24/7 Wall St.

It is that time of year when investors start positioning their portfolios for the year ahead. 24/7 Wall St. reviews vast numbers of research reports looking for the best stocks to buy and stocks to sell, according to analysts. If one firm can move the needle handily in any individual stock it is Goldman Sachs. Investors have followed the firm’s prized Conviction Buy List for years, and the firm has made many changes to this key list going into 2014.

When investors see stocks upgraded from Neutral to the Conviction buy List, they usually chase shares as stocks to buy. When they see the stocks removed, they often treat the names as stocks to sell, even if Goldman Sachs did not remove its formal Buy rating. What investors need to consider is that Goldman Sachs only targets institutional investors and very high net worth individuals.

Investors are generally positive for stocks for 2014, they expect the beginning of the end for quantitative easing and the endless bond buying, and they seem to even expect a gradual recovery for the rest of the world in 2014. Goldman Sachs issued an upside call to 1,900 for the S&P 500 in 2014, but they also believe a 10% correction is likely to occur before that comes about. The many changes to the Conviction Buy List echo this outlook, and many investors actually might welcome lower prices to get into long-term stocks again.

The raw number of changes has been vast in recent days and weeks. In the first week of December, there were Conviction Buy List changes made each day of the week. That is highly unusual, and we have interpreted this as the firm telegraphing to its wealthy clients to completely reposition their portfolios for the year ahead.

Some of the top stocks on the Conviction Buy List have been removed and other new names of highly visible companies have been added. Again, we are interpreting this as a signal that the wealthy investors at Goldman Sachs are being told to reposition their portfolios for 2014.

We have tracked more than a dozen changes to the Conviction Buy List over recent weeks. If that is not a signal of a rebalancing for what the wealthy are supposed to do with their money, then what is?

Dollar General Corp. (NYSE: DG) is a store that most Goldman Sachs clients would never visit. Still money is money, and this call echoes our own belief that the dollar store theme is a secular winner for investors. Goldman Sachs raised the king of dollar stores to the Conviction Buy List on Friday, December 6. Unlike others where there was already a Buy rating, this one was raised up from a Neutral rating. The firm also raised its price target to $71 from $64, and the consensus price target is closer to $64, while the highest analyst price target is only $1 higher than the Goldman Sachs target.

MGIC Investment Corp. (NYSE: MTG) made the move to the Conviction Buy List on December 5, with a $10 price target. The company is benefiting from a solid improvement in credit and mortgage quality. With shares close to $8.40 now, the consensus price target is $8.81 and the 52-week trading range is $1.92 to $8.59. We noticed that the $10 price target is well under the street-high target of $13 on this stock.

Melco Crown Entertainment Ltd. (NASDAQ: MPEL) was removed for the Conviction Buy List on December 5, but the Macau casino operator retains a Buy rating. Solid earnings and revenues have helped drive the stock, and we could not help but notice that the casino sector valuations were looking very high going into 2014 from most other firms as well. Despite removing it from the list, Goldman Sachs actually raised their price target on the stock to $43 from $34. The consensus price target is closer to $40 here.

Tiffany & Co. (NYSE: TIF) is a company that most of Goldman Sachs’ clients visit annually, if not more. The luxury jeweler was added on December 5 to the Conviction Buy List, having been raised up from Neutral in the call. The firm took the price target up to $105 from $97 as well. Tiffany’s current share price is closer to $89, and the consensus price target is near $88.50, despite the company having raised its guidance. Again, Goldman Sachs has the highest price target on Wall Street.

AbbVie Inc. (NYSE: ABBV) was moved up from Buy to the Conviction Buy List at Goldman Sachs on December 5. The Goldman Sachs price target for this top pharmaceutical name is $60, versus about $51 now, and Goldman Sachs has the highest price target of all analysts covering it. AbbVie trades at about 16 times expected 2014 earnings, which is not exactly cheap for a drug stock these days. Drug giant Pfizer Inc. (NYSE: PFE) was removed from the list to make room, but Goldman Sachs did keep its Buy rating on the stock, with a $35 price target.

