Goldman Sachs sent a note to clients on Tuesday with a list of stocks their analysts say could have the most upside potential over the next twelve months, as well as their list for those companies that could see the most downside.
At the top of Goldman’s list is embattled PG&E (NYSE: PCG), the California utility whose equipment is likely to have been responsible for the deadliest wildlife in California’s history. The stock dropped as much as 90% between November 2018 and January, but despite that drop, the stock has rallied 196% since the bottom reached on January 17 and Goldman’s analysts say it could jump another 111% over the next twelve months.
Next on their list is DXC Technology (NYSE: DXC), which Goldman says could rally 99% over the next year, followed by biotech companies Nektar Therapeutics (NASDAQ: NKTR) and Alexion Pharmaceuticals (NASDAQ: ALXN), which could climb 89% and 80%, respectively.
Netflix (NASDAQ: NFLX) is fifth on the list and the investment firm expects the streaming giant to gain 79% over the next twelve months. So far this year, NFLX is already up 37%.
RBC analyst Mark Mahaney sees a challenging environment ahead for Netflix as big players like Disney (NYSE: DIS) and Apple (NASDAQ: AAPL) enter the video subscription space, but believes the streaming video pioneer will be one of the winners in the market.
“The landscape appears more challenging, based on what we have seen from survey work and commentary from leading Internet & Media management teams, we believe there is a massive opportunity facing Internet TV that will be able to support 2 or 3 providers, and that Netflix—based on its scale, brand, and value proposition—will be one of those,” Mahaney wrote in a note to clients.
Also on Goldman’s list of the stocks with the most upside are Freeport-McMoRan (NYSE: FCX) with 75% upside ahead; Coach, Kate Spade, and Stuart Weitzman parent Tapestry (NYSE: TPR) with 72% upside; Alliance Data Systems (NYSE: ADS) with 70% projected upside; Noble Energy (NYSE: NBL), jewelry giant Tiffany (NYSE: TIF), Aptiv (NYSE: APTV), and Albermarle (NYSE: ALB) all with 69% projected upside ahead; American Airlines (NASDAQ: AAL) with 65% upside; Anadarko Petroleum (NYSE: APC), FedEx (NYSE: FDX), and Incyte (NASDAQ: INCY) with 63%, 61%, and 60% projected upside, respectively.
Goldman also highlighted womenswear company L Brands (NYSE: LB). L Brands owns names like Victoria’s Secret and Bath & Body Works, and has had a rough go of it over the last three years as declining sales have plagued the company.
Since the beginning of 2016, the stock is down 65%, though that decline appears to be slowing down. The stock is up 8% so far this year and Goldman believes it could see 64% upside in the next twelve months.
Goldman also noted the companies it believes could see the most downside over the next twelve months.
Also on the downside list are big names like Clorox (NYSE: CLX), Hershey (NYSE: HSY), McCormick (NYSE: MKC), and Hormel (NYSE: HRL), which Goldman says could decline -25%, -20%, -15%, and -11%, respectively.
Candy-maker Hershey has been struggling with scaling shipping costs, and growing competition has threatened its market share in the U.S. The company reported flat comparable sales for Q4, and said revenue slipped 0.3% in North America as prices sank.
Spice company McCormick said earlier this year that it expects weaker sales growth and weaker earnings this year. The company did see a 12% sales jump in 2018, but said that it expects revenue growth of 1 to 3% in 2019.