If there is one firm on Wall Street that investors have been told that they want to pay attention to during analyst upgrades and downgrades, it is Goldman Sachs. The firm has analysts who are highly ranked, as well as some who are ranked behind their analyst peers. Still, Goldman Sachs only caters to wealthy individuals and to institutional investors. Now the firm has released its list of “cheapest stocks” right now. This list is based solely upon the projected upside to the firm’s price target versus the current share price.
Before blindly jumping into these “just because it is from Goldman Sachs,” 24/7 Wall St. would remind investors that some of these calls have large upside because they have had “Buy” ratings at the firm for some time. Some have pulled back handily from highs as well, which can distort the reality of real upside — as in, if the analyst were to initiate coverage today versus the prior price target.
24/7 Wall St. wanted to feature these on a sector by sector basis rather than trying to parse out the list of stocks by another measure. Of the 40 stocks featured with big upside, we featured six of the stocks. Others have been eliminated due to their recent news or due to changes made by Goldman Sachs since the March 31, 2015 cut-off date.
Chesapeake Energy Corp. (NYSE: CHK) is the top energy pick from Goldman Sachs. The firm sees upside of close to 55% here. Goldman raised Chesapeake up to Buy from Neutral back on January 12 with a target price of $23 at the time — when shares were at a dividend-adjusted share price of $18.28 the day prior to the call. The shares were at $14.16 as of the March 31 date used by Goldman Sachs, but the stock was up 1.1% at $15.31 at the time this posted. Also, Chesapeake’s 52-week range is $13.38 to $29.92, so it is no stranger to big price swings — and the consensus analyst target is $18.24. Chesapeake’s highest price target is up at $27.
Delta Air Lines, Inc. (NYSE: DAL) is Goldman Sachs’ top transportation stock. The airline was shown to have upside of 53.5% to the firm’s target, but the $44.96 price at the end of March 31 is even higher than the $41.86 share price as of Tuesday, April 7. What investors need to know now is that this would imply upside of closer to 64% based upon the latest share price. At $41.85 on Tuesday, Delta’s 52-week range is $30.12 to $51.06 and the consensus price target is $63.47. Despite Goldman having close to a $69 target price, the highest analyst target from other firms is said to be up at $80.
Keurig Green Mountain, Inc. (NASDAQ: GMCR) may have Coca-Cola to thank for its recovery, but it also ranks as the consumer goods and products ‘cheapest stock’ of Goldman Sachs in this list. The firm’s $166 price target for this coffee giant was 48.6% higher than the $111.73 price on March 31, and almost 44% higher than the $115.40 more recent share price. Goldman Sachs is much more optimistic than most analysts as the consensus price target is $139.36 — with the highest price target being $175 elsewhere. Keurig Green Mountain has a 52-week range of $90.08 to $158.87
Alcoa Inc. (NYSE: AA) was the top metals and material pick from the Goldman Sachs cheapest stocks list. At $13.50, it is important to know that Alcoa shares have been pounded and are barely $1 above their 52-week low ahead of earnings. Goldman Sachs’ upside of 39.3% was based on a $12.92 share price on March 31, so the current $13.50 share price implies upside to its $18 target price would leave 33% upside now. Alcoa has a 52-week trading range of $12.34 to $17.75 and a consensus analyst price target of $18.25. The highest price target from analysts is $23.
Amgen Inc. (NASDAQ: AMGN) was not just the top biotech from the cheapest stocks list at Goldman Sachs — it made the cheapest healthcare stock on a broader front. Amgen’s price was $159.85 on the March 31 cut-off date with an implied upside of 30.1%, but the $158.40 share price on Tuesday implies about 31.2% upside. Amgen has a 52-week trading range of $108.20 to $173.14. The stock has a consensus analyst price target of $176.42, the highest price target given was $208.
Lam Research Corporation (NASDAQ: LRCX) is technically the cheapest stock on the Goldman Sachs buy list — Garmin, Ltd. (NASDAQ: GRMN) and SanDisk Corp. (NASDAQ: SNDK) were ranked higher, but they are both stocks that 24/7 Wall St. refuses to acknowledge as big upside calls due to cuts that have been made of late. Goldman Sachs added Lam Research to the Conviction Buy List last October, and the firm had an implied 29.6% upside based upon the march 31 cut-off date. Lam Research shares were currently over $1 higher and the $71.60 share price would take away marginally from Goldman’s 29.6% upside call. Lam Research has a 52-week trading range of $50.54 to $85.70. The stock has a consensus analyst price target of $93.10, the highest price target from any analyst is $105.
Again, 24/7 Wall St. would warn investors that they should not just go out and randomly buy stocks based upon a Goldman Sachs list. Some of these stocks that were on the March 31, 2015, list have already been downgraded or they have had bad news that should lower the targets. Other sites have run the full list here, but the problem we have seen is that they have not by and large parsed out the noise from the report due to that one-week cut-off date differential.