While the stock market has done much better in 2023, the reality is that ten companies have made up 95% of the gains in the S&P 500, and nine of the ten most heavily weighted stocks in the Nasdaq 100 have accounted for almost all of the gains. What do these stocks have in common, you may be wondering? They are almost all technology stocks, and it’s likely that the technology sector continues to drive upside for the rest of the year.
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The good news for growth investors is there are still solid opportunities in technology, the bad news is that companies that have driven the huge year-to-date gains, like Nvidia Corp. and Meta Platforms, are very overbought and likely due to consolidate some.
The analysts at Goldman Sachs have refined the firm’s very popular Conviction List of top stock picks and, on a monthly basis, will refresh the list with new ideas and updates. Here is what they said about the new research launch.
We introduce a new investment list highlighting a selection of fundamental Buy-rated US stocks across the Goldman Sachs Americas Global Investment Research department — sourced from our US research analysts, but chosen by members of our Investment Review Committee. This new “Conviction List – Directors’ Cut” is designed to provide investors with a curated and active list of 20-25 of what we believe to be our most differentiated fundamental Buy ideas across our US stock coverage. We intend to refresh and publish this list monthly in an easily digestible framework that emphasizes the key criteria underlying the analyst’s investment thesis to best aid a portfolio manager’s investment process.
We screened the Conviction List for the stocks that have the biggest upside potential to the posted Goldman Sachs price target. Five top companies come in with the potential for some massive gains, and while all are Buy rated at Goldman Sachs, it’s important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
The stocks are listed in order of the biggest upside potential.
Warner Bros. Discovery
The stock has been crushed since the merger between the two companies giving investors an awesome entry point. Warner Bros. Discovery, Inc. (NASDAQ: WBD) operates as a media and entertainment company worldwide. It operates through three segments: Studios, Networks, and DTC.
24/7 Wall St.The Studios segment produces and releases feature films for initial exhibition in theaters; produces and licenses television programs to third parties and networks and direct-to-consumer services; distributes films and television programs to various third parties and internal television; and offers streaming services and distribution through the home entertainment market, themed experience licensing, and interactive gaming. The Network segment comprises domestic and international television markets. The DTC segment offers premium pay-tv and streaming services.
In addition, Warner Bros. Discovery offers a portfolio of content, brands, and franchises across television, film, streaming, and gaming under the Warner Bros. Pictures Group, Warner Bros. Television Group, DC, HBO, HBO Max, Discovery Channel, discovery+, CNN, HGTV, Food Network, TNT, TBS, TLC, OWN, Warner Bros. Games, Batman, Superman, Wonder Woman, Harry Potter, Looney Tunes, Hanna-Barbera, Game of Thrones, and The Lord of the Rings brands. Further, it provides content through distribution platforms, including linear network, free-to-air, and broadcast television; authenticated GO applications, digital distribution arrangements, content licensing arrangements, and direct-to-consumer subscription products.
The Goldman Sachs price target objective is set at $21, while the consensus on Wall Street is just lower at $20.52. The shares closed Monday at $12.95, up over 3%. Hitting the target would be an insane 65% gain.
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WW International
If you’ve ever tried to lose weight, then this company may have helped at some point. WW International, Inc. (NYSE: WW). provides weight management products and services worldwide. It offers a range of nutritional, activity, behavioral, and lifestyle tools and approaches, products, and services.
The company also provides various digital subscription products to wellness and weight management businesses, which provide interactive and personalized resources that allow users to follow its weight management program through its app and web-based platform, including personal coaching and digital products; and allows members to inspire and support each other by sharing their experiences with other people on weight loss and weight management journeys.
In addition, it offers various consumer products, including bars, snacks, cookbooks, kitchen tools, and other products. Further, the company licenses its trademarks and other intellectual property in food, beverages, and other relevant consumer products and services, as well as provides publishing services. It offers products through e-commerce platforms and through partners. The company was formerly known as Weight Watchers International, Inc. and changed its name to WW International, Inc. in September 2019.
