | 40.8 |
| Microsoft / MSFT | 3,019.1 | 406.32 | 96.1 | 469.90 | 34.9 |
| Targa / TRGP | 19.7 | 88.44 | 95.7 | 107.70 | 15.2 |
| Delta / DAL | 25.7 | 40.01 | 95.5 | 54.10 | 6.2 |
| Schlumberger / SLB | 67.9 | 47.58 | 93.5 | 68.10 | 13.4 |
E=estimate
Source: FactSet
The six stocks have an average Buy-rating ratio of 96%, which compares with an average of about 55% for stocks in the S&P 500. The average upside based on average price targets is 24%, compared with 9% for companies in the S&P 500.
The average return over the past year is also about 24%. Two of the six stocks are down over that span: NiSource and Schlumberger.
The valuations are wide-ranging. There are some growth stocks and value stocks in the bunch. Amazon stock trades for about 41 times estimated 2024 earnings. Shares of Delta Air Line trade for about six times.
Buying one share of each of the six—maybe as a gift for a loved one—would cost about $936. The average Valentine’s Day spending looks to be $185.81 per person this year, according to the National Retail Federation. That’s down from about $190 in 2023.
Barron’s likes stocks better than chocolate. They are less fattening and offer more to chew on. With a screen, that involves learning about and valuing the individual companies identified. The act of running a screen is only the beginning of the investment process.
Write to Al Root at [email protected]
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