U.S. Bancorp (NYSE: USB) made the jump to the Goldman Sachs Conviction Buy List on December 4. Citigroup Inc. (NYSE: C) was the casualty as it was downgraded to Neutral and removed from the list after a long residence. We would point out that Warren Buffett keeps buying up shares of U.S. Bancorp as well. Goldman’s price target went to $44 from $40 in the call, versus about $39.50 currently. Note that the consensus price target is closer to $40, and this is another instance of Goldman Sachs matching the highest price target.

Extra Space Storage Inc. (NYSE: EXR) made the jump top the Conviction Buy List on December 3, although this one already had an official Buy rating from the firm. Goldman Sachs’ price target for this top storage real estate investment trust (REIT) is $50, which compares to a current price of about $42.50 and a consensus price target of almost $49.00. Goldman is well under the street-high target of $56.00, and there is a dividend that clocks in just under 4% for investors to boot.

Marketo Inc. (NASDAQ: MKTO) was moved up from Buy to the Conviction Buy List on December 2. The company provides the leading cloud-based marketing software platform for companies of all sizes to build and sustain engaging customer relationships. Goldman Sachs posted a $45 price target for the stock. Marketo was a hot IPO stock offering that started public trading last May, and its target compares to a current price close to $32 and to a consensus price target of $39.50. Investors should realize that $45 is also the highest official price target from all the Wall Street analysts covering Marketo.

Omega Healthcare Investors Inc. (NYSE: OHI) was removed from the Conviction Buy List but was still maintained as Buy on December 3. The Goldman Sachs price target for the stock held steady at $36. The current price is closer to $31.50, and the consensus price target is $32.50.

Tumi Holdings Inc. (NYSE: TUMI) was removed from the Conviction Buy List on December 5, but the firm retained its Buy rating. The Goldman Sachs price target for the stock is $28, versus closer to $25 for the consensus target price. Shares are currently around $23.40.

Priceline.com Inc. (NASDAQ: PCLN) made the jump to the prestigious Conviction Buy List in November. This was another call that felt very late to the party as the stock is above $1,000 but shares have continued rising since the upgrade. The Goldman Sachs analysts upped their price target on the red-hot momentum stock from $1,260 to an astonishing $1,500. Goldman Sachs has the highest price target on Wall Street here too.

Vitamin Shoppe Inc. (NYSE: VSI) was moved up from Buy to the Conviction Buy List shortly before Thanksgiving. Goldman Sachs expects Vitamin Shoppe’s same-store sales growth to accelerate in the fourth quarter and likely top the Wall Street estimates. Goldman Sachs’ price target for the stock is $65, well above the consensus target of about $53. Its shares are currently around $53.50, and the 52-week range is $39.92 to $65.93.

Cisco Systems Inc. (NASDAQ: CSCO) was removed from the Conviction Buy List in November, on the heels of the networking giant’s disappointing earnings. This downgrade echoed many other analyst calls, and Goldman Sachs dropped the price target from $30 to $25 in the call. Cisco’s current consensus price target is closer to $24. Cisco also looks as though it may be on the Dogs of the Dow for 2014, a first if that comes to pass.

Altera Corp. (NASDAQ: ALTR) was another top tech name that was removed from the Conviction Buy List in mid-November. Goldman Sachs kept its Buy rating on the stock and kept the price target at $39. Altera’s current stock price is around $32, and the consensus price target is $37. We would point out that the 52-week range here is $30.62 to $39.18, so the trend has been a weak one, even with a fairly high valuation of more than 20 times expected 2014 earnings.

Remember that being added to the prized Goldman Sachs Conviction Buy List is not a guarantee that a stock will rise. Still, this is what the wealthiest Americans are being told about how to position themselves for a year out. We will continue to monitor the list closely for any additions or deletions. There likely will be more going into and shortly after the end of 2013.