Here’s how Wall Street’s favorite stock picks turned out in 2019

As we head to a new year, predictions for financial markets and stock picks for 2020 are flowing. It’s also time for annual mea culpas, as stock pickers admit their failures — and, of course, brag about their successes.

It’s difficult for a fund manager to beat the broader market, which is a reason why low-cost index funds are so popular. The S&P 500 Index

SPX, +0.03%

 has returned 30% (with dividends reinvested) through Dec. 16. The benchmark index last performed so well in 2013, when it jumped 32%.

MarketWatch’s Jeff Reeves wrote an entertaining piece about his mixed record for 2019 stock selections, and readers chimed in with their own amusing comments.

We have already listed the favorite large-cap, mid-cap and small-cap stock picks among Wall Street analysts for 2020. Let’s see how their selections for 2019 performed.

How Wall Street’s favorites fared

On Jan. 2, we narrowed the S&P 500, the S&P 400 Mid Cap Index

MID, +0.33%

 and the S&P Small Cap 600 Index

SML, +0.77%

to companies covered by at least five sell-side analysts with at least 75% “buy” or equivalent ratings. We then listed the 20 for each index with the highest implied upside for 2019, based on consensus price targets.


A favorite large-cap stock pick for 2019 was Anadarko Petroleum. The stock closed at $43.84 on Dec. 31, 2018, and analysts’ consensus price target for the shares on that date was $76.86. After Anadarko agreed in April to be acquired by Chevron

CVX, -0.64%

 for $65 a share, Occidental Petroleum

OXY, +0.00%

 outbid Chevron to take out Anadarko for $76 a share in August. Activist investor Carl Icahn sent a letter to Occidental’s shareholders criticizing the deal, and Occidental’s management team and board of directors.

The consensus price target wasn’t met, but that $76 takeout price was a 73% premium from Anadarko’s share price on Dec. 31. So this one is in the “win” column for the analysts.

Here are the other 19 large-cap picks for this year, with total returns (which include reinvested dividends) through Dec. 16, 2019:

Company Ticker Industry Total return – 2019
Aptiv PLC

APTV, +0.93%

Auto Parts: OEM 56%
LKQ Corp.

LKQ, +0.33%

Automotive Aftermarket 51%
Allergan plc

AGN, +0.27%

Pharmaceuticals: Generic 45%
Conagra Brands Inc.

CAG, +1.35%

Food: Major Diversified 39%
Electronic Arts Inc.

EA, +0.03%

Recreational Products 34%
SVB Financial Group

SIVB, +1.19%

Regional Banks 32%
Norwegian Cruise Line Holdings Ltd.

NCLH, +0.09%

Hotels/Resorts/Cruiselines 30%
Alexion Pharmaceuticals Inc.

ALXN, -1.39%

Biotechnology 14%
PVH Corp.

PVH, +0.83%

Apparel/Footwear 13%
Pioneer Natural Resources Co.

PXD, +0.46%

Oil & Gas Production 10%
Marathon Petroleum Corp.

MPC, +0.76%

Oil Refining/Marketing 7%
TechnipFMC Plc

FTI, +0.30%

Oilfield Services/Equipment 4%
Diamondback Energy Inc.

FANG, -1.23%

Oil & Gas Production -5%
Halliburton Co.

HAL, +1.40%

Oilfield Services/Equipment -5%
American Airlines Group Inc.

AAL, +1.29%

Airlines -12%
Albemarle Corp.

ALB, +3.88%

Chemicals: Specialty -12%
Concho Resources Inc.

CXO, +0.00%

Oil & Gas Production -21%
Mylan NV

MYL, -1.05%

Pharmaceuticals: Generic -31%
Source: FactSet

Including Anadarko, eight of the 20 large-cap picks matched or beat the return of the S&P 500 in 2019. So 12 underperformed the index, with six having negative returns. Eleven of the 20 returned at least 10%.


Here’s how the 20 mid-cap picks performed in 2019 through Dec. 16:

Company Ticker Industry Total return – 2019
Marriott Vacations Worldwide Corp.

VAC, +0.36%

Other Consumer Services 82%
Lumentum Holdings Inc.

LITE, +0.21%

Telecommunications Equipment 80%
MKS Instruments Inc.

MKSI, +0.70%

Electronic Production Equipment 72%
MasTec Inc.

MTZ, +1.91%

Engineering & Construction 52%
Knight-Swift Transportation Holdings Inc. Class A

KNX, +0.27%

Trucking 48%
Boyd Gaming Corp.

