Wall Street analysts are nailing it this year

Key Points
  • Stocks that analysts recommended for 2017 have generally gained, according to analysis from Bespoke Investment Group.
  • Names the Street didn't like have typically fallen.
  • Bespoke's Paul Hickey said fund flows could drive the trend.
Traders work on the floor of the New York Stock Exchange.
Michael Nagle | Bloomberg | Getty Images

Wall Street analysts have made the right calls so far this year.

Analysts' 50 most loved stocks at the start of the year are up an average 11.37 percent year-to-date, according to a Monday note from Bespoke Investment Group.

On the flip side, the 50 stocks analysts hated most at the start of this year are down an average 0.74 percent year-to-date.

Source: Bespoke Investment Group

Typically, a high number of buy ratings on a stock means it's likely peaked and investors should sell. But this time, flows of new money may be dictating the analysts' good track record, Paul Hickey, co-founder of Bespoke Investment Group, told CNBC in a phone interview.

As new money comes into the market, it's probably going through brokers who must follow their analysts' recommendations, he said. That's bringing massive buyers into the very stocks the Street likes.

According to Hickey, eight S&P 500 stocks have no sell ratings and at least three buy recommendations:

Just two stocks have more than six sell ratings:

Except for the energy names, the stocks analysts like are up at least 12 percent year-to-date.

"If you continue to see new money coming into the market, this trend could continue," Hickey said. "It's just a matter of how money gets allocated. If you see more money going into active strategies you could see this trend continue."

Money has kept to the sidelines amid political uncertainty and only started coming back into the market in the last few months. Cash holdings hit a 15-year high of 5.8 percent of portfolios last July and remain above the benchmark 4.5 percent level, according to Bank of America Merrill Lynch's May fund managers survey.

Active managers have also recovered against the rise of passive investing in exchange-traded funds. In April, large-cap money managers posted their best performance in more than two years, according to BofAML.


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