Editor’s note: This article was first published in February 2013, and all its prices, analyst price targets and upside percentages are from that month. Apple’s figures predate its 2014 and 2020 stock splits, and several of the companies mentioned, such as Apollo Group and Alexion, no longer trade as they did in 2013.
Since we think it is still too early to analyse companies on the Spanish market in the current situation, we are going to go through the S&P 500 looking for undervalued or oversold stocks. What we will do is average the analyst consensus from CNBC, S&P Capital IQ and Thomson Reuters, and pick the stocks whose consensus price target is furthest from the company’s current share price.
In other words, we will average where these analysts believe the stock will go based on fundamentals (because it is undervalued). Before making any decision, do your own research. I should say that the last time we did this was in June 2012, with 20 stocks supposedly with upside potential, and by December it had worked for 15 of them.
Which stocks are they?
1. Apple (NASDAQ: AAPL)
- Upside potential: 38.02%
- Average price target: $619.50
Most analysts believe Apple has been punished excessively on the stock market. Although right now we couldn’t say Apple shares are worth $1,200, as was once claimed, they are clearly worth more than $446, the current share price. Out of a total of 46 analysts, some have said we will see Apple at $888 before the end of the year, while others talk of $270. The truth is somewhere in between, and while the consensus average gives us $619.50, I personally think a price we could reasonably see would be $570. (Read: Apple’s hidden potential)
2. Apollo Group Inc (NASDAQ: APOL)
- Upside potential: 39.93%
- Average price target: $26.77
Over the past 12 months the company has lost 64%, and 33% over the past six months. The most optimistic analysts think it could rise above $46, while the most pessimistic believe it could fall to $17. Given that it currently trades at $18, the risk/reward ratio is optimal for buying into this stock.
See also: Keep an eye on Sacyr: ready to take off
3. Newmont Mining Corp (NYSE: NEM)
- Upside potential: 40.09%
- Average price target: $56.82
- Current price: $41.60
- Most optimistic: $76
- Most pessimistic: $44
4. Newfield Exploration Co. (NYSE: NFX)
- Upside potential: 49.30%
- Average price target: $36.95
- Current price: $24.75
- Most optimistic: $64
- Most pessimistic: $25
5. Apache Corporation (NYSE: APA)
- Upside potential: 36.89%
- Average price target: $103.33
- Current price: $75.24
- Most optimistic: $127
- Most pessimistic: $81
Other stocks that could be about to take off include WPX Energy (WPX), Alexion Pharmaceuticals (ALXN) and Hewlett-Packard Company (NYSE: HPQ).
Further reading
- Lessons from the investor who taught Warren Buffett
- 5 steps to building a dividend investing strategy
Featured image: Mariordo (Mario Roberto Duran Ortiz), CC BY-SA 3.0, via Wikimedia Commons.
