These 3 stocks could see double digit upside ahead over the next twelve months, according to analysts.
On Thursday, China’s Commerce Ministry spokesman, Gao Feng, said both sides had agreed to simultaneously begin cancelling some existing tariffs in phases in the lead up to the signing of the phase one limited trade deal.
And the news sent stocks soaring, with the Dow surging to a new all-time high of 27,674.80, spurred higher by trade bellwethers such as Boeing (NYSE: BA) and Caterpillar (NYSE: CAT).
Now that the index has notched a new all-time high, analysts say there are a few stocks that can push it even higher.
Among the 30 stocks in the Dow, analysts’ consensus price targets are the highest for McDonald’s (NYSE: MCD), which they say could see another 15.16% upside from here.
McDonald’s may have just seen the surprise departure of CEO Steve Easterbrook, but the consumer equity strategist at Morningstar, RJ Hottovy, said the company’s pick for his successor, Chris Kempczinski, makes for an easy transition.
“I’m pretty comfortable with Kempczinski as the new CEO,” Hottovy said. “He co-authored a lot of the velocity initiatives that Steve Easterbrook put in place. He was a big proponent of the fresh beef initiative the company rolled out. Honestly, he did a lot behind the scenes with delivering digital so I think we’ll see a lot of continuation of Steve’s initiatives with Chris at the helm.”
However, Evercore ISI’s David Palmer warns that McDonald’s needs to step things up if its going to compete.
“You have rivals showing that you can do some things – you can grow breakfast certainly, there’s the chicken wars as we all know, and the fact that there’s been some demand creation happening in the industry,” Palmer said. “The industry is doing over 4% comps right now so very strong results. McDonald’s has outperformed generally but that has compressed lately.”
Even still, Credit Suisse analyst Lauren Silberman says, “Given MCD’s current global strength, deep bench and strong franchisee base, the management transition does not alter our positive view of the Company. We view any material pullback in the stock around the CEO change as a buying opportunity.”
Disney (NYSE: DIS) is the next Dow stock analysts say has the most potential for upside over the next year, with consensus price targets at nearly 15% upside from the current price.
Disney reported earnings on Thursday, and delivered a beat with earnings per share at $1.07 on $19.1 billion in revenue.
The next big catalyst for the stock will be this month’s release of the company’s Disney+ streaming service, which CEO Bob Iger said is “ready to go” after a test in the Netherlands he called “quite successful” with the demographics of those using the service being “far broader than a lot of people expected them to be.”
And finally, we have Microsoft (NASDAQ: MSFT), which analysts say could see nearly 11% upside from here.
Microsoft recently won a Defense Department cloud contract competition worth up to $10 billion against Amazon (NASDAQ: AMZN), which Wedbush analyst Dan Ives called a “turning point” in the battle to dominate the cloud.
“Microsoft remains in an enviable position heading into 2020 on the heels of its cloud success and is firing on all cylinders around its Office 365 and Azure strategic vision based on our recent checks,” Ives wrote in a research report from Tuesday. “We believe [Microsoft’s] Redmond is poised to win the lion’s share of the next phase of cloud deployments versus Amazon and Bezos.”
As for those Dow stocks analysts aren’t so bullish on to lead the next leg up, analysts say Apple (NASDAQ: AAPL), JPMorgan Chase (NYSE: JPM), and Home Depot (NYSE: HD) will all decline over the next year with average price targets -7.77% lower, -5.56% lower, and -0.51% over the next twelve months.