The S&P 500 index hit record highs lately, buoyed by strong corporate earnings and AI momentum. Therefore, it could be wise to invest in fundamentally sound S&P 500 stocks Amazon.com, Inc. (AMZN), Salesforce, Inc. (CRM), and Abbott Laboratories (ABT) with strong analyst ratings.
The S&P 500 index continued its rally in June as solid corporate earnings and AI momentum have helped ease investor concerns over inflation and the possibility of a delayed Federal Reserve pivot to interest rate cuts. The S&P 500 surged nearly 3% over the past month and is up more than 14% year-to-date.
Inflation cooled in May for a second consecutive month. The Consumer Price Index (CPI) rose 3.3% year-over-year, slowing from April’s 3.4% rate. On a monthly basis, prices were steady for the first time since July 2022. Economists expected a 0.1% monthly rise and an annual gain of 3.4%. While inflation is easing, it is still above the Fed’s 2% target.
The central bank held rates steady as expected this Wednesday and signaled that it expects to cut rates just once this year compared to the three times it had previously forecasted.
Goldman Sachs recently raised its 2024 year-end target for the benchmark index from 5,200 to 5,600, citing robust earnings growth by five major U.S. tech stocks and a higher fair value price-to-earnings ratio. Microsoft, Nvidia, Google, Amazon.com, and Meta Platforms have collectively soared by 45% and now comprise 25% of the S&P 500 cap, it wrote in a note.
“The drivers of the rally include upward revisions to consensus 2024 earnings estimates for these same tech companies, and valuation expansion stemming from increased investor enthusiasm about artificial intelligence (AI),” the brokerage added.
Meanwhile, Evercore ISI increased its year-end price target for the S&P 500 index to 6,000 from 4,750, anticipating earnings to grow 8% this year, driven by solid potential from the AI revolution. It upgraded the information technology sector’s rating from “in line” to “outperform,” citing structural-demographic trends and the ongoing excitement surrounding AI.
Citigroup has joined other Wall Street firms in expressing optimism about the S&P 500, raising its year-end price target for the index to 5600.
Now, let’s discuss the fundamentals, growth prospects, and updated analyst ratings for top S&P 500 stocks such as AMZN, CRM, and ABT.
Amazon.com, Inc. (AMZN)
AMZN engages in the retail sale of consumer products, advertising, and subscription services via online and physical stores internationally. It operates through three segments: North America; International; and Amazon Web Services (AWS). It also sells electronic devices, like Kindle, Fire tablets, Fire TVs, and Blink, and develops and produces media content.
On June 7, Amazon Games unveiled New World: Aeternum, an exciting and content-rich action RPG featuring dynamic real-time combat and set in a vast and enigmatic world with players having the freedom to choose how they shape their adventure.
It introduces new features for players on all platforms, such as New World’s first-ever large-scale player vs. player zone, a challenging 10-player raid, end-game solo trials, an upgraded leveling experience, a revamped dialogue system, and more. This console launch, expected on October 15, will diversify AMZN’s revenue streams and solidify its presence in the gaming industry.
On May 29, AWS, an Amazon.com company, expanded its strategic partnership with SAP SE (SAP) to transform modern cloud enterprise resource planning (ERP) experiences and help enterprises drive new capabilities and efficiencies with generative AI.
The Generative AI hub within SAP AI Core integrates with foundational models in Amazon Bedrock to deliver generative AI-driven insights and optimize manual processes for enterprise customers. This collaboration should bode well for both
AMZN’s net sales increased 12.5% year-over-year to $143.31 billion for the first quarter that ended March 31, 2024. Its operating income rose 220.6% from the year-ago value to $15.31 billion. Additionally, the company’s net income came in at $10.43 billion and $0.98 per share, up 228.8% and 216.1% from the prior year’s quarter, respectively.
Analysts expect AMZN’s revenue for the second quarter (ending June 30, 2024) to increase 10.6% year-over-year to $148.60 billion. Its revenue for the current quarter is expected to grow 56.1% year-over-year to $1.01. Moreover, the company surpassed the consensus revenue and EPS estimate in each of the trailing four quarters.
Shares of AMZN have surged 20.7% over the past six months and 45.3% over the past year to close the last trading session at $186.10. Moreover, Wall Street analysts expect the stock to reach $221.48 in the upcoming 12 months, indicating a potential upside of 21.2%. Each of the 42 analysts offering 12-month price targets for Amazon rated the stock a Buy.
AMZN’s sound fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.
AMZN has a B grade for Growth, Momentum, Sentiment, and Quality. It is ranked #7 among 51 stocks within the B-rated Internet industry.
To see the additional ratings of AMZN for Value and Stability, click here.
Salesforce, Inc. (CRM)
CRM offers Customer Relationship Management (CRM) technology that brings companies and customers together globally. The company's service includes sales to store data, monitor leads, forecast opportunities, insights through analytics and AI, and deliver contracts and invoices. Also, its platform enables companies of all sizes to build business workflow and apps.
On May 22, CRM expanded its Einstein Copilot capabilities by introducing new features for marketers and merchants. Einstein Copilot, Salesforce’s trusted conversational AI assistant, now helps businesses of various sizes with daily marketing and merchandising tasks in addition to its existing functionalities for sales and service.
