Stock market traders can take advantage of special situations to exploit sentiment and momentum and make quick profits – if they are quick or lucky enough. But in the long run, investors have profited from shares in companies that increase sales, profits and cash flow. And the resulting increases in analyst ratings can help raise stock prices.
Below is a list of actions among the S&P 500 SPX,
that had the biggest increases in “buy” or equivalent ratings this year among analysts surveyed by FactSet. An increase could mean that a stock has fallen enough for an analyst to believe that it has become an attractive value. Or it could mean that something has changed for the better in business or in the company sector. Or it could be a combination of these and other factors.
A focus on the positive side of the ratings action makes sense. Analysts who work for brokerage firms – those that provide recommendations to investing clients – are separated from the business groups of the companies that generate fees by providing various services to some of the same companies covered by the analysts. But there is still a much greater tendency for these so-called sales-side analysts to assign “buy” ratings or “overweight” equivalents than “sale” ratings or “underweight” ratings.
Among the S&P 500, 270 companies have a majority “buy” or equivalent ratings among analysts surveyed by FactSet, but only two (American Airlines Group Inc. AAL,
and Lumen Technologies Inc. LUMN,
) have a majority rating of “sale” or equivalent.
An increase in the number of “purchase” ratings does not necessarily mean that all new “purchases” resulted from updates. The number of analysts covering any company changes frequently. An analyst can start coverage with a “buy” rating. Brokers generally add or decrease coverage for companies or even entire sectors due to personnel changes or resource reallocation.
Largest increases in ‘purchase’ ratings
Here is a list of 22 companies among the S&P 500 that now have at least three more “buy” ratings than at the end of 2020:
The table is ranked in two ways – first by the increase in the number of “buy” ratings, but then by the current percentage of “buy” ratings. You will need to scroll the table to see all the data.
ConocoPhillips COP,
is at the top of the list because it has five more “buy” ratings than on December 31 and because 96% of analysts polled by FactSet currently classify the shares as “buy”.
The second company on the list, Chevron Corp. CLC,
it also had its number of “buy” ratings increased by five, but 68% of analysts rated the stock as “buy”.
Third on the list is Intel Corp. INTC,
also with five additional “buy” ratings, but with only 38% of analysts having a positive rating on stocks.
Higher percentage of ‘purchase’ ratings
Here is a list of 21 S&P 500 companies with the highest percentage of “buy” ratings among analysts surveyed by FactSet:
The last two, Jacobs Engineering Group Inc. J,
and Cigna Corp. CI,
are tied at 88%.
The first two companies, Assurant Inc. AIZ,
and Teledyne Technologies Inc. TDY,
has not earned any “buy” ratings since late 2020, however, Teledyne has one less overall rating, which is why it is now 100% rated as purchased according to FactSet data.
There are six companies involved in the production or distribution of oil on the first list and four on the second, which shows analysts’ growing confidence in the recovery in oil prices.
Amazon.com Inc. AMZN,
is fourth in the second list, with 96% “buy” ratings. The founder of Internet retail pioneer Jeff Bezos announced on February 2 that he would step down as CEO during the third quarter, remaining as chief executive. Here’s a look at how well Amazon’s shares have fared since they went public in May 1997.