The artificial intelligence rally this year led by the “Magnificent 7” has been awesome if you owned those stocks. However, the bulk of the S&P 500 is treading water for the most part and unlikely to catch up to the hype-driven AI stocks anytime soon. One thing is certain, with the looming storm clouds on the horizon, and the potential for as many as two more interest rate increases, many strategists on Wall Street feel we will be fortunate to have high single-digit gains for the balance of 2023. We could very well have a 20% or bigger sell-off at some juncture.
With those conditions in mind, we screened the Goldman Sachs Conviction List of top stock picks that had the biggest upside to the Goldman Sachs price target. The thought was that those with the biggest upside also may be priced the best for growth stock investors. It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
Bath & Body Works
This top retailer could be poised for a big holiday season. Bath & Body Works Inc. (NYSE: BBWI) operates a specialty retailer of home fragrance, body care and soaps and sanitizer products.
It sells its products under the Bath & Body Works, White Barn and other brand names through retail stores and e-commerce sites located in the United States and Canada, as well as through international stores operated by partners under franchise, license and wholesale arrangements. The company was formerly known as L Brands and changed its name in August 2021.
Like many savvy retailers, the company has been moving locations to strip malls, which often provide easier access for shoppers. In addition, Bath & Body Works posted results for the second quarter that exceeded guidance, and the CEO noted that “Cost optimization and merchandise margin improvement initiatives helped drive earnings which outperformed expectations.”
Investors receive a 2.42% dividend. The Goldman Sachs price target for Bath & Body Works stock is $52. The consensus target is $47.78, and at Tuesday’s $31.70, close hitting the Goldman Sachs target would be a 57% gain.
This top stock has the biggest upside potential to the Goldman Sachs target price. First Solar Inc. (NASDAQ: FSLR) provides photovoltaic (PV) solar energy solutions in the United States, Canada, France, Japan, India and elsewhere.
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 recently broke ground on a previously announced manufacturing facility in Iberia Parish, Louisiana, its fifth fully vertically integrated factory in the United States.
The Goldman Sachs price target of $296 towers above the $246.96 consensus target for First Solar stock. The shares closed on Tuesday at $161.39, so hitting the Goldman Sachs target would be an 80% gain.
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.
Salesforce’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
- Service, which enables companies to deliver trusted and highly personalized customer service and support at scale
Its Service offerings also comprise 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; online learning platform that allows anyone to learn in-demand Salesforce skills; and Slack, a system of engagement.
Further Service offerings include:
- Marketing, which enables companies to plan, personalize and optimize one-to-one customer marketing journeys
- Commerce, which empowers brands to unify the customer experience across mobile, web, social and store commerce points
- Tableau, an end-to-end analytics solution serving various enterprise use cases
- MuleSoft, an integration offering that allows its customers to unlock data across their enterprise
The company provides its Service offerings for customers in financial services, health care 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.
Salesforce stock has a $340 target price at Goldman Sachs, while the consensus target is just $254.98. From Monday’s closing price of $202.49 a share, the Goldman Sachs target represents a gain of almost 65%.
While lesser known than some of the big-time digital payment competition, shares of this very solid company have big upside potential, and some feel it is a takeover target. Shift4 Payments Inc. (NYSE: FOUR) provides software and payment processing solutions in the United States.
The company provides omnichannel card acceptance and processing solutions, including credit, debit contactless card; Europay; Mastercard and Visa; QR Pay; and mobile wallets. It provides alternative payment methods; merchant acquiring; proprietary omnichannel gateway; complementary software integrations; integrated and mobile point-of-sale (POS) solutions; security and risk management solutions; reporting and analytical tools; and web-store design, hosting, shopping cart management and fulfillment integration; and tokenization, payment device and chargeback management, fraud prevention and gift card solutions.
Its VenueNext provides mobile ordering, countertop POS, and self-service kiosk services, as well as a digital wallet to facilitate food and beverage, merchandise and loyalty for stadium and entertainment venues. Shift4Shop offers an e-commerce platform that provides everything a merchant needs to build their business online.
In addition, it provides Lighthouse, a cloud-based business intelligence tool that includes customer engagement, social media management, online reputation management, scheduling, and product pricing, as well as reporting and analytics; SkyTab POS, a POS workstations pre-loaded with software suites and integrated payment functionality; SkyTab Mobile, a mobile payment solution; and marketplace technology for integrations into third-party applications. Additionally, it provides merchant underwriting, onboarding and activation, training, risk management, and support services; and software integrations and compliance management, and partner support and services.
Goldman Sachs has set its target price at $87. The consensus target is $81.19, and Shift4 Payments stock ended Thursday trading at $54.60. Hitting the target would be a 58% gain.
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 a media and entertainment company worldwide.
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, while the DTC segment offers premium pay-tv and streaming services.
In addition, the 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, as well as authenticated GO applications, digital distribution arrangements, content licensing arrangements and direct-to-consumer subscription products.
The $20 Goldman Sachs price target compares with a $19.43 consensus target and Tuesday’s at $10.69. Hitting the target would be an 87% gain for Warner Bros. Discovery stock.
If you have ever tried to lose weight, then this company may have helped at some point. WW International Inc. (NASDAQ: 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 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 it 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 and changed its name in September 2019.
The Goldman Sachs price target of $17 is higher than the consensus target of $11.40. WW International stock closed at $10.29 on Tuesday, so hitting the target would be a 60% gain.
All these top stocks are trading well below their 52-week highs and are offering investors outstanding entry points on the top picks from one of the top investment banks in the world. One cautionary note: third-quarter earnings are right around the corner, so it makes sense to buy partial positions and see how the results come in.
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