When UBS published its list of the largest detractors to the S&P 500 (SPY), the report noted the wide return spread between the Magnificent Seven and the rest.
The M7 are (MSFT), (AAPL), (NVDA), (AMZN), (GOOGL), (META), and (TSLA). The complete stock ticker list is TSLA, PFE, PYPL, AMZN, DIS, BAC, GOOGL, VZ, HD, NEE, EL, ABT, NKE, CSCO, TMO, QCOM, MRNA, TGT, MMM, CVS.
Readers may consider most of the stock ideas from the report for 2024.
Among the highlighted stocks, the healthcare and biotech stocks are the worst performers. In the next year ahead, investors seeking a bargain may pivot to value stocks. They may buy Abbott Laboratories, Pfizer, and Moderna. Already, all three stocks rebounded from their lows. Moderna gained over 50% from its low when it posted positive clinical data from its mRNA-based skin cancer therapy.
CVSHealth is also a compelling stock. Despite already bottoming below $70, the drugstore pays a ~ 3% dividend and trades at a P/E below 12 times.
Stocks to avoid in the consumer discretionary sector are Target, Nike, and Estee Lauder. Consumers have less disposable income, hurt by inflationary pressures.
Home Depot, Verizon, 3M and NextEra Energy all enjoyed a technical rebound. They risk re-testing lows to fill the gap, should market sentiment turn negative at the start of 2024.
Qualcomm traded at a 52-week low recently and is a hold from here. In the communications sector, Cisco trades at fair value. Its acquisition of Splunk adds risks for shareholders.
