Deep Dive: After a dazzling 2021, Apple and Tesla stocks are expected to be duds in 2022
A report from Goldman Sachs shows how much of investors’ money is concentrated in only five high-flying stocks. And a screen of the biggest contributors to this year’s excellent performance for the S&P 500 index highlights two that are expected not to perform well in 2022: Apple and Tesla.
Just five stocks — Microsoft Corp.
MSFT,
Alphabet Inc.
GOOGL,
Apple Inc.
AAPL,
Nvidia Corp.
NVDA
and Tesla Inc.
TSLA
— contributed over a third of the S&P 500 Index’s
SPX
26% total return for 2021 through Dec. 9, according to analysts at Goldman. And from the end of April through Dec. 9, they contributed 51% of the index’s 13% return.
Moreover, only 25 stocks accounted for 58% of the index’s gains, including reinvested dividends, through Dec. 9, Goldman said. Its list of those stocks is below, along with screens of Wall Street analysts’ expectations for the group as we look ahead to 2022 and 2023.
The analysts, led by David Kostin, pointed out that “market breadth has narrowed substantially” over the past several months. In other words, investors have concentrated more of their money (and risk) in the largest tech companies, by market capitalization.
That said, the Goldman analysts continue to recommend that long-term investors “own high-growth, high-margin stocks.”
Digging into the 25 biggest contributors to the S&P 500’s returns this year
This list shows each of the 25 stocks and their “contributions” to the gains, expressed in basis points. (A basis point is one 100th of a percent. ) The table also includes pricing information — closing prices as of Dec. 14 with declines from 52-week highs and the dates of those highs.
Company
Ticker
Total return – 2021 through Dec. 9
Contribution to S&P 500’s return for 2021 through Dec. 9 (basis points)
Closing Price – 12/14/21
Decline from 52-week high
Date of 52-week high
Microsoft Corp.
51%
271
$328.34
-6.1%
11/22/2021
Alphabet Inc. Class A
68%
224
$2,878.14
-4.7%
11/19/2021
Apple Inc.
32%
217
$174.33
-4.3%
12/13/2021
Nvidia Corp.
134%
137
$283.37
-18.2%
11/22/2021
Tesla Inc.
42%
71
$958.51
-22.9%
11/04/2021
Home Depot Inc.
58%
52
$402.20
-4.4%
12/06/2021
Meta Platforms Inc. Class A
21%
43
$333.74
-13.2%
09/01/2021
UnitedHealth Group Inc.
37%
39
$479.46
-0.7%
12/14/2021
Bank of America Corp
50%
36
$44.13
-9.4%
11/03/2021
JPMorgan Chase & Co.
29%
36
$159.13
-8.0%
10/25/2021
Exxon Mobil Corp.
61%
34
$61.54
-7.3%
11/08/2021
Berkshire Hathaway Inc. Class B
23%
32
$295.03
-0.5%
12/14/2021
Amazon.com Inc.
7%
31
$3,381.83
-10.4%
07/13/2021
Pfizer Inc.
47%
30
$55.54
-0.7%
12/14/2021
Wells Fargo & Co.
67%
26
$48.89
-7.0%
11/03/2021
Chevron Corp.
47%
24
$116.22
-2.5%
12/08/2021
Intuit Inc.
76%
24
$639.48
-10.8%
11/19/2021
Lowe’s Companies Inc.
63%
23
$252.46
-4.1%
12/13/2021
Accenture Plc Class A
44%
23
$369.73
-3.0%
12/13/2021
Thermo Fisher Scientific Inc.
37%
22
$632.11
-5.2%
11/26/2021
Costco Wholesale Corp.
40%
21
$545.34
-2.8%
12/10/2021
Broadcom Inc.
36%
20
$614.91
-4.6%
12/10/2021
Adobe Inc.
26%
20
$614.86
-12.1%
11/22/2021
Danaher Corp.
44%
20
$307.70
-7.9%
09/10/2021
Eli Lilly and Co.
46%
19
$249.38
-9.6%
08/17/2021
Sources: Goldman Sachs, FactSet
We included the declines from 52-week highs through Dec. 14 to illustrate how volatile the stocks of rapidly growing tech giants can be. Shares of Nvidia, for example, were down 18% from the high reached Nov. 22. Tesla has tumbled into bear-market territory three times in 2021 and is down 23% from its high reached Nov. 4.
