Financials And Infrastructure MLPs Least Favored By Analysts For Next 12 Months

by: Richard Shaw

Examination of the FirstCall mean 12-month target price changes for stocks in the S&P 500, S&P 1500 Dividend Aristocrats, Dow Jones US Equity REITs and the Alerian Infrastructure MLP indexes, shows that analysts least favor financials and MLPs in the year ahead.

We looked up the mean FirstCall target price for each constituent company in each of theses indexes, converted that to a price change and multiplied it by the weight of each constituent in each index to arrive at the effective mean analyst projection for each index.

These are the indexes and representative ETFs:

XLG Russell MegaCap 50
OEF S&P 100
SPY S&P 500
SDY S&P 1500 HY Div Aristocrats
XLB S&P 500 Basic Materials
XLE S&P 500 Energy
XLF S&P 500 Financials
XLI S&P 500 Industrials
XLK S&P 500 InfoTech & Telecomm
XLP S&P 500 Consumer Staples
XLY S&P 500 Consumer Cyclicals
XLU S&P 500 Utilities
XLV S&P 500 Healthcare
AMLP Alerian InfraStructure MLPs

MLPs are actually projected to go down in price, and financials are not expected to advance much.

Energy is most favored.

Utilities stand out as favored, but they did not do well in the recent fear of reduced Fed easing. They have the strongest short-term technical sell rating from and one of the stronger mean analyst views. That combination gives us significant pause.

The high quality, low volatility and strong dividend indexes are not projected to as well as the broader market. That will probably be true if the economy continues to improve, and untrue if the economy falters or sputters.

We don't think the absolute level of price projection is as interesting as the relative ranking of the various indexes. The absolute levels are probably less reliable that the relative rankings, and both could be way off, but there it is -- that is what the "Street" thinks.

Disclosure: QVM has positions in SPY and SDY as of the creation date of this article (September 30, 2013). We certify that except as cited herein, this is our work product. We received no compensation or other inducement from any party to produce this article, but are compensated retroactively by Seeking Alpha based on readership of this specific article.

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