This year has been tough for investors, but there may be a silver lining. The S & P 500 is down more than 14% in 2022. That would be the biggest one-year loss for the index since 2008, when it dropped 38.5% during the throes of the financial crisis. However, this sell-off may have opened buying opportunities among some of Wall Street analysts’ favorite names. Here are the criteria used to find these names: Stocks trading at a lower forward price-to-earnings ratio relative to their average five-year forward P/E multiple Buy ratings from at least 60% of analysts covering them Upside to average price target of 30% or more Here are the stocks that made the cut. Amazon made the list, trading at a 31.6% discount to its average five-year forward P/E multiple. The stock also has buy ratings from 80% of analysts covering them. The stock is also expected to rise by more than 42%. Shares of the e-commerce giant have tumbled more than 42% year to date. The company also posted in October a weaker-than-expected revenue for the third quarter and issued disappoint fourth-quarter guidance. However, Cowen analyst John Blackledge sees several headwinds subsiding in 2023, including wage inflation pressure. “While we expect “rest of biz” Op losses to remain elevated in ’23, headwinds should start to subside, driving margin upside vs. consensus,” wrote the analyst Thursday, who has an outperform rating on Amazon. Salesforce also made the list. The stocks is trading at a more than 50% discount to its average five-year forward valuation and has buy ratings from more than three-quarters of analysts covering it. Year to date, the stock is down roughly 40%. The cloud giant also took a hit last week, losing 6% after announcing that co-CEO Bret Taylor was leaving his post . “The departure of Bret Taylor is a disappointment given investor perception of him as a key change agent with greater product focus, which favored more organic investment and modernization of Salesforce’s technology platform,” wrote Morgan Stanley analyst Keith Weiss. He has an overweight rating on Salesforce. “On the bright size, the company is strongly committed to improving profitability, as reflected in guidance for +200bps (+275 excluding Slack) operating margin expansion YoY in FY23,” he added. Energy name EQT and Delta Air Lines trade at the biggest discount of any names on the list. The former is trading 82% below its average five-year forward valuation, while Delta is 77% below. EQT is one the best-performing stocks in the entire S & P 500 this year, advancing about 90%. Analysts also see the stock going higher by 48% from current levels, FactSet data shows. Delta, meanwhile, has dropped 10% in 2022, but the average analyst price target on the airline implies upside of 35%. Other names that made the cut are: Live Nation, PayPal, Global Payments, Caesars Entertainment, Match Group, Signature Bank, Bio-Rad Laboratories, Hasbro, Dish Network and Zoetis.
These stocks are cheap heading into 2023, and analysts love them
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