MW 21 stocks that Wall Street analysts now think are bargains in this year's worst-performing sector
By Philip van Doorn
Recent action shows how quickly the market can turn around. If you were considering any stocks for long-term investments, it might be better to scoop them up now at discounted prices.
Investors have had quite a wake-up call to daily volatility in the stock market. As we saw on Monday, the broad indexes can shift to large gains and then back into deep red territory as rumors circulate. But a high level of volatility can also give rise to opportunities for patient investors looking to buy quality merchandise at low (or at least greatly reduced) prices.
Read: S&P 500 sees biggest intraday swing since the 'flash crash' of 2010
Let's begin with a look at how the 11 sectors of the S&P 500 SPX have performed this year through Monday, sorted by how much they have declined, with the full index at the bottom of the list. All price changes in this article exclude dividends.
Sector or index 2025 price change 2024 price change 2023 price change 2022 price change Price change since end of 2021
Information Technology -22.5% 35.7% 56.4% -28.9% 16.9%
Consumer Discretionary -21.1% 29.1% 41.0% -37.6% -10.3%
Communication Services -13.6% 38.9% 54.4% -40.4% 10.4%
Industrials -10.9% 15.6% 16.0% -7.1% 11.1%
Financials -8.8% 28.4% 9.9% -12.4% 12.9%
Materials -8.7% -1.8% 10.2% -14.1% -15.1%
Energy -8.0% 2.3% -4.8% 59.0% 42.5%
Real Estate -6.7% 1.7% 8.3% -28.4% -26.5%
Utilities -3.1% 19.6% -10.2% -1.4% 2.6%
Healthcare -2.3% 0.9% 0.3% -3.6% -4.6%
Consumer Staples -0.6% 12.0% -2.2% -3.2% 5.5%
S&P 500 -13.9% 23.3% 24.2% -19.4% 6.2%
Source: FactSet
The last row of the table shows how the full S&P 500 has performed for each of the previous three calendar years. The right-most column shows weighted price changes for the index and the sectors from the end of 2021 through Monday, in order to reflect the seesaw pattern of a 19.4% decline for the index in 2021, followed by stellar gains in 2023 and 2024 leading into this year's decline.
Now let's take another look at the sectors, this time showing forward price-to-earnings ratios and how they compare with their 5- and 10-year average valuations. The forward P/E ratios are prices divided by rolling consensus earnings-per-share estimates, weighted by market capitalization.
Sector or index Forward P/E Forward P/E at end of 2024 5-year average P/E 10-year average P/E
Information Technology 21.6 28.8 25.2 20.7
Consumer Discretionary 23.1 29.6 32.0 27.1
Communication Services 16.6 19.5 19.3 19.0
Industrials 19.5 21.7 21.6 19.4
Financials 14.4 16.5 15.3 14.5
Materials 17.8 18.6 18.4 17.3
Energy 12.8 13.7 1.9 13.9
Real Estate 16.6 17.6 19.3 18.8
Utilities 16.5 17.3 17.9 17.5
Healthcare 16.3 16.9 17.2 16.5
Consumer Staples 21.5 21.5 20.5 19.8
S&P 500 18.3 21.6 20.2 18.6
Source: FactSet
The S&P 500 now trades at a forward P/E of 18.3, which is well below its five-year average and slightly below its 10-year average valuation. The information technology sector's forward P/E has declined to 21.6 from 28.8 on Dec. 31. The sector now trades well below its average five-year P/E but still slightly above its 10-year average valuation. These valuation declines illustrate why the term "correction" is used to describe a decline of 10% or more from a recent high. The idea is that valuations have been reset to more reasonable levels.
Read: Should you buy the dip in tech? Veterans of the dot-com era share 5 ways to find winners.
An S&P 500 tech-sector screen
There are various ways to screen stocks, including looking at expected growth rates for companies' revenue and earnings. It might be a bit early for that type of screen, as analysts cannot predict what form President Donald Trump's trade policies will take. Early Tuesday, U.S. Treasury Secretary Scott Bessent said Trump had asked him to begin trade negotiations with Japan's government.
On Sunday, a team of analysts at Jefferies led by Brent Thill "preemptively cut forecasts" on 29 software companies, but Thill wrote in a note to clients that estimates for revenue and earnings for the group had been lowered by only 2% and 1%, respectively, for the companies' current fiscal years.
Thill cut his price target for Microsoft Corp.'s $(MSFT)$ stock by 5% to $475 from $500 on Sunday. The new target was 33% higher than the stock's closing price of $357.86 on Monday.
There are 69 stocks in the S&P 500 information technology sector; 21 of them are rated a "buy" or the equivalent by at least 75% of analysts working for brokerage or research firms polled by FactSet.
Here they are, sorted by upside potential implied by the consensus price targets. In the right-most column, you can see how much the consensus price targets have changed since the end of last year.
