The week of October 4, 2019, proved to be yet another one full of volatility. The Dow Jones industrials were down at one point more than 1,000 over three trading sessions, but a snapback rally was seen on Thursday and Friday to help out the week. Earnings season is still not quite here, and investors are trying to figure out just how they want to be positioned ahead of U.S./China trade talks and the coming election. Despite the volatility and slower growth, the Dow, S&P 500 and Nasdaq were all handily higher, with double-digit percentage gains year to date.
Treasury yields are also very low, with the 10-year yield barely hanging on to 1.50% and the 30-year to 2.0%. Now that the fourth quarter of 2019 is here, savvy investors are looking beyond the noise of today for the undervalued or underappreciated themes for 2020.
24/7 Wall St. reviews dozens of analyst research reports each day of the week to find new ideas for traders and long-term investors alike. It turns out to be hundreds of analyst calls in any given week. Some of the daily analyst calls cover stocks to buy, while others cover stocks to sell or avoid. Reviewing these for a pattern or for groups revealed that the week of October 4 had multiple analyst calls advising investors and traders to buy certain mega-cap and blue-chip stocks. These are generally expected to be high leaders in the Dow or S&P 500, and all have a market capitalization of more than $100 billion.
Before just following the herd, investors should use analyst research reports only as a starting place or as one portion before making any investment decision. This also comes with a warning that chasing bullish analyst calls during broad sell-offs can be quite painful. Most Buy/Outperform analyst calls at this stage of the 10-year-plus bull market come with an implied total return (upside to targets plus dividends) projections of 8% to 10%.
Here are six blue-chip picks (technically seven stocks) from Wall Street analysts that received very favorable analyst coverage with above-consensus upside projections in the past week. Consensus estimates and price target data come from Refinitiv.
Apple Inc. (NASDAQ: AAPL) received multiple calls during the first week of October, with firms pointing to higher demand and production for the new iPhone 11. Wedbush has been the most frequent bull, with multiple reasons Apple is rated as Outperform and has a $245 target price.
Apple shares were up at $224.75 in midday trading on Friday, compared with $218.82 on the prior Friday, despite what had been a 1,000 mid-week drop in the Dow. Citigroup also maintained its Buy rating with a $250 target price, even after warning that Apple’s sales might disappoint due to a slower global growth story and tariffs hurting its demand ahead.
AT&T Inc. (NYSE: T) lived up to being a defensive stock in the past week, as the Dow sold off about 1,000 points at one point and AT&T was at $37.30 late on Friday, compared with $37.43 the prior week. Nomura Instinet reiterated its Buy rating and its $43 price target. The firm noted that third-quarter results should be more positive and supportive of the stock, while AT&T’s reticence to match Verizon’s price cut implies confidence in wireless while it also has activist pressure.
AT&T has a consensus target price of $36.36 and a dividend yield of 5.5%.
Citigroup reiterated Comcast Corp. (NASDAQ: CMCSA) as a Buy and raised the price target to $56 from $50 this week. In the prior week, Pivotal Research reiterated its Buy rating and raised its target to $56 from $54, while Benchmark started Comcast with a Buy rating and set a super-high $64 target price.
Comcast had closed up one-cent at $44.06 a share on Thursday, but it was trading up over 1% at $44.70 late on Friday. Comcast’s consensus target price was $50.30 ahead of the Citigroup call.