By Philip van Doorn
Other expected highfliers include KKR, AMD, Microsoft and Live Nation
Investors are always hoping that companies will surprise analysts by showing higher profits than expected. These “earnings beats” can set up revisions of profit estimates for coming quarters, which in turn can support higher stock prices over time.
But stock prices can also be propelled by revenue growth. And among the S&P 500 SPX, there are many standouts with expected sales growth rates through 2026 that are much higher than that of the full index.
For the S&P 500, the expected compound annual growth rate (CAGR) for revenue from 2024 through 2026 is 5.7%, while the expected two-year earnings-per-share CAGR through 2026 is 13.8%.
The S&P 500 is weighted by market capitalization. This means that the largest five holdings of the SPDR S&P 500 ETF Trust SPY make up 26.5% of the portfolio.
Here are those five companies, sorted by their weighting within the SPY portfolio, with projected sales and EPS CAGR through 2026. All projections in this article are for calendar years, with consensus estimates among analysts polled by FactSet adjusted for companies whose fiscal reporting periods don’t match the calendar.
Company Ticker % of SPY portfolio Two-year estimated sales CAGR through 2026 Two-year estimated EPS CAGR through 2026
Nvidia Corp. NVDA 7.10% 35.5% 35.1%
Apple Inc. AAPL 6.75% 7.1% 14.4%
Microsoft Corp. MSFT 6.24% 14.2% 14.9%
Amazon.com Inc. AMZN 3.95% 10.7% 22.3%
Meta Platforms Inc. META 2.50% 13.5% 12.5%
Source: FactSet
All five companies are expected to show two-year sales CAGR exceeding that of the index, with Apple showing the slowest two-year revenue CAGR of 7.1% through 2026. But Apple’s EPS growth rate is expected to exceed that of the index. One reason is improving profit margins as services make up a larger portion of the iPhone maker’s revenue. Another reason is that Apple continues to lower its share count significantly through share repurchases.
Screening the full S&P 500
Starting with the 500 components in the U.S. large-cap benchmark index, there are 58 companies projected to show revenue CAGR of at least 11.4% from 2024 through 2026, based on consensus estimates among analysts polled by FactSet, with adjustments made for calendar years for companies whose fiscal years don’t match the calendar. That is twice the projected sales CAGR for the full index.
Among these 58 companies, 49 are projected to show two-year EPS CAGR exceeding 13.8% (the projected level for the index) through 2026.
Among the 49 remaining companies, we narrowed the list to 15 with the highest percentages of “buy” or equivalent ratings among analysts polled by FactSet. Here they are, sorted by expected two-year revenue CAGR through 2026:
Company Ticker Two-year estimated sales per share CAGR through 2026 Two-year estimated EPS CAGR through 2026 Share "buy" ratings
Nvidia Corp. NVDA 35.5% 35.1% 91%
KKR & Co Inc. KKR 26.8% 25.1% 81%
Advanced Micro Devices Inc. AMD 25.3% 46.7% 81%
Micron Technology Inc. MU 24.5% 77.8% 91%
CrowdStrike Holdings Inc. Class A CRWD 22.3% 22.6% 81%
Axon Enterprise Inc. AXON 22.1% 22.8% 93%
ServiceNow Inc. NOW 20.5% 20.7% 83%
Coterra Energy Inc. CTRA 19.6% 45.7% 86%
Targa Resources Corp. TRGP 19.3% 25.4% 88%
Uber Technologies Inc. UBER 15.7% 38.1% 90%
Microsoft Corp. MSFT 14.2% 14.9% 93%
Broadcom Inc. AVGO 13.7% 20.9% 87%
Synopsys Inc. SNPS 13.0% 15.0% 86%
Mastercard Inc. MA 12.1% 14.4% 79%
Live Nation Entertainment Inc. LYV 11.7% 62.1% 83%
Source: FactSet
A buy rating doesn’t necessarily mean that an analyst working for a brokerage firm expects a company’s share price to rise over the next year. The analysts generally set 12-month price targets. But that can be considered a short period for a committed long-term investor.
Among these 15 companies, some can be considered “fully priced” now, based on the consensus price targets, if you as an investor have only a one-year outlook. And some have double-digit upside potential indicated by the price targets.
Here is the list again, in the same order, showing consensus price targets:
Company Ticker Closing price Consensus price target Implied 12-month upside potential
Nvidia Corp. NVDA $146.27 $158.25 8%
KKR & Co Inc. KKR $152.13 $160.44 5%
Advanced Micro Devices Inc. AMD $139.30 $185.80 25%
Micron Technology Inc. MU $99.92 $145.96 32%
CrowdStrike Holdings Inc. Class A CRWD $347.88 $327.32 -6%
Axon Enterprise Inc. AXON $601.29 $558.85 -8%
ServiceNow Inc. NOW $1,045.55 $1,007.50 -4%
Coterra Energy Inc. CTRA $25.61 $32.04 20%
Targa Resources Corp. TRGP $193.00 $190.34 -1%
Uber Technologies Inc. UBER $71.16 $90.76 22%
Microsoft Corp. MSFT $425.20 $500.38 15%
Broadcom Inc. AVGO $173.58 $195.78 11%
Synopsys Inc. SNPS $557.96 $650.22 14%
Mastercard Inc. MA $521.88 $562.23 7%
Live Nation Entertainment Inc. LYV $127.02 $138.42 8%
Source: FactSet
You should do your own research before considering any investment. One way to begin that process is to click on the tickers for more about each company, exchange-traded fund or index.
Read: Tomi Kilgore’s detailed guide to the wealth of information available for free on the MarketWatch quote page
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-Philip van Doorn
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11-14-24 1122ET
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