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The chart below is pulled from the Intro section of our 2017 annual outlook report. We’ve broken the S&P 500 into deciles (10 groups of 50 stocks each) based on analyst buy and sell ratings at the start of 2016. The 50 stocks in decile 1 were the most loved stocks by analysts at the start of the year, while the 50 stocks in decile 10 were the most hated. We then calculated the average percentage change in 2016 for the 50 stocks in each decile. This allows us to see how well the most loved and hated stocks did this year.
As shown, analysts didn’t have a great year. The 50 stocks with the highest percentage of “Buy” ratings were up an average of just 2.88% this year, while the 50 stocks with the least amount of “Buy” ratings were up an average of 15.29%. Deciles 7, 8, and 9 all posted huge average gains as well.
Let’s see if 2017 is a better year for the analyst community than 2016 was.