5 Goldman Sachs Conviction List Buys for a Fully Valued Market

The current bull market is now 10 and a half years old, and although we have traded sideways for the past 18 months, almost every metric used to measure the markets value is flashing red. The problem for most investors is that interest rates remain at generational lows and will probably stay there for the foreseeable future. That keeps dividend-paying stocks high on many investors’ buy lists.

We screened the Goldman Sachs Americas Conviction List for dividend-paying stocks that are fairly priced and either have been somewhat out of favor or have lagged their peers. We found five that make good sense now for investors looking for total return potential.

Baker Hughes

General Electric announced late last year it will be divesting a large part of its interests in this company, which could provide some life to the shares. Baker Hughes, a GE Company (NYSE: BHGE) is a provider of integrated oilfield products, services and digital solutions. Its products and services include upstream, midstream, downstream, industrial and digital.

The upstream unit includes evaluation, drilling, completions and production. Midstream enables the power and compression efficiency for liquefied natural gas (LNG) and pipeline and storage. Downstream builds reliability and safety into process operations that include refining and petrochemical and fertilizer solutions.

Baker Hughes industrial solutions offers power generation to advanced control systems and sensing technology that power industrial facilities. Digital transformation integrates data on an open platform with security and scale. This unit enables field services with real-time insights.

Baker Hughes shareholders receive a 3.05% dividend. The Goldman Sachs price target on the stock is $36, and the Wall Street consensus target is $29.52. The stock traded early Monday at $24.22 per share.

Bank of America

The company posted solid second-quarter results and is one of three banks on the Goldman Sachs Americas Conviction List. Bank of America Corp. (NYSE: BAC) is a ubiquitous presence in the United States, providing various banking and financial products and services for individual consumers, small and middle market businesses, institutional investors, corporations and governments in the United States and internationally.

Bank of America operates some 5,100 banking centers, 16,300 ATMs, call centers, online and a mobile banking platform. It most recently posted revenues of $23.08 billion for the quarter ended June 2019, a 2% increase from a year earlier, and per-share earnings that topped the consensus estimate of analysts. Note that the bank has topped consensus revenue estimates three times over the past four quarters.

Bank of America pays investors a 2.45% dividend. Goldman Sachs has a price target of $32 on the shares, and the posted consensus target price is $33.19. The shares were trading at $29.33 Monday morning.