In this article, we will be taking a look at 10 S&P 500 stocks with the most upside.
Amid the bloodbath in the stock market in 2022, investors are flocking to stable stocks like The Coca-Cola Company (NYSE:KO), PepsiCo, Inc. (NASDAQ:PEP), and Johnson and Johnson (NYSE:JNJ). Compared to other indexes, the S&P 500 has been performing reasonably well. According to a JPMorgan Weekly Market Recap report for the week that ended on October 23, the S&P 500’s weekly return stood at 4.75%. In comparison, the Russell 2000 and Russell 1000 Value had weekly index returns of 3.57% and 3.93%, respectively. The S&P’s three-year cumulative index return stood at 31.1% as of October 24, while the Dow Jones 30, Russell 2000, and Russell 1000 Value, all lagged behind. The three-year cumulative returns for these indices were 23.38%, 16.66%, and 19.27%, respectively.
Our Methodology
We have selected S&P 500 stocks with significant upside potential, based on a comparison between their share prices as of October 24 and analyst price targets placed on the stocks. These companies are popular among hedge funds this year according to Insider Monkey’s second quarter hedge fund data when 895 funds were tracked. We have ranked these stocks based on the number of hedge funds holding stakes in them, from the lowest to the highest number.
S&P 500 Stocks With The Most Upside
10. BorgWarner Inc. (NYSE:BWA)
Number of Hedge Fund Holders: 31
Share Price as of October 24: $34.54
BorgWarner Inc. (NYSE:BWA) is an auto parts and equipment company providing solutions for combustion, hybrid, and electric vehicles across the globe. The company offers turbochargers, emissions systems, thermal systems, and gasoline ignition technology, among much more. It is based in Auburn Hills, Michigan.
John Murphy, an analyst at Bank of America, holds a $75 price target on shares of BorgWarner Inc. as of September 9. The analyst also reiterated a Buy rating on the stock.
This August, BorgWarner Inc. beat consensus estimates in its second-quarter earnings results with a 7% increase in organic sales during the quarter. The company’s guidance for the rest of the year remains strong despite inflation fears, as it expects full-year organic sales to rise by 11% to 14%, and its EPS to land between $4 to $4.4, versus the $4.02 consensus. In June, BofA analysts named BorgWarner Inc. as one of their top SMID-cap stocks for the second half of 2022. A SMID-cap stock is one of the smallest 2500 companies within the larger benchmark.
Bailard Inc was the largest stakeholder in BorgWarner Inc. in the second quarter, holding 123,486 shares worth $3.9 million. In total, 31 hedge funds were long the stock, with a total stake value of $182.5 million.
Oakmark Funds, an investment management firm, mentioned BorgWarner Inc. in its fourth-quarter 2021 investor letter. Here’s what the firm said:
“We had the opportunity to purchase BorgWarner for a high single-digit multiple of our estimate of normal earnings due to elevated cyclical concerns and uncertainty about the longer term impact of powertrain electrification on the business. Currently, the company’s earnings are depressed due to semiconductor supply constraints that are impacting the entire industry. We expect these constraints to prove transitory, and we’re confident that component shortages will be resolved in the coming years. Furthermore, we believe that OEMs are likely to rely heavily on third-party suppliers, like BorgWarner, to leverage R&D expenses to enhance innovation and speed-to-market in an electrified world. For decades, we’ve been impressed with how BorgWarner management has successfully acquired and scaled fuel efficiency technologies for internal combustion engines. We see strong parallels and underappreciated potential in the acquisitions the company has made over the past 5+ years in key electric vehicle technologies. We believe the company is well-positioned to manufacture and integrate new propulsion systems and components to meet customer demands.”
BorgWarner Inc., like The Coca-Cola Company, PepsiCo, Inc., and Johnson and Johnson, is set to become one of the most profitable stocks in the S&P 500 according to analysts today.
9. DISH Network Corporation (NASDAQ:DISH)
Number of Hedge Fund Holders: 41
Share Price as of October 24: $14.10
DISH Network Corporation (NASDAQ:DISH) is a communication services company providing pay-TV services in the US. The company operates through its Pay-TV and Wireless segments. It provides video services under its DISH TV brand, alongside programming packages including programming through national and local broadcast networks, and national and regional cable networks.