BYD, +0.13%

Casinos/Gaming 44%
Thor Industries Inc.

THO, -0.45%

Recreational Products 36%
Brunswick Corp.

BC, -0.72%

Recreational Products 32%
HealthEquity Inc.

HQY, +1.97%

Investment Managers 22%
East West Bancorp Inc.

EWBC, +2.00%

Regional Banks 14%
Cabot Corp.

CBT, -0.70%

Industrial Specialties 13%
SLM Corp

SLM, +1.34%

Finance/Rental/Leasing 9%
Apergy Corp.

APY, +2.43%

Oilfield Services/Equipment 8%
WPX Energy Inc.

WPX, +6.64%

Oil & Gas Production 5%
Patterson-UTI Energy Inc.

PTEN, -0.54%

Contract Drilling 0%
Allegheny Technologies Inc.

ATI, -1.07%

Steel -2%
Ligand Pharmaceuticals Inc.

LGND, +1.53%

Biotechnology -22%
Granite Construction Inc.

GVA, -0.39%

Engineering & Construction -29%
Callon Petroleum Co.

CPE, +7.73%

Oil & Gas Production -32%
Inogen Inc.

INGN, +0.07%

Medical Specialties -43%
Source: FactSet

Eight of the 20 mid-cap picks beat the 25% return of the S&P 400 Mid Cap Index during 2019 through Dec. 16. That matches the success of the large-cap group. Five of the mid-cap stocks had negative returns, with four down more than 20%, while 11 had returns of at least 10%.


One of the small-cap picks was Control4 Corp., which closed at 17.60 a share on Dec. 31, 2018. Analysts’ consensus price target for the stock at that time was $31.75. The company was acquired by privately held SnapAV for $23.91 a share on Aug. 4. So the price target wasn’t met, but the company was taken out at a 36% premium to the Dec. 31, 2018 price. So this one was a winner for the analysts.

Here’s how the other 19 small-cap picks did:

Company Ticker Industry Total return – 2019
Medicines Co.

MDCO, -0.05%

Pharmaceuticals: Other 340.7%
Ultra Clean Holdings Inc.

UCTT, +0.20%

Electronic Production Equipment 171.5%
Koppers Holdings Inc.

KOP, +2.01%

Chemicals: Specialty 116.3%
Patrick Industries Inc.

PATK, +0.33%

Building Products 72.5%
Helix Energy Solutions Group Inc.

HLX, +0.44%

Oilfield Services/Equipment 69.3%
Cytokinetics Inc.

CYTK, -2.16%

Biotechnology 61.4%
TTM Technologies Inc.

TTMI, +0.88%

Electronic Components 51.7%
Nabors Industries Ltd.

NBR, +3.82%

Contract Drilling 33.0%
Archrock Inc.

AROC, -0.21%

Oilfield Services/Equipment 32.7%
Progenics Pharmaceuticals Inc.

PGNX, +1.57%

Biotechnology 21.2%
Green Plains Inc.

GPRE, +4.58%

Chemicals: Specialty 20.1%
Enova International Inc.

ENVA, +1.25%

Finance/Rental/Leasing 19.4%
SMART Global Holdings Inc.

SGH, +0.46%

Semiconductors 16.2%
Vonage Holdings Corp.

VG, +0.14%

Specialty Telecommunications -15.5%
TETRA Technologies Inc.

TTI, +14.79%

Oilfield Services/Equipment -15.5%
ProPetro Holding Corp.

PUMP, +3.56%

Oilfield Services/Equipment -15.7% Inc.

STMP, -1.58%

Internet Software/Services -48.2%
Ring Energy Inc.

REI, +5.60%

Oil & Gas Production -54.3%
Rayonier Advanced Materials Inc.

RYAM, +3.52%

Chemicals: Specialty -62.0%
Source: FactSet

Twelve of the small-cap picks matched or beat the 21% return for the S&P Small Cap 600 Index through Dec. 16, with three more than doubling. Fourteen had returns of at least 10%, while six had negative returns. Three fell more than 20%.

So there you have it — a decent record for the small-cap stocks (with three big losers) and records of mostly underperformance for the large-cap and mid-cap groups.

This sheds light on one of the problems with Wall Street: 12-month price targets. That’s a short period for serious long-term investors who believe in the companies they own. When doing your own stock-picking homework, you might build confidence that a company’s financial condition and business strategy are in a position to compete effectively over the next decade. That can carry you through a bad year for the stock.

Don’t miss: Wall Street’s top dividend stock picks for 2020

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