We recently compiled a list of the 12 Best S&P 500 Stocks to Invest in According to Analysts. In this article, we are going to take a look at where Edison International (NYSE:EIX) stands against the other S&P 500 stocks.
2024 was a memorable year for the broad market index, which posted a gain of 23.31%, building on the 24.2% return in 2023. The two-year surge of over 53% is the best performance for the index since the 66% rally between 1997 and 1998.
READ ALSO: 15 Stocks ChatGPT Predicts Could Make You Wealthy in 10 Years and 10 Under-the-Radar Stocks with Massive Upside for 2025.
The stock market benefited from a resilient economy that avoided recession, declining interest rates, and waning inflation. Analysts are projecting continued growth in 2025 amid strong economic data and optimism about a business-friendly Trump administration returning to power.
The broader market rose 0.5% on January 23, going past its peak in December to a new record high. The gain added to the week-long winning momentum after data showed inflation slowing in the country more than economists had anticipated. With this rise, the index is up 4% since the start of the year.
Investor sentiment has also been bolstered with President Trump reiterating his commitment to lowering oil prices and further cutting interest rates. The 78-year-old is also taking his time over tariffs by holding them off until February. Analysts believe a less aggressive approach than some had expected has helped the market move higher. Here is what Larry Tentarelli, chief technical strategist at the Blue Chip Daily Trend Report, had to say:
“He really can’t control interest rates, but the market likes to hear that kind of stuff. So far, the market does seem to like what Trump’s policies are going to be, so we’ll just have to see if there’s some follow-through.”
A string of strong corporate earnings reports has also supported the gains in January. According to data from FactSet, earnings for companies listed on the index are on track to grow by over 12% for the fourth quarter compared to the same period in the prior year. If that happens, this would mark the best quarter for company profits since 2021.
While the overall outlook for the stock market looks encouraging, analysts are also cautious about the rally having gone too far, and a correction is in the offing this year. The threat of fierce trade wars sparked by tariffs, ongoing geopolitical conflicts, and broader inflationary pressures could also hurt the market.
Jurrien Timmer, Director of Global Macro for Fidelity Management & Research Company wrote the following in a note on December 18.
“Personally, I am bullish on stocks for 2025, though with valuations high and the bull market maturing, I don’t think investors should expect quite such spectacular returns next year as we have seen this past year. And I think there are important risks from inflation, and the market’s concentration, to be aware of.”
Methodology
For this article, we went through the list of large cap stocks on the broader market index and picked the top 12 with the highest average share price upside potential. All data is as of the close of the day on Friday, January 31, 2025. The stocks are listed in ascending order of their share price upside potential.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A wide aerial view of an electric power transmission facility with lines, substations, and overhead wires.
Edison International (NYSE:EIX)
Average Share Price Upside Potential as of January 31: 53.48%
Market Cap: $20.91 billion
Edison International (NYSE:EIX) is a California-based public utility holding company that engages in the generation and distribution of electric power to approximately 15 million people in the state.
As of the close of the day on January 23, the company’s shares have declined by 24% due to the adverse impact of the LA wildfires. Current estimates project the blaze is set to cause severe financial damages to Edison International (NYSE:EIX) as it is losing out on revenue by not being able to supply electricity in the destructive areas.
Edison International (NYSE:EIX) is also facing legal repercussions from the ongoing crisis. Its subsidiary, Southern California Edison, has been hit with multiple lawsuits claiming that its equipment caused one of the major wildfires that struck the Los Angeles area. According to the lawsuit, the company was unable to manage its electrical equipment properly, resulting in damage to private property.
Despite ongoing challenges, analysts believe EIX’s stock valuation is attractive, with the share price expected to bounce back once the headwinds are over. Wall Street analysts have a consensus Buy rating for the stock, with an average share price upside potential of over 53%, making it one of the best large-cap stocks to invest in according to analysts. On January 23, Barclays analyst, Nicholas Campanella, cut Edison International’s (NYSE:EIX) price target from $76 to $67, while maintaining the Buy rating.
Edison International (NYSE:EIX) is also a generous dividend payer. On December 12, the company declared a 6.1% hike in its quarterly dividend to $0.8275 per share, which has stretched its dividend-paying growth streak to 21 years. It was recently named on Insider Monkey’s list of the 10 Best January Dividend Stocks To Buy.
Overall EIX ranks 6th on our list of the best S&P 500 stocks to invest in according to analysts. While we acknowledge the potential of EIX as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than EIX but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap
Disclosure: None. This article is originally published at Insider Monkey.