As of September 27, BofA analysts hold a Buy rating on DISH Network Corporation shares, alongside a $30 price target.
This September, DISH Network Corporation shares went up by 4% after Apple’s new iPhone unveiling event since the new iPhones all sported the company’s band 70 spectrum. Band 70 is an LTE operating frequency Band that carries mobile data for smartphone users.
DISH Network Corporation was found among the 13F holdings of 41 hedge funds in the second quarter. In comparison, 48 hedge funds were long the stock in the previous quarter. Their total stake values were $936.9 million and $1.8 billion, respectively.
8. Western Digital Corporation (NASDAQ:WDC)
Number of Hedge Fund Holders: 43
Share Price as of October 24: $34.86
Western Digital Corporation (NASDAQ:WDC) is an information technology company working to develop, manufacture, and sell data storage devices and solutions. The company operates in the US, China, Hong Kong, Europe, the Middle East, Africa, the rest of Asia, and internationally. It is based in San Jose, California.
Christian Schwab, an analyst at Craig-Hallum, placed a $50 price target on Western Digital Corporation shares on October 4. The analyst also reiterated a Buy rating on the stock.
In the fiscal fourth quarter of 2022, Western Digital Corporation had an EPS of $1.78, beating estimates by $0.06. The company’s revenue of $4.53 billion also beat the previous quarter’s revenue of $4.38 billion. Near the end of September, Western Digital Corporation shares rose by 25.% to $32.98 in premarket trading as well, outperforming key competitors such as Seagate Technology, which remained flat.
There were 43 funds long Western Digital Corporation in the second quarter, with a total stake value of $894.4 million. Of these funds, Lyrical Asset Management was the largest stakeholder in the company, holding 3.9 million shares worth $177.2 million.
7. Aptiv PLC (NYSE:APTV)
Number of Hedge Fund Holders: 43
Share Price as of October 24: $87.04
Aptiv PLC (NYSE:APTV) is another auto parts and equipment company on our list, working to design, manufacture, and sell vehicle components across the globe. The company offers electrical, electronic, and safety technology solutions in the automotive and commercial vehicle markets. It operates through its Signal and Power Solutions, and Advanced Safety and User Experience segments.
Berenberg’s Jared Maymon assumed coverage of Aptiv PLC shares on September 28 with a Buy rating. The analyst also placed a $130 price target on the stock.
This June, Goldman Sachs named Aptiv PLC as one of the companies it expects to perform well through the end of 2022, based on its solid free cash flow generation, good market share, and ability to benefit from the growth in the electric vehicles sector. Aptiv PLC also benefitted in April from an upgrade at Wells Fargo, which placed an Equal Weight rating on the stock after having it placed at Underweight for a while. Analyst Colin Lagan commented at the time that the company’s guidance of 8% to 10% growth over the market implied it was well-positioned to offset volume declines in a recession.
Our hedge fund data shows 43 funds long Aptiv PLC in the second quarter and 48 funds long the stock in the previous quarter. Their total stake values were $1.6 billion and $1.7 billion, respectively.
ClearBridge Investments, an investment management firm mentioned Aptiv PLC in its first-quarter 2022 investor letter. Here’s what the firm said:
“The acceleration in electrification of transport should support electric vehicle (EV)-related stocks like Aptiv (NYSE:APTV), which came under pressure in the quarter on concerns the auto cycle is past its peak. Aptiv provides a range of solutions for the auto industry, including autonomous driving technologies, safety technologies, components, and wiring. The large exposure of APTV to EVs should lead to long-term value as EVs continue their growth, boosted by their relative attractiveness as prices at the pump hit near-historic highs.”
6. Ford Motor Company (NYSE:F)
Number of Hedge Fund Holders: 46
Share Price as of October 24: $12.19
Ford Motor Company (NYSE:F) is an automobile manufacturer working to design and market a range of Ford trucks, cars, sport utility vehicles, electrified vehicles, and Lincoln luxury vehicles. The company operates through its Automotive, Mobility, and Ford Credit segments. It is based in Dearborn, Michigan.
Bank of America analysts placed a Buy rating on Ford Motor Company shares on September 27, alongside a $28 price target.
