Stocks Analysts Hated Beat the Ones They Loved: John Dorfman

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As 2010 gets under way, the stock that Wall Street’s security analysts love most is CMS Energy Corp. It garners 14 “buy†recommendations, with no dissenting votes. One might think that this stock can’t miss.


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[hellen]

Hello friends


Accenture Plc, which recently saw its Tiger Woods-centered advertising campaign turn to dust overnight, was analysts’ favorite stock in 2002. Sixteen analysts urged investors to buy the stock; not one said to hold or sell. How did Accenture do? Shares fell 33 percent that year.


That result was not a fluke. For 11 of the past 12 years, I have studied the performance of analysts’ four favorite stocks, and the fate of the four they most scorned. My analysis covers 1998 through 2009, except for 2008, when I was temporarily retired as a columnist.


Their favorites, on average, were flat during those years while the four stocks they hated most gained about 6 percent annually. The Standard & Poor’s 500 Index had an average gain of about 9 percent.


Thanks to all friends