Market 2017-12-07 & Large Cap Picks

The story line in today's market is similar to yesterday's, as Tech and Industrial lead. Crude +1.2%, Gold -1.3%.

Surprisingly, Broadcom (AVGO) gave up all its early gain and finished flat.

GE announced to layoff 12,000 in power unit. Stock priced initially jumped more than 2% before giving up the gain. The massive layoff is expected and analysts are not convinced.

LULU jumped 6.3% today, reaching 52wk high.

LC tumbled 15% today after disappointing investor day.

Let's forget today's boring market, and have a look this interesting article by Philip Van Doorn on Market Watch. (Click HERE for the article)

The writer published a list of large cap stocks in Dec 2016, which had the highest 1-year return expectation by various analysts in Wall Street. There are 18 companies on that list with return expectation higher than 30%. Following are the data：

  • 12/5/2016 --- 11/30/2017, the S&P 500 Index rose 20%. 
  • Of analysts’ 18 favorite large-cap stocks, only 5 (CNC, ATVI, FB, EW, CRM) had better return than expected.
  • 11 underperformed the S&P 500.
  • 8 of the 18 stocks suffered price declines, with 6 dropping by double digits.
  • The 2 stocks which analysts expected >50% gain — dropped more than 50%.

What we learn is that analysts' rating and price target could be ridiculously wrong!

Let's give them another chance. Here is the new list: 17 S&P 500 stocks with majority “buy” ratings that analysts expect to rise at least 25% over next 12 months:

 Pick      Price on 11/30    expected gain
RRC             18.02                 59%
ALXN        109.81                 50%
INCY           98.99                 49%
WDC           78.86                 44%
NBL             35.38                 35%
KMI             17.23                 34%
AGN           173.83                33%
APC              48.09                29%
EQT              59.60                29%
AMAT           52.77                28%
MU                42.39                27%
HBI               26.53                27%
VRTX         144.29                 27%
CBS              56.06                 26%
EXPE         122.50                 26%
HAL             41.78                 25%
CSRA           28.93                 25%

Note: among the 17, 6 are Energy, 4 are Biotech. These are not my picks or recommendations.

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