Company Ticker Share "buy" ratings April 7 price Cons. Price target Implied 12-month upside potential Change in price target since Dec. 31 Western Digital Corp. WDC 75% $31.16 $67.35 116% -0.7% Micron Technology Inc. MU 85% $68.37 $128.63 88% -2.6% First Solar Inc. FSLR 86% $130.05 $239.70 84% -13.4% Nvidia Corp. NVDA 91% $97.64 $172.59 77% -0.7% Dell Technologies Inc. Class C DELL 85% $75.00 $131.48 75% -14.0% Arista Networks Inc. ANET 78% $68.17 $115.14 69% -0.1% Synopsys Inc. SNPS 91% $380.90 $630.05 65% -2.7% Broadcom Inc. AVGO 89% $154.14 $248.68 61% 1.2% Trimble Inc. TRMB 93% $56.02 $89.38 60% 2.5% NXP Semiconductors NV NXPI 79% $163.29 $251.65 54% -5.2% Salesforce Inc. CRM 79% $244.21 $375.48 54% -7.3% ServiceNow Inc. NOW 84% $735.50 $1,129.54 54% 3.6% Workday Inc. Class A WDAY 76% $215.32 $314.58 46% 7.1% Keysight Technologies Inc. KEYS 79% $129.89 $187.64 44% 1.9% Jabil Inc. JBL 82% $121.28 $174.43 44% 5.6% Microsoft Corp. MSFT 92% $357.86 $499.79 40% -1.4%
MW 21 stocks that Wall Street analysts now think are bargains in this year's worst-performing sector
By Philip van Doorn
Recent action shows how quickly the market can turn around. If you were considering any stocks for long-term investments, it might be better to scoop them up now at discounted prices.
Investors have had quite a wake-up call to daily volatility in the stock market. As we saw on Monday, the broad indexes can shift to large gains and then back into deep red territory as rumors circulate. But a high level of volatility can also give rise to opportunities for patient investors looking to buy quality merchandise at low (or at least greatly reduced) prices.
Read: S&P 500 sees biggest intraday swing since the 'flash crash' of 2010
Let's begin with a look at how the 11 sectors of the S&P 500 SPX have performed this year through Monday, sorted by how much they have declined, with the full index at the bottom of the list. All price changes in this article exclude dividends.
Sector or index 2025 price change 2024 price change 2023 price change 2022 price change Price change since end of 2021
Information Technology -22.5% 35.7% 56.4% -28.9% 16.9%
Consumer Discretionary -21.1% 29.1% 41.0% -37.6% -10.3%
Communication Services -13.6% 38.9% 54.4% -40.4% 10.4%
Industrials -10.9% 15.6% 16.0% -7.1% 11.1%
Financials -8.8% 28.4% 9.9% -12.4% 12.9%
Materials -8.7% -1.8% 10.2% -14.1% -15.1%
Energy -8.0% 2.3% -4.8% 59.0% 42.5%
Real Estate -6.7% 1.7% 8.3% -28.4% -26.5%
Utilities -3.1% 19.6% -10.2% -1.4% 2.6%
Healthcare -2.3% 0.9% 0.3% -3.6% -4.6%
Consumer Staples -0.6% 12.0% -2.2% -3.2% 5.5%
S&P 500 -13.9% 23.3% 24.2% -19.4% 6.2%
Source: FactSet
The last row of the table shows how the full S&P 500 has performed for each of the previous three calendar years. The right-most column shows weighted price changes for the index and the sectors from the end of 2021 through Monday, in order to reflect the seesaw pattern of a 19.4% decline for the index in 2021, followed by stellar gains in 2023 and 2024 leading into this year's decline.
Now let's take another look at the sectors, this time showing forward price-to-earnings ratios and how they compare with their 5- and 10-year average valuations. The forward P/E ratios are prices divided by rolling consensus earnings-per-share estimates, weighted by market capitalization.
Sector or index Forward P/E Forward P/E at end of 2024 5-year average P/E 10-year average P/E
Information Technology 21.6 28.8 25.2 20.7
Consumer Discretionary 23.1 29.6 32.0 27.1
Communication Services 16.6 19.5 19.3 19.0
Industrials 19.5 21.7 21.6 19.4
Financials 14.4 16.5 15.3 14.5
Materials 17.8 18.6 18.4 17.3
Energy 12.8 13.7 1.9 13.9
Real Estate 16.6 17.6 19.3 18.8
Utilities 16.5 17.3 17.9 17.5
Healthcare 16.3 16.9 17.2 16.5
Consumer Staples 21.5 21.5 20.5 19.8
S&P 500 18.3 21.6 20.2 18.6
Source: FactSet
The S&P 500 now trades at a forward P/E of 18.3, which is well below its five-year average and slightly below its 10-year average valuation. The information technology sector's forward P/E has declined to 21.6 from 28.8 on Dec. 31. The sector now trades well below its average five-year P/E but still slightly above its 10-year average valuation. These valuation declines illustrate why the term "correction" is used to describe a decline of 10% or more from a recent high. The idea is that valuations have been reset to more reasonable levels.
