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View of Amazon office
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Amazon and a little known energy company are Wall Street analysts’ favorite stocks based on highest percentage of buy ratings.
Both the online retailing juggernaut and Diamondback Energy are universally loved on Wall Street, with all analysts that cover the stocks rating them a buy. They are the only two out of 500 stocks where that’s the case, according to FactSet.
CNBC used FactSet to screen all S&P 500 companies looking for the stocks with the highest percentage of buy ratings compared to total ratings. We threw out companies that had less than 10 analysts covering them.
Amazon, the world’s second most valuable company behind Microsoft, grew its share of the U.S. the e-commerce market to 42% in 2018, according to JP Morgan. The bank expects Amazon, whose stock has surged more than 2000% in the past decade, to surpass Walmart as the largest U.S. retailer in 2020. Amazon shares are up 23% this year.
“The highest quality management and franchise within global internet – a must own name with huge upside even from here,” Pivotal Research’s Michael Levine said in a note to clients about Amazon. “AWS duration will surprise to the upside both on topline and EBIT and the move towards one day shipping is a significant step to owning the consumer’s wallet.”
Diamondback Energy?
Amazon’s accumulation of 47 buy ratings on the Street may not come as a surprise given its dominance in the e-commerce space. However, tied for first place is oil and gas drilling company Diamondback Energy.
Diamondback, which drills exclusively in the Permian Basin, reported last month that its oil and natural gas production more than doubled from a year ago to 263 million barrels of oil equivalent per day. The company was one the the biggest energy sector gainers immediately after Chevron announced its $33 billion deal to buy Anadarko last month.
Analysts believe Diamondback shares will jump 64% over the next 12 months, based on their average price target collected by FactSet.
In May, Bank of America Merrill Lynch added Diamondback to its prestigious US 1 list, with a $170 price target. The bank said shares of Diamondback have underperformed but its fundamentals have improved.
“FANG remains a top pick on continued benefits from a transformational recent acquisition, top-notch execution, increased shareholder friendly initiatives and above -average oil leverage,” Bank of America’s Asit Sen said in a note to clients.
Diamondback acquired rival Energen in a $9.2 billion deal last year. The shares are down 17% over the last month.
Healthcare loved
Last month, data center services company Equinix had its second best booking quarter on record and had its highest level of organic growth since 2015, according to Guggenhiem, which has a price target of $505.
Equinix, whose stock is up more than 42% this year, has 200 data centers across five continents.
“We believe the company is increasingly well positioned as significant capacity additions through the year are set to meet consistent demand – evident in two consecutive strong bookings quarters, and meaningful step-ups in organic growth,” Guggenheim’s Robert Gutman said in a note to clients.
Cloud company Salesforce is the most loved technology stock out there. The Marc Benioff-lead company announced on Monday it would purchase data visualization firm Tableau for $15.3 billion in stock.
The healthcare industry has the most stocks on the list, including UnitedHealth, Agilent and Boston Scientific. Paradoxically, worries from investors over drug pricing reform and “Medicare for All” changes have weighed on some healthcare stocks in recent months.
—with reporting from CNBC’s Michael Bloom