Investing

Goldman Sachs Has 5 Stocks to Buy Trading Under $10 With Huge Upside Potential

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It happened in 2008 and 2009, and despite a huge rally off the bottom, many of the top companies that investors are very familiar with have taken a beating. Needless to say, the ones that have been beaten down the most are in sectors that are struggling the most with the temporary new normal routines. While conditions are improving as the country opens up, some sectors continue to fare better than others.

We screened the BofA Securities research database looking for companies that are likely to survive the current troubles and could very well offer patient investors some huge returns over the next year or so. Patient investors that did that in 2008 and 2009 absolutely killed it over the next few years.

While all five stocks are rated Buy at Goldman Sachs, it is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.

Energy Transfer

This top energy master limited partnership is a very safe way for investors looking for energy exposure and income. Energy Transfer L.P. (NYSE: ET) owns and operates one of the largest and most diversified portfolios of energy assets in the United States, with a strategic footprint in all the major domestic production basins.

Energy Transfer is a publicly traded limited partnership with core operations that include complimentary natural gas midstream, intrastate and interstate transportation and storage assets; crude oil, natural gas liquids (NGLs) and refined product transportation and terminaling assets; NGL fractionation; and various acquisition and marketing assets.

Through its ownership of Energy Transfer Operating, formerly known as Energy Transfer Partners, the company also owns Lake Charles LNG Company, as well as the general partner interests, the incentive distribution rights and 28.5 million common units of Sunoco, and the general partner interests and 39.7 million common units of USA Compression Partners.

Investors receive an outstanding 15.14% distribution, which appears to be safe for now. Goldman Sachs has a $10 price objective on the shares, which compares to the Wall Street consensus figure of $11.68. Energy Transfer stock has traded above at $8 for most of the past week.

Infinera

Some feel this top company would be an outstanding addition to a networking giant as a takeover candidate. Infinera Corporation (NASDAQ: INFN) provides Intelligent Transport Networks, enabling carriers, cloud operators, governments and enterprises to scale network bandwidth, accelerate service innovation and simplify optical network operations.

Infinera’s portfolio of solutions includes optical transport platforms, converged packet-optical transport platforms, optical line systems, router platforms and a suite of networking and automation software offerings.

Infinera and Windstream recently completed a live network trial that successfully achieved 800G single-wavelength transmission over 730 km across Windstream’s long-haul network between San Diego and Phoenix. The results of the trial mark a major milestone in optical networking by demonstrating that ultra-high-speed optical transmissions, such as 700G and 800G, powered by Infinera’s ICE6 optical engine and Windstream’s high-performance fiber network, can be deployed in real-world network applications over significant distances.

The Goldman Sachs price objective is $8, above the posted consensus target price of $6.88. Infinera broke above $6 late last week for the first time in more than a month.


SunPower

This stock has been blasted and could have the biggest upside potential among the Goldman Sachs favorites. SunPower Corp. (NASDAQ: SPWR) designs, manufactures and delivers solar systems to residential, commercial and power plant customers worldwide. The company provides solar power components, including panels and other system components. French energy giant Total owns a 57% stake in the company.

The company also offers operations and maintenance services, including remote monitoring, and preventative and corrective maintenance services, as well as rapid-response outage restoration services. Further, it leases solar power systems to residential customers and sells inverters manufactured by third parties.

SunPower serves investors, financial institutions, project developers, electric utilities, independent power producers, commercial and governmental entities, production home builders, residential owners and small commercial building owners.

The $9 Goldman Sachs price compares with a $6.57 consensus target. SunPower stock approached $8 a share on Friday.

WPX Energy

This smaller capitalization energy company with solid upside potential and is a top Permian Basin play. WPX Energy Inc. (NYSE: WPX) is an independent oil and natural gas exploration and production company that engages in the exploitation and development of unconventional properties in the United States. Its principal areas of operation include the Permian Basin, the Williston Basin in North Dakota and the San Juan Basin in New Mexico and Colorado.

WPX is a premier Permian-levered operator with sector-leading debt-adjusted cash flow growth supported by strong execution in the core Delaware, all while trading at Williston valuations primarily due to its relatively high financial leverage.

The Goldman Sachs analysts have a $9.50 price target. The posted consensus price objective is $8.66, and WPX Energy stock has met resistance around $7 recently.

Zynga

This very aggressive tech play could have upside above the Jefferies target. Zynga Inc. (NASDAQ: ZNGA) is a leading developer of mobile and social games. In the company’s relatively short history, it has developed a broad portfolio of games that includes several on Facebook and several top-grossing mobile apps. Key franchises include FarmVille, Zynga Poker, Hit It Rich Slots and Words With Friends.

Snap recently announced it was expanding its partnership with Zynga to release new titles on Snap’s gaming platform. The partnership may expand Zynga’s reach to a younger demographic, though the near-term revenue opportunity is likely not impactful to Zynga. Content investment commitment from Zynga an indication of strong engagement and a very solid long-term opportunity.

The Goldman Sachs price target is $10.30. The consensus target is $10.41, and Zynga stock briefly traded above $9.40 on Friday.

These five stocks have all been sent to the single-digit midget penalty box. Some of these companies may have a difficult road back to prosperity, but given what we have seen in the past, and the massive liquidity coming out of Washington, D.C., the odds are good that each survives this downturn and shares could head much higher in the second half of the year.

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