Goldman Sachs (NYSE:GS | GS Price Prediction) is the acknowledged leader in the investment landscape on Wall Street and worldwide. The firm’s top-notch research department continues to provide institutional and high-net-worth clients with the best ideas across the investment spectrum and is likely to do so for years to come. Founded in 1869, Goldman Sachs is the world’s second-largest investment bank by revenue and is ranked 36th on the Fortune 500 list of the largest U.S. corporations by total revenue.
The Wall Street white-glove giant offers financing, advisory services, risk distribution, and hedging for the firm’s institutional and corporate clients. In addition, it provides advice, investing, and execution for institutions and individuals across public and private markets. At 24/7 Wall St., we have followed the company’s research for 15 years to bring our readers top stock ideas. One of our favorite avenues is the firm’s Conviction List of top picks, which is reviewed and often updated monthly. This month, the firm added two stocks that investors are very familiar with, and a third with massive upside potential.
Why we recommend Goldman Sachs Conviction List stocks
The Goldman Sachs Conviction List is a curated list of stocks that the firm’s research team believes are highly likely to outperform the market. It is a tool for investors to identify stocks with strong growth potential and is frequently updated to reflect changes in market conditions and company performance. The list aims to identify stocks where Goldman Sachs analysts have the “highest level of conviction” in their outperformance.
Estee Lauder
The fragrance and makeup giant has been added to the list and also offers a 1.69% dividend. Estee Lauder (NYSE:EL) is a manufacturer, marketer, and seller of skin care, makeup, fragrance, and hair care products.
Goldman Sachs analyst Bonnie Herzog noted this:
Following several years of execution challenges, it is heading into a positive, innovation-driven topline inflection that investors underappreciate in a prestige beauty market driven by innovation. Look for revenue growth, an improving business in China, and internal initiatives to drive 450bp of margin expansion over the next three years, alleviating investor concerns that the company will engage in value-dilutive M&A, and paving the way for multiple expansion as confidence returns to this historical high-end leader.
The company’s products are sold in approximately 150 countries and territories under several brand names, including:
- Estee Lauder
- Aramis
- Clinique
- Lab Series
- Origins
- M.A.C
- Bobbi Brown Cosmetics
- La Mer
- Aveda
- Jo Malone London
- Bumble and bumble
- Darphin Paris
- TOM FORD
- Smashbox
- AERIN Beauty
- Le Labo
- Editions de Parfums
- Frederic Malle
- GLAMGLOW
- Kilian Paris
- Too Faced
- Dr.Jart+
- The DECIEM family of brands, including The Ordinary and NIOD
It is a licensee for fragrances, cosmetics, and/or related products for AERIN, BALMAIN, and Dr. Andrew Weil. Its skin care products include moisturizers, serums, cleansers, toners, exfoliators, facial masks, body care products, sun care products, and more. The makeup products include lipsticks, lip glosses, mascaras, foundations, and others.
The Goldman Sachs price target is $100, which would be a 22% gain from current levels.
Nextpower
While off the radar of some, this company, previously known as Nextracker, could attract more attention as power demand surges. Nextpower (NASDAQ:NXT) is a global provider of solar and energy technology solutions for utility-scale power plants. The company specializes in solar tracking systems.
Goldman Sachs analyst Brian Lee said this:
NXT’s business model is evolving from a pure-play utility-scale solar-tracking company into a power technology platform built around a solar core, with the potential to sustain long-term growth and a premium valuation vs. peers in the space. Over time, look for tracking revenue to fall to two-thirds of total revenue, while other, value-added, and margin-enhancing services, including electrical work, batteries, and software solutions, grow to a third of total revenue, driving a ~10% non-GAAP EPS CAGR through FY 2029 (ended March).
The company delivers an integrated suite of structural, electrical, and digital solutions across the full lifecycle of solar power plants, from design and construction through operations and maintenance. The company delivers intelligent power generation systems and services.
Nextpower has developed solar trackers that enable rows to move independently. Its TrueCapture energy yield management system addresses power production shortfalls due to the variability of real-world site conditions.
The company’s customers include engineering, procurement, and construction firms, as well as solar project developers and owners. Its products include trackers, foundations, software, eBOS, controls, and module frames. Its trackers include NX Horizon, NX Horizon-XTR, and NX Horizon Low Carbon. Its solutions include AgriPV and Risk and Resilience.
The Goldman Sachs target price of $168 would represent a 63% gain.
Wells Fargo
Wells Fargo (NYSE:WFC) operates in 35 countries and serves over 70 million customers worldwide. This money-center giant makes sense, given its 2.06% dividend, as many of the issues that have plagued the company over the last five years appear to be resolved. Wells Fargo is a financial services company that offers a diverse range of banking, investment, mortgage, and consumer and commercial finance products and services in the United States and internationally.
Goldman Sachs analyst Richard Ramsden provided this:
WFC continues to shift from defense to offense, as it is in the midst of a balance sheet expansion initiative while simultaneously benefiting from a very strong capital markets backdrop and strength in its credit card business. Look for a supportive US economy, a constructive environment, and concerted efforts to control costs to help drive 300bp+ of margin expansion, helping to fuel a 17.6% ROTCE by 2028.
The company operates through four segments:
- Consumer Banking and Lending
- Commercial Banking
- Corporate and Investment Banking
- Wealth and Investment Management
The Consumer Banking and Lending segment offers a diverse range of financial products and services tailored to meet the needs of consumers and small businesses. These include checking and savings accounts, credit and debit cards, as well as home, auto, personal, and small business lending services.
The Commercial Banking segment provides financial solutions to private, family-owned, and specific public companies. Its products and services include banking and credit products across various industry sectors and municipalities, as well as secured lending and lease products, and treasury management services.
The Corporate and Investment Banking segment offers a suite of capital markets, banking, and financial products and services, such as:
- Corporate banking
- Investment banking
- Treasury management
- Commercial real estate lending and servicing
- Equity and fixed-income solutions
- Sales, trading, and research capabilities services to corporate, commercial real estate, government, and institutional clients
The Wealth and Investment Management provides wealth management, brokerage, financial planning, lending, private banking, and trust and fiduciary products and services to affluent, high-net-worth, and ultra-high-net-worth clients.
Wells Fargo also operates through financial advisors in brokerage and wealth offices, consumer bank branches, independent offices, and digitally through WellsTrade and Intuitive Investor.
The $93 Goldman Sachs price target would represent a 6% gain, so this is more of a total return idea.
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