The S&P 500 has rallied hard off its March lows, but the index remains down 12.9% year-to-date overall. The near-term economic outlook amid the COVID-19 shutdown is still unclear, creating a lot of uncertainty on Wall Street. The International Monetary Fund recently cut its 2020 global economic growth forecast to negative 3%.
Fortunately for investors, a number of stocks have bucked the bearish trend and gained ground this year. Some of those stocks will maintain that bullish momentum as the economic downturn drags on, while others will prove to be overbought and regress.
Here’s what Bank of America analysts have to say about the seven best-performing S&P 500 stocks of 2020 (excluding buyouts).
Regeneron Pharmaceuticals Inc (NASDAQ: REGN) - Hold
Regeneron is a biopharmaceutical company focused on treating eye disorders, hypercholesterolemia, cancer and other conditions. Regeneron shares have been on fire in 2020 for two main reasons. First, the company reported better-than-expected fourth-quarter earnings in February. Second, Regeneron is reportedly working with the U.S. Department of Health and Human Services to develop a treatment for COVID-19. Analyst Geoff Meacham recently said fading Eylea revenue plus an unproven early drug pipeline suggests limited near-term upside after a year-to-date gain of 45%.
Bank of America has a Neutral rating and $575 price target for REGN stock.
Newmont Corporation (NYSE: NEM) - Buy
Gold is one of the few investments that has performed well in 2020 as investors worry about the long-term impact that the $2.3-trillion stimulus package will have on the dollar. The SPDR Gold Trust (NYSE: GLD) is up 12.9% year-to-date, and Newmont is up 42.6%. The company recently withdrew its 2020 guidance after COVID-19 forced shutdowns of mines in Yanacocha, Musselwhite, Eleonore and Cerro Negro. Analyst Michael Jalonen recently said he is bullish on Newmont despite the temporary closures and the stock has some of the strongest fundamentals within the gold space.
Bank of America has a Buy rating and $73 price target for NEM stock.
Citrix Systems, Inc. (NASDAQ: CTXS) - Hold
Citrix is a software platform that enables access to enterprise solutions from a variety of connections and locations. Analyst Nikolay Beliov recently said Citrix’s cloud transition creates near-term uncertainty in earnings and free cash flow despite an overall solid fourth quarter. Following the stock’s 36.7% year-to-date gain, Beliov said there is limited upside for Citrix from current levels. In fact, Citrix ranked dead last among 37 companies in Bank of America’s recent screen of fundamentals within the server and enterprise software group.
Bank of America has a Neutral rating and $160 price target for CTXS stock.
NortonLifeLock Inc (NASDAQ: NLOK) - Sell
Norton LifeLock provides online security and risk management software and services, and the stock has rallied 35% so far in 2020. Beliov says the company has aggressive long-term targets and the market is significantly overvaluing the stock. Beliov says it’s surprising to see the price action in the stock in 2020 given the company has lost 1.1 million direct subscribers over the past three years. In addition, average revenue per user has dropped substantially and growth has stagnated.
Bank of America has an Underperform rating and $14 price target for NLOK stock.
Netflix Inc (NASDAQ: NFLX) - Buy
Netflix’s negative price action after its blowout first-quarter earnings report was a classic case of sell the news after its stock got a bit ahead of itself with a 30.2% year-to-date gain. Netflix reported 15.77 million global net subscriber additions in the first quarter, well ahead of consensus analyst expectations of 8.2 million. Netflix got a huge subscriber boost due to stay-at-home measures around the world. Following Netflix’s biggest subscriber beat in history, analyst Nat Schindler said COVID-19 measures have helped Netflix take a major leap forward in penetration.
Bank of America has a Buy rating and $525 price target for NFLX stock.
Southwestern Energy Company (NYSE: SWN) - Sell
Southwestern Energy is one of the largest U.S. natural gas producers. WTI crude oil prices recently plummeted into negative territory due to concerns over national storage capacity approaching 100%. The potential for U.S. oil production to grind to a total halt in the near-term means less natural gas is being produced, which is bullish for gas prices. In fact, in the past five trading days alone, the United States Oil Fund LP (NYSE: USO) crashed 43.5%, while the United States Natural Gas Fund, LP (NYSE: UNG) gained 17.6%. Analyst Doug Leggate says he is concerned about the long-term outlook for natural gas prices and he believes Southwestern’s valuation has gotten too rich.
Bank of America has an Underperform rating and $1.20 price target for SWN stock.
Amazon.com, Inc. (NASDAQ: AMZN) - Buy
Nearly all of Amazon.com’s businesses have benefited from the COVID-19 lockdown, including its e-commerce sales, its cloud services business and its streaming video platforms. In fact, Amazon has already announced it is hiring 175,000 new employees in 2020 to help support its business, especially its Whole Foods delivery services. Bank of America analyst Justin Post recently said Amazon’s heavy logistics investments in recent years have set the segment up to be a significant contributor to future revenue growth. Post says Amazon’s scale, market share and margins are unrivaled in the high-growth e-commerce space. Bank of America has a Buy rating and $2,480 price target for AMZN stock.
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A Newmont gold mine in Nevada. Photo by Uncle Kick-Kick via Wikimedia.
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