Further, the company introduced new tools for unifying business and commerce data and a new AI-powered personalization decision engine that helps companies personalize customer interactions using data from any source.
On May 21, Salesforce and International Business Machines Corporation (IBM) announced an extended partnership that will bring together IBM watsonx AI and Data Platform capabilities with the Salesforce Einstein 1 Platform for greater customer choice and flexibility in AI and data ecosystems.
During the first quarter that ended April 30, 2024, CRM’s total revenues increased 10.7% year-over-year to $9.13 billion. Its non-GAAP income from operations rose 28.8% from the year-ago value to $2.93 billion. The company’s non-GAAP net income was $2.41 billion, or $2.44 per share, up 43.8% and 44.4% from the previous year’s quarter, respectively.
Analysts expect CRM’s revenue and EPS for the second quarter (ending July 2024) to increase 7.4% and 11.2% year-over-year to $9.24 billion and 2.36, respectively. Furthermore, CRM has topped consensus EPS estimates in each of the trailing four quarters, which is impressive.
CRM’s stock has soared 6.8% over the past year to close the last trading session at $241.80. Moreover, Wall Street analysts expect the stock to reach $297.11 in the upcoming 12 months, indicating a potential upside of 28.2%. Based on 40 analysts offering price targets for Salesforce, 29 rated the stock Buy, while ten rated Hold, and one of them rated Sell.
CRM’s POWR Ratings reflect this robust outlook. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.
The stock has a B grade for Quality. CRM is ranked #19 out of 134 stocks in the Software – Application industry.
Beyond what is stated above, we’ve also rated CRM for Growth, Sentiment, Value, Stability, and Momentum. Get all CRM ratings here.
Abbott Laboratories (ABT)
ABT discovers, develops, manufactures, and sells healthcare products worldwide. The company operates in four segments: Established Pharmaceutical Products; Diagnostic Products; Nutritional Products; and Medical Devices.
On June 14, ABT’s Board of Directors declared a quarterly common dividend of 55 cents ($0.55) per share, payable on August 15, 2024, to shareholders of record at the close of business on July 15, 2024. It marks the 402nd consecutive quarterly dividend paid by Abbott since 1024.
ABT’s annual dividend of $2.20 translates to a 1.93% yield on the prevailing share price, while its four-year average dividend yield is 1.60%. Its dividend payouts have grown at CAGRs of 10.8% and 12.4% over the past three and five years, respectively. Abbott has raised its dividend payout for 52 consecutive years and is a member of the S&P 500 Dividend Aristocrats Index.
On June 11, ABT received U.S. FDA clearance for two new over-the-counter continuous glucose monitoring (CGM) systems - Lingo™ and Libre Rio™, which are based on Abbott's world-leading FreeStyle Libre® continuous glucose monitoring technology, currently used by nearly 6 million people worldwide.
Also, on April 29, ABT announced that the FDA had approved the Esprit™ BTK Everolimus Eluting Resorbable Scaffold System (Esprit BTK System). The Esprit BTK System is a dissolving stent that provides the possibility of better outcomes for people with the most severe form of peripheral artery disease (PAD).
For the first quarter, which ended on March 31, 2024, ABT’s net sales increased 2.2% year-over-year to $9.96 billion, driven by solid underlying base business performance. Its adjusted earnings before taxes were $2.04 billion for the quarter. In addition, the company’s adjusted net earnings came in at $1.73 billion, or $0.98, respectively.
For the full year 2024, Abbott expects organic sales growth, excluding COVID-19 testing-related sales, to be 8.5%-10%, representing a rise at the midpoint of the range. Also, the company projects an adjusted EPS of $4.55 to $4.70, which also represents an increase at the midpoint of the range.
Street expects ABT’s revenue for the second quarter (ending June 2024) to increase 3.9% year-over-year to $10.37 billion. The consensus EPS estimate of $1.11 for the same period indicates a 2.4% year-over-year improvement. Moreover, the company has an excellent surprise history, surpassing consensus revenue and EPS estimates in each of the trailing four quarters.
ABT’s stock has gained 2.9% over the past month to close the last trading session at $106.57. Also, Wall Street analysts expect the stock to reach $127.75 in the upcoming 12 months, indicating a potential upside of 21.2%. Based on 12 analysts offering price targets for Abbott in the last three months, 11 of them rated the stock as Buy, while one rated Hold.
ABT’s sound fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, translating to a Buy in our proprietary rating system.
The stock has a B grade for Stability. In the 132-stock Medical – Devices & Equipment industry, ABT is ranked #23.
Click here to see ABT’s ratings for Growth, Value, Momentum, and Quality.
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AMZN shares were trading at $187.21 per share on Friday morning, up $1.11 (+0.60%). Year-to-date, AMZN has gained 23.21%, versus a 14.97% rise in the benchmark S&P 500 index during the same period.
About the Author: Mangeet Kaur Bouns
Mangeet’s keen interest in the stock market led her to become an investment researcher and financial journalist. Using her fundamental approach to analyzing stocks, Mangeet’s looks to help retail investors understand the underlying factors before making investment decisions.
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