S&P 500: Profit Is About To Go Through The Roof At 7 Companies

With the S&P 500 taking a breather, investors anxiously hope some big profit gains will jazz things up again. And some companies are favorites to deliver on that wish.

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Seven companies in the S&P 500, including industrial General Electric (GE), energy firm Baker Hughes (BKR) and consumer discretionary Marriott International (MAR), are seen putting up adjusted profit growth in 2021 of 1,000% or more, says an Investor’s Business Daily analysis of data from S&P Global Market Intelligence and MarketSmith.

And if this materializes, it’s exactly the kind of growth investors are hoping for to reignite interest in the S&P 500.

Another Bonanza Year For S&P 500 Profit

S&P 500 corporate earnings reports start trickling out this week. And the results ought to be pivotal and promising.

Analysts are now calling for S&P 500 profit to jump 21.7% in just the fourth quarter of 2021, says John Butters of FactSet. If that’s right, it would “mark the fourth straight quarter of earnings growth above 20%,” he said.

But perhaps more important is how 2021’s profit shaped up for the full year. Remember last year was the first since the S&P 500 crawled out of its Covid-19 hole in 2020. And right now, analysts think companies in the S&P 500 will report 45.2% higher profit for last year, FactSet says. Industrials are leading the pack with a projected whopping 98% jump in profit in 2021.

And some S&P 500 companies are likely about to put up numbers that top even the S&P 500’s overall impressive gain.

Is The General Electric Blackout Finally Over?

GE, once the most valuable company in the world, is a stain on many investors’ long-term portfolios. But is the pain finally over?

Analysts are calling for the overextended corporate giant to make an adjusted $2.04 a share in 2021 when it reports on Jan. 28. If spot on, that would mark 2,449% profit growth for the year. Before you get too excited, though, know that GE has struggled to fix itself for decades. It’s only now in the painful process of splitting itself into pieces that might fare better on their own.

It’s been a painful ride for GE investors. Revenue dropped in the past four years, and it’s seen falling again in 2021 by 5.6%. Meanwhile, the stock plunged more than 60% in the past five years, while the S&P 500 is up more than 100%. Analysts, though, seem to think GE finally is on the right path. And a profit boom is only part of why. They’re calling for the stock to be worth 360% more in 12 months than it is now. Should you buy GE stock now?

Profit Gusher In S&P 500 Energy Sector

Booming prices for commodities are seen flowing right to the bottom line of energy companies, again. S&P 500 energy sector profit gains are off the charts for 2021. Revenue alone is expected to jump nearly 60% for the year.

Just look at Houston-based oil services firm Baker Hughes. The company supplies explorers of energy with most of the tools and materials they need to do their job. And the business is strong. Analysts think Baker Hughes’ on Jan. 20 will report 2,177% higher adjusted profit of 68 cents a share for all of 2021. All that on top of stable revenue of more than $20 billion.

Shares are already up more than 70% in a year’s time to 76.39. But analysts, though, think it’s played out despite the surge in profit. Analysts think the stock is only worth 29.47 a share, meaning its more than 60% overvalued. Big profit, and a strong outlook, might change their thinking.

Finding Opportunity In Booming Travel Profits

Last year was supposed to mark a surge in return to travel. And in many ways, it did. But the rise of the omicron variant of Covid-19 put somewhat of a damper on recovery.

Profit is seen booming in 2021 at both Marriott and Hilton Worldwide (HLT). Analysts think Marriott’s 2021 profit will jump more than 1,500% to $2.89 a share. And they see profit at the well-run Hilton jumping 2,100% to $2.20 a share.

But only with Marriott do they see obvious upside for the stock. Analysts think Marriott’s shares will rise nearly 40% in the next 12 months to 163.54. Marriott stock has been a late bloomer coming out of the pandemic, rising only 6% in the past year, versus a nearly 30% jump by Hilton.

But one thing’s for sure. Investors need to see big profit gains for 2021. And a handful of S&P 500 companies look likely to deliver.

Biggest Profit Gainers In 2021

S&P 500 firms expected to put up top profit gains in 2021

Source: IBD, S&P Global Market Intelligence

Follow Matt Krantz on Twitter @mattkrantz

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