Despite higher inflation, rising interest rates, military conflict in Ukraine, and a resurgence of COVID-19 in China, analysts have more Buy ratings on stocks in the S&P 500 as a percentage of their total ratings in more than 10 years.
On March 31, there were 10,821 ratings on stocks in the S&P 500. Of these ratings, 57.3% were Buy ratings, 37.1% were Hold ratings, and 5.6% were Sell ratings. Over the past five years, the average (month-end) percentage of Buy ratings is 52.9%, the average (month-end) percentage of Hold ratings is 41.1%, and the average (month-end) percentage of Sell ratings is 6.0%.
The month of March marked the second highest (month-end) percentage of Buy ratings for the index going back to at least 2010, trailing only the previous month (February) at 57.4%. Prior to the recent surge in Buy ratings, the last time the percentage of Buy ratings exceeded 55% at the end of a month was September 2011 (55.8%).
At the sector level, analysts are most optimistic on the Energy (66%), Information Technology (64%), and Communication Services (62%) sectors, as these three sectors had the highest percentages of Buy ratings on March 31. On the other hand, analysts are most pessimistic on the Consumer Staples (41%) and Utilities (49%) sectors, as these two sectors had the lowest percentage of Buy ratings on March 31. The Consumer Staples sector also had the highest percentage of Hold ratings (48%) and the highest percentage of Sell ratings (11%) on this date.
The S&P 500 companies with the highest percentages of Buy and Sell ratings on March 31 are listed in the tables below.
|
Company |
Buy |
Hold |
Sell |
|
Signature Bank |
100% |
0% |
0% |
|
Alexandria Real Estate Equities, Inc. |
100% |
0% |
0% |
|
Assurant, Inc. |
100% |
0% |
0% |
|
Alphabet Inc. Class C |
98% |
2% |
0% |
|
Amazon.com, Inc. |
96% |
2% |
2% |
|
Alphabet Inc. Class A |
96% |
4% |
0% |
|
Microsoft Corporation |
95% |
5% |
0% |
|
IQVIA Holdings Inc |
95% |
5% |
0% |
|
Caesars Entertainment Inc |
94% |
6% |
0% |
|
Alaska Air Group, Inc. |
93% |
7% |
0% |
|
Company |
Buy |
Hold |
Sell |
|
Consolidated Edison, Inc. |
6% |
35% |
59% |
|
Clorox Company |
16% |
32% |
53% |
|
Pinnacle West Capital Corporation |
19% |
31% |
50% |
|
Lumen Technologies, Inc. |
14% |
43% |
43% |
|
Snap-on Incorporated |
30% |
30% |
40% |
|
Progressive Corporation |
26% |
37% |
37% |
|
Robert Half International Inc. |
36% |
29% |
36% |
|
Church & Dwight Co., Inc. |
19% |
48% |
33% |
|
Expeditors Intl. of Washington, Inc. |
13% |
56% |
31% |
|
McCormick & Company, Incorporated |
15% |
54% |
31% |
Analysts are also optimistic in their target price estimates, as they currently believe the price of the index will increase by more than 16% (to 5282.93) over the next 12 months. For more details, please refer to our recent article on this topic.
What is driving the optimistic outlook in terms of ratings and target prices? One likely reason is that analysts have been increasing earnings estimates for S&P 500 companies in aggregate for CY 2022 and CY 2023 for several months. For more details, please refer to this recent article.
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