Read: Should you buy the dip in tech? Veterans of the dot-com era share 5 ways to find winners.
An S&P 500 tech-sector screen
There are various ways to screen stocks, including looking at expected growth rates for companies' revenue and earnings. It might be a bit early for that type of screen, as analysts cannot predict what form President Donald Trump's trade policies will take. Early Tuesday, U.S. Treasury Secretary Scott Bessent said Trump had asked him to begin trade negotiations with Japan's government.
On Sunday, a team of analysts at Jefferies led by Brent Thill "preemptively cut forecasts" on 29 software companies, but Thill wrote in a note to clients that estimates for revenue and earnings for the group had been lowered by only 2% and 1%, respectively, for the companies' current fiscal years.
Thill cut his price target for Microsoft Corp.'s $(MSFT.UK)$ stock by 5% to $475 from $500 on Sunday. The new target was 33% higher than the stock's closing price of $357.86 on Monday.
There are 69 stocks in the S&P 500 information technology sector; 21 of them are rated a "buy" or the equivalent by at least 75% of analysts working for brokerage or research firms polled by FactSet.
Here they are, sorted by upside potential implied by the consensus price targets. In the right-most column, you can see how much the consensus price targets have changed since the end of last year.
Company Ticker Share "buy" ratings April 7 price Cons. Price target Implied 12-month upside potential Change in price target since Dec. 31 Western Digital Corp. WDC 75% $31.16 $67.35 116% -0.7% Micron Technology Inc. MU 85% $68.37 $128.63 88% -2.6% First Solar Inc. FSLR 86% $130.05 $239.70 84% -13.4% Nvidia Corp. NVDA 91% $97.64 $172.59 77% -0.7% Dell Technologies Inc. Class C DELL 85% $75.00 $131.48 75% -14.0% Arista Networks Inc. ANET 78% $68.17 $115.14 69% -0.1% Synopsys Inc. SNPS 91% $380.90 $630.05 65% -2.7% Broadcom Inc. AVGO 89% $154.14 $248.68 61% 1.2% Trimble Inc. TRMB 93% $56.02 $89.38 60% 2.5% NXP Semiconductors NV NXPI 79% $163.29 $251.65 54% -5.2% Salesforce Inc. CRM 79% $244.21 $375.48 54% -7.3% ServiceNow Inc. NOW 84% $735.50 $1,129.54 54% 3.6% Workday Inc. Class A WDAY 76% $215.32 $314.58 46% 7.1% Keysight Technologies Inc. KEYS 79% $129.89 $187.64 44% 1.9% Jabil Inc. JBL 82% $121.28 $174.43 44% 5.6% Microsoft Corp. MSFT 92% $357.86 $499.79 40% -1.4%
(MORE TO FOLLOW) Dow Jones Newswires
April 08, 2025 11:07 ET (15:07 GMT)
MW 21 stocks that Wall Street analysts now think -2-
Cadence Design Systems Inc. CDNS 78% $233.82 $325.05 39% 0.5% Teledyne Technologies Inc. TDY 85% $437.90 $571.30 30% 5.9% CrowdStrike Holdings Inc. Class A CRWD 75% $324.36 $413.07 27% 7.4% Accenture Plc Class A ACN 75% $284.72 $362.14 27% -9.6% Motorola Solutions Inc. MSI 79% $403.12 $507.57 26% -3.8% Source: FactSet
Click on the tickers for more about each company.
Read: Tomi Kilgore's detailed guide to the information available on the MarketWatch quote page
Micron $(MU)$ ranks second on the list, with the consensus price target implying 88% upside potential over the next 12 months from Monday's close. The stock is inexpensively priced, according to Charles Lemonides, chief investment officer of ValueWorks - the New York-based hedge fund management firm he founded in 2001, with $312 million in assets under management as of Dec. 31.
During an interview with MarketWatch, Lemonides pointed out that Micron's stock had traded above $150 last June. It closed at $68.37 Monday.
Micron's forward P/E ratio was 7.2 as of the close on Monday. The stock's average forward P/E over the past year has been 13.3 and has traded at a forward P/E as high as 25.9 during that period. Lemonides acknowledged that Micron's focus on designing and manufacturing computer-memory and data-storage products is cyclical, but said the company's profits "could torque higher" as the industry hardware build-out continues to support the development of artificial intelligence technology.
"The stock has come crashing down. The earnings have not," he said.
The consensus estimate is for Micron to earn $6.97 a share during its current fiscal year that ends in August, increasing to $11.12 the following fiscal year. So investors are looking at "a mid-single-digit multiple to next year's earnings with demand expected to grow dramatically," Lemonides said.
"A lot of memory is going to be required, from self-driving cars to data centers to video monitoring to AI," he said.
Related: A Salesforce board member bought $1 million in stock near recent lows. He has a good track record.
Don't miss: This investing strategy has held up well during stock-market turmoil. It pays you to wait.
-Philip van Doorn
This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.
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