You can click the tickers for more about each company. Click here for Tomi Kilgore’s detailed guide to the wealth of information for free on the MarketWatch quote page.
Screening the 25 stocks: sales, earnings and ratings
Leaving the list in the same order, here are consensus estimates among analysts polled by FactSet for sales (in millions of dollars) for calendar years through 2023, with projected compound annual growth rates (CAGR):
Company
Ticker
Estimated revenue – 2021
Estimated revenue – 2022
Estimated revenue – 2023
Two-year estimated sales CAGR
Microsoft Corp.
$182,593
$210,753
$240,396
14.7%
Alphabet Inc. Class A
$254,060
$296,677
$341,671
16.0%
Apple Inc.
$369,729
$389,037
$413,789
5.8%
Nvidia Corp.
$25,754
$31,175
$36,380
18.9%
Tesla Inc.
$51,678
$73,183
$89,639
31.7%
Home Depot Inc.
$148,615
$153,285
$158,252
3.2%
Meta Platforms Inc. Class A
$117,569
$139,805
$164,737
18.4%
UnitedHealth Group Inc.
$286,410
$316,412
$342,740
9.4%
Bank of America Corp
$89,268
$93,591
$99,180
5.4%
JPMorgan Chase & Co.
$123,128
$123,405
$130,270
2.9%
Exxon Mobil Corp.
$294,130
$308,304
$292,830
-0.2%
Berkshire Hathaway Inc. Class B
$294,667
$294,894
$309,287
2.5%
Amazon.com Inc.
$470,607
$553,097
$649,246
17.5%
Pfizer Inc.
$81,333
$92,070
$72,748
-5.4%
Wells Fargo & Co.
$76,024
$72,048
$75,462
-0.4%
Chevron Corp.
$155,748
$168,114
$159,898
1.3%
Intuit Inc.
$10,714
$12,980
$14,881
17.9%
Lowe’s Companies Inc.
$95,152
$97,459
$100,080
2.6%
Accenture Plc Class A
$52,819
$58,906
$63,622
9.8%
Thermo Fisher Scientific Inc.
$37,210
$39,493
$42,053
6.3%
Costco Wholesale Corp.
$203,027
$222,877
$238,794
8.5%
Broadcom Inc.
$27,976
$30,877
$32,521
7.8%
Adobe Inc.
$15,957
$18,393
$21,000
14.7%
Danaher Corp.
$29,116
$30,792
$32,437
5.5%
Eli Lilly and Co.
$27,601
$27,774
$30,366
4.9%
Source: FactSet
Here’s another look ahead, this time at earnings-per-share estimates
Company
Ticker
Estimated EPS – 2021
Estimated EPS – 2022
Estimated EPS – 2023
Two-year estimated EPS CAGR
Microsoft Corp.
$8.60
$9.85
$11.44
15.3%
Alphabet Inc. Class A
$108.65
$113.97
$130.48
9.6%
Apple Inc.
$5.64
$5.85
$6.27
5.4%
Nvidia Corp.
$4.18
$5.08
$6.15
21.3%
Tesla Inc.
$5.99
$8.64
$11.46
38.3%
Home Depot Inc.
$15.17
$16.13
$17.30
6.8%
Meta Platforms Inc. Class A
$13.94
$14.24
$16.94
10.3%
UnitedHealth Group Inc.
$18.84
$21.63
$24.58
14.2%
Bank of America Corp
$3.52
$3.19
$3.63
1.5%
JPMorgan Chase & Co.
$14.98
$12.03
$13.23
-6.0%
Exxon Mobil Corp.
$5.03
$5.79
$5.59
5.4%
Berkshire Hathaway Inc. Class B
$11.65
$12.63
$14.13
10.1%
Amazon.com Inc.
$41.31
$51.54
$76.68
36.2%
Pfizer Inc.
$4.19
$5.75
$4.87
7.8%
Wells Fargo & Co.
$4.63
$3.72
$4.41
-2.4%
Chevron Corp.
$8.36
$9.42
$8.78
2.5%
Intuit Inc.
