Investing

5 Top Goldman Sachs Stocks to Buy for 2016

PayPal

PayPal Holdings Inc. (NASDAQ: PYPL) is now free from the firm grasp of eBay. Many investors still tie the two companies together, but Goldman Sachs went out on a limb in late October by adding PayPal to the prized Conviction Buy list, with a $45.00 price target for a stock that was said to be very underappreciated. Goldman Sachs sees PayPal dominating in the online payments space despite waves of new competition.

The company can thank eBay for having millions upon millions of customers already embedded, and ongoing security fears also have kept consumers from jumping around with a slew of payment provider trials that are tied right into their bank accounts. PayPal shares were last seen around $36.50 heading into year’s end, which still leaves nearly 25% in implied upside. PayPal’s consensus price target is just under $41.50, and its post-split high is $42.55.

Starbucks

After taking over the civilized world’s coffee market, Starbucks Corp. (NASDAQ: SBUX) now wants to do the same with tea and even has ambitions in wine. The firm’s last price target was $69.00, which would imply close to 15% upside for 2016, if you include the dividend.

The firm likes the wide moat that Starbucks has built up, with great overseas expansion possibilities still awaiting in key growth markets. The consensus price target is closer to $68.00 here, and Starbucks has a split-adjusted all-time high of $64.00.

Visa

In mid-December, Visa Inc. (NYSE: V), one of the newer Dow Jones Industrial Average components, was added to the Conviction Buy list. That should mean its $86.00 price target at the time is safe for the time being, with potentially more than 10% upside that could come with even higher targets ahead. Goldman Sachs sees potentially larger upside as Visa is being considered a winner in the electronic payment and IT services space, despite the sector facing continued pressure from cloud cannibalization.

Visa’s shares were close to $79.99 after that call, and they were at $78.35 just a day before the end of 2015. The consensus price target is almost $86.50, and the all-time high was $81.01, so the call might not seem all that aggressive despite the strong conviction of Goldman Sachs. The highest target price on Wall Street is all the way up at $95.00. Also, Visa offers a dividend yield of less than 1%.


The strategist montage of 2016 views shows that the Goldman Sachs target for the S&P 500 is 2,100.

Note that these were just a sample of the top Goldman Sachs calls. It was taken from more than 20 upside stocks that the firm covers. A last consideration is that the ratings and price targets can change at any time, and some price targets get changed without the street ever even noticing that they have.