This October, Ford Motor Company saw an increase in its vehicle sales in China during the third quarter, when it sold 133,000 vehicles, demonstrating a 12% rise quarter-over-quarter. The company’s SUV sales were up 3% year-over-year as well. In September, Ford Motor Company also so a stunning rise of 197.3% year-over-year in its electric vehicle sales, with retail sales jumping by 152.1% year-over-year.
In total, 46 funds were long Ford Motor Company in the second quarter. Their total stake value was $608.8 million. Citadel Investment Group was the largest stakeholder in the company, holding 29 million shares worth $323.2 million.
Leaven Partners, an investment management firm, mentioned Ford Motor Company in its third-quarter 2022 investor letter. Here’s what the firm said:
“In our last quarterly letter, I briefly mentioned that the consensus estimates for corporate profits appeared to be a bit too sanguine. I referenced a Reuters article that reported, as of June 17, Wall Street expected S&P 500 earnings to grow by 9.6% in 2022, which was up from 8.8% in April and from 8.4% in January. That tune began to change at the end of July and accelerated in August and September, as major players, such as Ford (NYSE:F), has recently issued profit warnings and/or have withdrawn guidance. In response, Wall Street has altered its outlook: lowering third-quarter profit growth to 4.6%[2] from 7.2% in early August and slashing full-year profit growth to 4.5%.”
Ford Motor Company, like The Coca-Cola Company, PepsiCo, Inc., and Johnson and Johnson, is among the few S&P 500 stocks elite hedge funds are still piling into today.
5. Delta Air Lines, Inc. (NYSE:DAL)
Number of Hedge Fund Holders: 49
Share Price as of October 24: $32.58
Delta Air Lines, Inc. (NYSE:DAL) is a provider of scheduled air transportation in the US and internationally. The company is based in Atlanta, Georgia.
Cowen’s Helane Becker upgraded Delta Air Lines, Inc. on October 14 from Market Perform to Outperform, and placed a $54 price target on the stock.
This October Delta Air Lines, Inc. reported that it had topped expectations in the third quarter with a $695 million profit. The company’s revenue was up by 11%, while its operating income was $1.5 billion on an operating margin of 10.4%
Out of 895 hedge funds tracked in the second quarter, 49 funds were long Delta Air Lines, Inc.. Their total stake value was $887.3 million.
Miller Value Partners, an investment management company, mentioned Delta Air Lines, Inc. in its third-quarter 2022 investor letter. Here’s what the firm said:
“Delta Air Lines, Inc. (NYSE:DAL) ($29.42) is a high-quality airline (yes, there really is such a thing!). It didn’t issue any equity in the pandemic. It focuses on delivering a superb customer experience and has brand loyalty (including a stable revenue stream from partner American Express, growing at 20%/ year). Maybe the best evidence: it’s managed to outperform the S&P 500 over the past decade despite a horrible pandemic ending point (+13.2% vs. 11.7%1 ). It trades for 4x 2024 earnings! If it eventually trades at Southwest’s historical valuation, it implies this stock should double as well.”
4. The Boeing Company (NYSE:BA)
Number of Hedge Fund Holders: 51
Share Price as of October 24: $141.32
The Boeing Company (NYSE:BA) is an aerospace and defense company. It develops commercial jetliners, military aircraft, satellites, missile defense, and human space flight and launch systems.
A Positive rating was reiterated on shares of The Boeing Company on October 12 by analyst Charles Minervino at Susquehanna. The analyst also holds a $192 price target on the stock.
This October, The Boeing Company announced that its airplane deliveries rose to 51 airplanes in September, compared to 35 planes the month before. The stock gained 1% in light of the announcement.
The Boeing Company was found among the 13F holdings of 51 hedge funds in the second quarter, and 52 hedge funds in the previous quarter. Their total stake values were $1.5 billion and $1.4 billion, respectively.
