S&P 500: 12 Stocks Up Big This Year Are Due For A Nasty Fall, Analysts Say

Hope you enjoyed the rally in S&P 500 stocks this year while it lasted. Analysts are already calling for some of the biggest gainers to fall.

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Shares of Steel Dynamics (STLD), Nucor (NUE) and C.H. Robinson (CHRW), all due to drop 2% or more in the next 12 months, says an Investor’s Business Daily analysis of data from S&P Global Market Intelligence and MarketSmith. That might disappoint some investors who saw these stocks rise 5.5% or more this year.

The S&P 500’s sudden reversal in February and March is a bit of a wake-up call for investors who thought all systems are go for stocks. The Federal Reserve is still threatening higher short-term interest rates. Meanwhile, the White House is talking about higher taxes, including on businesses.

“Unfortunately, we’re in a market environment where every data point feels like the children’s game, red light green light,” said Liz Young, Head of Investment Strategy at SoFi. “The most recent market-moving event was Fed Chair Powell’s testimony to Congress, which sent fed funds futures up in quick fashion. Red light.”

S&P 500’s Gains For Year At Risk

In many ways, seeing the S&P 500 soften this year comes as a surprise. The S&P 500 jumped more than 6% in January on the hopes the Fed’s biggest rate hikes are over.

But now, the whole thesis of jumping into the S&P 500 have faded away. The S&P 500 is now barely clinging onto a gain for the year of just 2.4%. And now, the average stock in the S&P 500 is barely clinging onto a gain of 1.4%.

And some of the biggest risk is in shares of S&P 500 that ran up the most.

Steel Stocks In The S&P 500 Show Their Rust

Talk about a stock analysts think is set up for a fall. Shares of leading steel company, Steel Dynamics, are up more than 31% this year to 128.19. That easily makes it one of the top stocks in the index.

But analysts think it’s got quite a way to drop. They’re calling for the stock to be worth just 110.50 a share in 12 months, or nearly 14% less. Much of the downturn in the stock is explained by the company’s fundamentals. Last year was boom time at Steel Dynamics. Adjusted earnings per share soared more than 40% on robust demand. But this year is an entirely different story. Analysts think the company’s profit will drop by nearly half to $11.98 a share.

It’s a similar story at rival steel company, Nucor. The stock is up more than 27% this year alone to 167.85 a share. But analysts think in 12 months’ time the stock will fall nearly 12% to 148.13. The fundamentals show a similar trend. The company’s profit jumped more than 20% in 2022. But this year, softening demand is likely to drag profit down by more than half.

It’s Not Just Steel

Steel stocks aren’t the only S&P 500 members analysts are warning ran up too much. Logistics company C.H. Robinson is due for a nearly 10% drop in the next 12 months, analysts say. That would come as quite a surprise for investors enjoying their nearly 13% gain on the stock this year.

Are all S&P 500 stocks up this year due for a fall? Hardly. Analysts are predicting a gain of at least 18% by the average stock in the S&P 500 in the next year. So when they’re willing to flag you off of some winners, it might be worth listening.

Analysts Says These S&P 500 Stocks Up Are Due To Fall

All are expected to fall in the next 12 months, despite being up 5.5% or more this year

Sources: S&P Global Market Intelligence, IBD