Analysts can be a powerful force in the market. If there are enough of them covering a stock, when their sentiment changes, it will move the stock price. Marketbeat.com’s analyst tracking tools will show 3 names that reported solid results for CQ4, gave positive guidance, and earned a round of analyst applause. Dick’s Sporting Goods (NYSE: DKS), General Mills (NYSE: GIS), and Darden Restaurants (NYSE: DRI) are on the brink of hitting new highs, which will trigger higher prices. A move to new highs catalyzes positive feedback loops that can turn former sellers into buyers and add momentum to already strongly trending names.
Assuming these stories unfold as expected in 2023, the upward trend in sentiment and price target should continue and lead these stocks to new highs.
Dick’s Sporting Goods: Value, Yield and Higher Prices
Dick’s Sporting Goods wowed the market with top and bottom-line outperformance, including inventory management, and left analysts expecting growth in 2023. The stock received multiple price target increases that compounded an already firming sentiment. The analyst sentiment is up to Moderate Buy from last year’s Hold with a consensus target that is trending higher as well. The takeaway is that the consensus is above $155, well into the new all-time high territory. The stock is trading shy of the all-time high now but is trending upward and on track to retest resistance at that level. Technically speaking, based on the magnitude of the 2022 correction, this market could exceed $155 and move toward the $200 range.
Dick’s Sporting Goods offers a decent value and yield combination, trading at 10X earnings and yielding 2.85%. The stock may not see a multiple expansion; although 1 is warranted, the earnings and distribution growth outlook support the uptrend. Dick’s dividend has grown at a 30% CAGR for the last 5 years and is still only 16% of the earnings. This suggests that increases will continue at a high rate if not at the current 16% CAGR.
General Mills Is Marching To New Highs
General Mills reported a beat-and-raise quarter earning a handful of price target increases. This stock doesn’t offer the same value-to-yield combination as Dick’s, nor does it have the best combination for the staples sector, but it is on the verge of new highs. The analyst's sentiment has slipped to a Hold over the last year, but they keep raising their price targets, which has this market higher. The latest round has a consensus near $83, which assumes fair value at current market levels. The stock yields about 2.5%, 90 bps above the broad market average.
Institutional buying is another catalyst for this stock. The institutions have been buying for the last year, and their activity spiked in Q1. They own 75% of the company, which may grow over the next quarter. The chart action is bullish, this stock is in an uptrend, but there may be a pause at the all-time high. If the market can get above $87, it could reach the $100 range.
Darden Restaurants Rebound Gains Momentum
Darden Restaurants' rebound is gaining momentum, with sales up double-digit in all segments. The FQ3 results beat on the top and bottom lines and came with improved guidance that may be cautious, given the environment. The takeaway is that 2 dozen analysts have pegged stock at Moderate Buy, half raised their price targets, and have the stock ready to break out. The consensus price target has the stock already trading at fair value, but it is trending higher, and the recent targets are mostly above consensus.
The trigger point for this stock is near the $165 level. This is the all-time intraday high and may provide resistance. A move above this will confirm the uptrend and the breakout and open the door to targets near $200. Until then, Darden pays a decent 3.15% dividend that has been growing.
