We recently gathered the amount of buy and sell ratings that analysts have on each stock in the Russell 1,000 to see which ones analysts are currently the most bullish or bearish on. We treat consensus analyst recommendations as a contrarian indicator. When a stock has a high percentage of buy ratings, it makes it harder for analysts to get more bullish on the stock, hence the next direction in ratings is down. Conversely, when a stock has a low percentage of buy ratings, things can't get much worse, and the upside is much larger.
There are many stocks that are down significantly this year that still have a high percentage of buy ratings. The poor stock performance means analysts will most likely begin to get more negative in their recommendations.
In the first table below, we highlight stocks in the Russell 1,000 that have more than 85% buy recommendations and are down more than 7% year to date. The assumption is that analysts need to lower ratings on these stocks, causing them to go down even more in the short-term. As shown, AAPL and GOOG are at the top of the list. Both of these stocks are down significantly this year, but analysts have not lowered ratings yet. There are four stocks on the list that have 100% buy ratings, yet they are down more than 10% this year. These are TXT, FWLT, WBC and LII.
On the opposite side of the equation are stocks that have a low percentage of buy ratings yet are up year to date. The assumption here is that analysts will become more bullish on these stocks because they have held up so well in the current market environment. Below we highlight stocks with less than 20% buy ratings that are up on the year.