24/7 Wall St.The Goldman Sachs price target is a hefty $13, which compares with the Wall Street consensus target of $7.90. The shares closed Monday at $8.53, up almost 8%. Hitting the target would be a 60%+ gain.
Salesforce
This company was an innovator in customer relationship management software. Salesforce Inc. (NYSE: CRM) provides customer relationship management technology that brings companies and customers together worldwide. Its Customer 360 platform empowers its customers to work together to deliver connected experiences for their customers.
The company’s service offerings include Sales to store data, monitor leads and progress, forecast opportunities, gain insights through analytics and relationship intelligence, and deliver quotes, contracts, and invoices; and Service that enables companies to deliver trusted and highly personalized customer service and support at scale.
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Salesforce service offerings also comprise a flexible platform that enables companies of various sizes, locations, and industries to build business apps to bring them closer to their customers with drag-and-drop tools; an online learning platform that allows anyone to learn in-demand Salesforce skills; and Slack, a system of engagement.
In addition, the company’s service offerings include a Marketing offering that enables companies to plan, personalize, and optimize one-to-one customer marketing journeys; and a Commerce offering, which empowers brands to unify the customer experience across mobile, web, social, and store commerce points. Further, its service offerings comprise Tableau, an end-to-end analytics solution serving various enterprise use cases; and MuleSoft, an integration offering that allows its customers to unlock data across their enterprise. The company provides its service offering for customers in financial services, healthcare and life sciences, manufacturing, and other industries.
The company also offers professional services; and in-person and online courses to certify its customers and partners on architecting, administering, deploying, and developing its service offerings. The company provides its services through direct sales; and consulting firms, systems integrators, and other partners.
The Goldman Sachs target price objective is set at a massive $325, which towers above the consensus target across Wall Street of $237.48. The last trade Monday was filled at $221.81. Hitting the Goldman Sachs target would be an incredible 50%+ gain.
Spirit AeroSystems
This is a top aerospace and defense company that offers solid upside potential. Spirit AeroSystems Holdings, Inc. (NYSE: SPR) is one of the world’s largest non-OEM designers and manufacturers of aerostructures for commercial aircraft. Spirit’s core products include fuselages, pylons, nacelles, and wing components.
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Spirit also provides aftermarket customer support services, including spare parts, maintenance/repair/overhaul, and fleet support services in North America, Europe and Asia. Spirit Europe produces wing components for a host of customers, including Airbus.
Many across Wall Street feel that the cost challenges that the company faced over the past few years are long in the rearview mirror, and most see continued strong free-cash-flow outlook and stock buybacks.
The Goldman Sachs analysts have set a $45 target price objective. The consensus is lower at $36.21. The stock closed on Friday at $29.67, a gain of 2% on the day. Hitting the price target would be another 50%+ winner.
First Solar
This top company is a top pick for 2023 and has been on the Goldman Sachs Conviction List of favorite stocks to Buy for years. First Solar, Inc. (NASDAQ: FSLR) provides photovoltaic (PV) solar energy solutions in the United States, Japan, France, Canada, India, Australia, and internationally.
The company designs, manufactures, and sells cadmium telluride solar modules that convert sunlight into electricity. It serves developers and operators of systems, utilities, independent power producers, commercial and industrial companies, and other system owners.
First Solar also develops/sells downstream solar projects and has created some of the largest solar installations in the country. While there have been some trade-related concerns over the year, solid earnings should keep a nice tailwind behind the shares. With systems business and module guidance very achievable, this is perhaps the strongest player in the sector.
Goldman Sachs has a strong $272 price objective, and that compares with a lower consensus price target on Wall Street of $224.24. The stock was last seen Friday at $190.82. Investors can grab a huge 40%+ gain if the stock hits the target.
With all five stocks having double-digit upside potential, they make good sense for growth stock investors looking for ideas that will continue to work regardless of the economy or the inflation picture. All five of these stocks should do that. With second-quarter earnings starting in earnest this week, and a strong year-to-date rally that has driven many stocks higher, it makes sense to buy partial positions here and see how the results for the quarter come in.
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