$10.56
$12.51
$14.70
18.0%
Lowe’s Companies Inc.
$11.71
$12.86
$14.40
10.9%
Accenture Plc Class A
$9.25
$10.48
$11.59
11.9%
Thermo Fisher Scientific Inc.
$23.45
$21.17
$23.34
-0.2%
Costco Wholesale Corp.
$11.63
$13.06
$14.33
11.0%
Broadcom Inc.
$28.83
$33.53
$36.69
12.8%
Adobe Inc.
$12.63
$14.47
$16.88
15.6%
Danaher Corp.
$9.82
$10.16
$10.72
4.5%
Eli Lilly and Co.
$8.02
$8.13
$9.71
10.1%
Source: FactSet
Here’s a summary of Wall Street analysts’ opinions about the stocks:
Company
Ticker
Share “buy” ratings
Share neutral ratings
Share “sell” ratings
Closing price – 12/14/21
Consensus price target
Implied 12-month upside potential
Microsoft Corp.
90%
10%
0%
$328.34
$366.41
12%
Alphabet Inc. Class A
94%
6%
0%
$2,878.14
$3,333.70
16%
Apple Inc.
79%
19%
2%
$174.33
$174.35
0%
Nvidia Corp.
81%
12%
7%
$283.37
$341.51
21%
Tesla Inc.
43%
30%
28%
$958.51
$860.35
-10%
Home Depot Inc.
65%
32%
3%
$402.20
$417.16
4%
Meta Platforms Inc. Class A
76%
22%
2%
$333.74
$398.32
19%
UnitedHealth Group Inc.
85%
11%
4%
$479.46
$490.88
2%
Bank of America Corp
64%
25%
11%
$44.13
$49.83
13%
JPMorgan Chase & Co.
61%
32%
7%
$159.13
$179.70
13%
Exxon Mobil Corp.
39%
51%
10%
$61.54
$72.97
19%
Berkshire Hathaway Inc. Class B
43%
57%
0%
$295.03
$332.50
13%
Amazon.com Inc.
94%
6%
0%
$3,381.83
$4,102.98
21%
Pfizer Inc.
38%
58%
4%
$55.54
$53.67
-3%
Wells Fargo & Co.
67%
33%
0%
$48.89
$54.90
12%
Chevron Corp.
68%
32%
0%
$116.22
$130.36
12%
Intuit Inc.
83%
13%
4%
$639.48
$756.29
18%
Lowe’s Companies Inc.
73%
24%
3%
$252.46
$272.43
8%
Accenture Plc Class A
70%
26%
4%
$369.73
$383.68
4%
Thermo Fisher Scientific Inc.
83%
13%
4%
$632.11
$682.47
8%
Costco Wholesale Corp.
59%
35%
6%
$545.34
$551.75
1%
Broadcom Inc.
84%
13%
3%
$614.91
$682.70
11%
Adobe Inc.
81%
19%
0%
$614.86
$720.69
17%
Danaher Corp.
82%
14%
4%
$307.70
$350.29
14%
Eli Lilly and Co.
67%
28%
5%
$249.38
$279.72
12%
Source: FactSet
Here are six data highlights to consider:
Two of this year’s best performers are expected to be poor performers next year, based on the price targets: Apple and Tesla.
Apple is expected to show much slower sales and earnings growth than the rest of the top five companies on the list through 2023.
Tesla’s expected two-year sales CAGR of 31.7% is by far the highest on the list. But only 43% of analysts polled by FactSet rate the stock a “buy.”
Tesla also has the highest expected EPS CAGR through 2023 at 38.3%, but Amazon.com Inc.
AMZN
is right behind, with a projected EPS CAGR of 36.2%. Next on the list by this measure is Nvidia, at 21.3%.
From the price targets, Nvidia and Amazon are Wall Street analysts’ favorite stocks on the list, with implied 12-month upside of 21%.
Pfizer Inc.’s
PFE
sales are expected to rise in 2022 but fall in 2023 to a level below that of 2021, according to analysts polled by FactSet. That could reflect expectations that the coronavirus pandemic will be ending.
Don’t miss: These are Wall Street’s 25 favorite semiconductor stocks for 2022
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