After an outstanding 2020, growth stocks have been having a tougher time during this year of expected economic recovery and a return to some sort of post-coronavirus normal. The Nasdaq has been up about 78% over the past 12 months, but only flat so far in 2021. Meanwhile, small-cap value stocks have already climbed more than 20% in less than three months.
However, recent softness is not a good-enough reason for Wall Street to dislike some of the top growth names. Today, the Apple Maven looks at what sell-side analysts believe to be the best investment opportunities from within this group of out-of-favor stocks.
Facing off growth stocks
There are a couple of ways to quantify Wall Street’s preferences within the growth stock universe. The first is by looking at how many of them have a “buy” or “strong buy” rating on each stock, relative to the total number of analysts covering the companies.
Of the largest growth stocks, defined here as those representing at least 2% of the Nasdaq, two have a perfect record with Wall Street. 100% of analysts that cover Amazon and Microsoft are currently bullish on these stocks, and see them as a buy or strong buy today.
Alphabet and Facebook do not rank poorly either, at a “bullish ratio” of at least 94%. The least appreciated stock among all eight of them is Tesla, with only 38% approval on Wall Street.
There is another way to assess Wall Street’s views on growth stocks: price targets. The chart below quantifies the investment opportunity by comparing analysts’ views on fair value vs. what each stock is currently worth in the market.
Here, a clear winner emerges. Not only is Wall Street all in on Amazon, but analysts also see in the stock the greatest investment opportunity within mega-cap growth: more than 30% upside. Microsoft does not rank quite as well this time, probably due to the resilience in the stock price over the past few weeks. Dead last is Tesla, once again, with analysts projecting an average loss of 14% on the stock.
Twitter speaks
I proposed a pop quiz on Twitter: which growth stock is most loved on Wall Street? Now that you know the answer, check out the results of the poll below:
Explore more data and graphs
The data used in this report was provided by Stock Rover. I have been impressed with the breadth and depth of information on markets, stocks and ETFs that this platform provides. Stock Rover also helps to set up detailed filters, track custom portfolios and measure their performance relative to a number of benchmarks.
To learn more, check out stockrover.com and get started for as low as $7.99 a month. The premium plus plan that I have will give you access to all the information that went into my analysis and much more.
(Disclaimers: this is not investment advice. The author may be long one or more stocks mentioned in this report. Also, the article may contain affiliate links. These partnerships do not influence editorial content. Thanks for supporting The Apple Maven)
