You can’t always follow every analyst forecast with blind trust, but it is important to stay on top of which stocks analysts see performing best down the road.
Stock analysts spend all day following the market, and while they are not always right, they do have their finger on the pulse of the market much better than the average investor, so their outlooks are always worth watching.
With so much uncertainty in the market right now, traders need to focus on companies that have the potential to show strong earnings growth. Wall Street loves growth, and one of the big fears in today’s market is a slowdown in corporate earnings growth.
Finding stocks that analysts believe will show strong growth moving forward is important. Here are five stocks with strong earnings growth estimates and bullish average price targets.
Heavy machinery maker Caterpillar (CAT) just took a decent hit following a Q4 earnings miss. China is a problem and the company sees ongoing weakness in the region, but forecast earnings and revenue growth for the next two years. It was the first miss since the company’s first quarter 2016, and shares have already started to rebound. CAT dropped from $136.86 to a low of $123.15 when the company reported on January 28 but has already made back a significant amount of its losses and is now back to $128.75, suggesting Wall Street remains upbeat on the stock due to its potential earnings growth in the next few years. Analysts forecast earnings will grow at an annual average rate of 25 percent over the next five years. The stock is trading at $128.75 with an average price target of $160.07.
Cigna Corp. (CI)
Health care plan operator Cigna (CI) is trending higher ahead of its February 1 quarterly report. The stock sold off with the overall market in December but is once again trending higher in anticipation of a strong quarterly report. Analysts expect earnings of $2.53 but the street has a much higher whisper number of $2.64 for the quarter. During the same period last year, the company had earnings of $1.94. The last five years have been good with the company growing earnings by 15 percent per annum. Wall Street expects more of the same moving forward, with Cigna is expected to grow earnings at an annual rate of 18 percent over the next five years. CI is currently trading at $196.10 with an average price target of $245.53.
Electric auto maker Tesla (TSLA) has been a wildcard since its public debut. The company proved it was possible for an electric car maker to turn a profit but has also shown how difficult it can be for an automaker to navigate the growing pains of scaling up a business in such a competitive sector with huge barriers of entry. If Tesla is able to streamline its operations and logistics the company has a real chance to become a major player in an auto industry that for decades has been dominated by just a few key players. Earnings are rising, with profits expected to climb 83 percent this year and over 530 percent next year. Earnings growth will not be able to maintain those huge numbers, but a forecast average annual earnings growth rate of 35 percent over the next five years is still tremendous if the company is able to keep pace. The stock trades at $299.07 with an average price target of $339.30.
Marriott Int’l (MAR)
Hotel and resort operator Marriott Int’l (MAR) suffered a tough second half in 2018, with shares trading steadily lower before hitting a low toward the end of December. As the overall market has rebounded, so has MAR and the stock is now up 12 percent from the 52-week low set on December 24. The company has a strong record of posting big beats on the bottom line but has reported disappointing revenues the last three quarters. It will need to show strength on both the top and bottom line when it next reports on February 13. If it does, the stock should easily continue to build on its recent gains. Earnings are expected to be $1.40 per share, up from $112 during the same period last year. Marriott is expected to grow profits by 19% per annum over the next five years. MAR is at $112.06 and analysts have an average price target of $132.43 on the stock.
Southwest Airlines (LUV)
Southwest Airlines (LUV) is bouncing off a big sell off during the final three months of 2018. The stock hit a 52-week low of $44.28 on December 26, but in the weeks since has rallied 29 percent to $57.30. A strong set of quarterly numbers on January 24 helped push the stock through a solid resistance level and shares continue to trend higher. Earnings rose to $1.17 from $0.77 during the same period last year while sales were up 7.5 percent. Over the last five years the company has managed to grow earnings at an annual rate of 24 percent. Looking ahead analysts see the company’s growth slowly slightly, but still expect earnings will rise by 17 percent per annum over the next five years and have an average price target of $63.07 on the stock. LUV is currently trading at $57.30.