Which Wall Street Firm Made The Best Stock Picks Of 2016?

Now that 2016 is coming to a close, most Wall Street firms are coming out with their top stock picks for 2017. But before traders go all in on the latest round of Wall Street recommendations, it may be wise to take a look back at the picks some of these firms made for 2016 to see which analysts have been delivering the best returns. The firms’ performances can be measured against the 2016 return of the SPDR S&P 500 ETF Trust SPY, which is up 10.1 percent in 2016.

Benzinga took a look at some 2016 stock picks from four of the largest U.S. investment banks, Goldman Sachs Group Inc GS, JPMorgan Chase & Co JPM, Morgan Stanley MS and Bank of America Corp BAC. Predictions from German rival Deutsche Bank AG (USA) DB are included as well. Here’s a look at the results.

JPMorgan

In a comprehensive year-end note to investors last December, JPMorgan analysts made 53 stock recommendations to clients for 2016. As expected with a list that big, there were plenty of winners and losers.

Top-performing 2016 picks included Agnico Eagle Mines Ltd (USA) AEG and Stillwater Mining Company SWC, which surged 54.1 percent and 86.3 percent in 2016, respectively. However, JPMorgan’s home run pick this year was United States Steel Corporation X, which is up 339.2 percent.

The firms biggest duds of 2016 were Vertex Pharmaceuticals Incorporated VRTX and Teva Pharmaceutical Industries Ltd (ADR) TEVA, both of which were down more than 40 percent on the year.

Goldman Sachs

In January, Goldman Sachs analyst David Kostin compiled a list of Goldman’s nine stocks with the most upside. Big winners included Marathon Oil Corporation MRO and Kinder Morgan Inc KMI, which are up 39.1 percent and 41.7 percent, respectively. Goldman’s big 2016 dud was Ford Motor Company F, which is down 13.1 percent this year.

Bank of America

In late 2015, Bank of America put together a list of 10 top stock picks for 10 different sectors of the market. Top-performing picks included QUALCOMM, Inc. QCOM and 3M Co MMM, which are up 31.4 percent and 18.2 percent on the year. However, Bank of America dropped the ball with Walt Disney Co DIS and The Coca-Cola Co KO, which are both down modestly in 2016.

Morgan Stanley

In early 2016, Morgan Stanley compiled a list of 30 stocks to buy and hold until 2019. Top picks included WhiteWave Foods Co WWAV and T-Mobile US Inc TMUS, which are both up more than 40 percent this year. However, 2016 pick CVS Health Corp CVS is down 184 percent year-to-date, and Nike Inc NKE is down 18.9 percent.

Deutsche Bank

Last December, Deutsche Bank released its own set of 30 large-cap stocks to buy in 2016.

Top-performing picks included Applied Materials Inc. AMAT, which gained 74.7 percent on the year, and Lam Research Corporation LRCX. Unfortunately, Deutsche Bank incredibly included the single worst performer in the entire S&P 500 on its list of stocks to buy in 2016. Not only was Endo International plc –Ordinary Shares ENDP not a top stock in 2016, it’s -74.4 percent return was the single worst return in the entire S&P 500 by a wide margin.

The Results Are In

The big winner among the five big firms is Goldman Sachs, which delivered an average return of 22.0 percent. That roughly doubled the return of the S&P 500. JPMorgan also delivered a strong showing at +20.3 percent. Bank of America’s picks came in just above the S&P 500’s return at +11.0 percent.

Morgan Stanley was the only U.S. firm to fall short of the S&P 500 benchmark. The firm’s picks only returned +9.3 percent.

Finally, Deutsche Bank capped off an extremely disappointing 2016 by producing an average return of only +7.8 percent on its top stock ideas.

Looking Ahead

Traders looking for Goldman’s top picks in 2017 should look to some of 2016’s worst performers. Goldman’s options research team recently named 2016 laggards Endo International, Tenet Healthcare Corp THC, Allergan plc Ordinary Shares AGN, Mylan NV MYL, H & R Block Inc HRB and Tripadvisor Inc TRIP among the firm’s top stocks for 2017.