Meridian Funds, managed by ArrowMark Partners, mentioned The Boeing Company in its second-quarter 2022 investor letter. Here’s what the firm said:
“We similarly remained invested in largely out-of-favor The Boeing Company (NYSE:BA), a global leader in developing and producing commercial jet aircraft. Due to some self-inflicted wounds and a bit of bad luck, as well as dramatic declines in air travel early in the pandemic, investor sentiment for this company has simply been awful. As part of our contrarian thinking, however, we view the business as critical to global transportation needs and see multiple catalysts to improve sentiment. In addition to the current surge in air travel worldwide, ramped up production of the 737 MAX aircraft and the pending restart of 787 Dreamliner deliveries should help turn broader sentiment. Additionally, we anticipate a meaningful inflection in cash flow as Boeing starts delivering aircraft currently in storage as well as the eventual expansion of its production in both core platforms.”
3. Caesars Entertainment Inc. (NASDAQ:CZR)
Number of Hedge Fund Holders: 59
Share Price as of October 24: $39.61
Caesars Entertainment Inc. (NASDAQ:CZR) is a casino and gaming company operating in the US. It is based in Reno, Nevada.
Bank of America analysts hold a Buy rating on Caesars Entertainment Inc. shares as of September 27, alongside a $75 price target.
Caesars Entertainment Inc. was among the biggest gainers in the S&P 500 this October, rising 6.15% on October 17. Stifel holds a Buy rating and $63 price target on the stock as well.
In total, 59 funds were long Caesars Entertainment Inc. in the second quarter, with a total stake value of $928.5 million.
2. Micron Technology, Inc. (NASDAQ:MU)
Number of Hedge Fund Holders: 69
Share Price as of October 24: $56.05
Micron Technology, Inc. (NASDAQ:MU) is an information technology company that develops memory and storage products. The company is based in Boise, Idaho.
Loop Capital’s Charles Park initiated coverage of Micron Technology, Inc. shares on October 13 with a Buy rating and a $70 price target.
In the fiscal fourth quarter of 2022, Micron Technology, Inc. had an EPS of $1.45, beating estimates by $0.08. The company’s revenue was $6.64 billion.
There were 69 hedge funds long Micron Technology, Inc. in the second quarter, with a total stake value of $2.2 billion. In comparison, 78 funds were long the stock in the previous quarter, with a total stake value of $3.4 billion.
Claret Asset Management, an asset management firm, mentioned Micron Technology, Inc. in its third-quarter 2022 investor letter. Here’s what the firm said:
“Inflation is still higher than interest rates… not an incentive to save for most people. Either inflation must come down or interest rates have to go up further. Or both. And probably both. Now that they are taking the punch bowl away and the party is over, what happens next? For whatever reason, the stock market seems to always precede the economic reality: Micron reached a high of $98.45 on January 5th, 2022 and is trading at $50.00 today.”
1. General Motors Company (NYSE:GM)
Number of Hedge Fund Holders: 75
Share Price as of October 24: $35
General Motors Company (NYSE:GM) is an automobile manufacturer that designs trucks, crossovers, cars, and automobile parts and accessories. The company operates in North America, the Asia Pacific, the Middle East, Africa, South America, the US, and China.
A Buy rating was reiterated on shares of General Motors Company on September 28 by Itay Michaeli at Citigroup. The analyst also placed a $78 price target on the stock.
This October, General Motors Company reported a 24% increase its in US sales, year-over-year. The company benefitted from pent-up customer demand and higher availability of semiconductor supplies.
Our hedge fund data shows 75 hedge funds long General Motors Company in the second quarter. Their total stake value was $3.4 billion.
Diamond Hill Capital, an investment advisor, mentioned General Motors Company in its second-quarter 2022 investor letter. Here’s what the firm said:
“Auto manufacturer General Motors Company (NYSE:GM)s was also among our bottom contributors in Q2. Rising interest rates and continued supply chain issues have increased uncertainty surrounding the auto industry, exerting downward pressure on stocks of auto makers. We continue to like GM’s focus on its most profitable market segments (SUV, crossovers, trucks) and believe the company’s heavy investments in autonomous capabilities will position it favorably as the secular movement towards autonomous vehicles continues.”
See also 11 Best High Beta Stocks To Buy Now and 11 Best Fast Food Stocks To Invest In.
Follow Insider Monkey on Twitter
Suggest articles:
- 10 Best Video Conferencing Stocks To Invest In
- 12 Best Emerging Stocks To Buy Now
- 10 Best Counter Cyclical Stocks To Buy
This article is originally published at Insider Monkey.
