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Goldman Sachs Says These 3 Stocks Have 30% Minimum Upside Ahead

Goldman Sachs Says These 3 Stocks Have 30% Minimum Upside Ahead

Goldman is bullish on consumers right now, and these 3 consumers stocks on their Conviction Buy List look to have at least 30% potential upside.

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With tax reform, rising wages, and back to school shopping and the upcoming holiday season, Goldman Sachs is optimistic about consumer companies.

According to the bank’s new survey of 2,000 consumers, optimism about the economy is at levels not seen since 2005, with optimism the strongest among the highest earners and at an 8-year peak in the middle income segment with household incomes between $50,000 and $90,000 a year.

Goldman consumer analyst, Matthew Fassler, said, “The impact of strong demand drivers and strong consumer sentiment is evident in consumer spending. While the most germane high frequency (i.e., monthly) consumption metrics – core retail sales and total goods excluding energy/food/auto – posted their recent peak growth rates in 4Q17, 2Q18 trends were solid, aprproaching 4Q levels – though fading through the quarter (i.e., July softer than June softer than May. … Growth in consumer net worth, meanwhile, has been resurgent, powered by a mix of real estate appreciation and strong financial markets, and growing at annual rates of 6% – 9% in each of the past seven quarters.”

“We remain confident in the trajectory of the consumer recovery, as drivers of spending remain solid,” Fassler added. “We note signs of moderating momentum from May through July, and soft patches in house, but remain constructive on the outlook for discretionary.”

These are the top three consumer stocks on Goldman’s Conviction Buy List now:

Wyndham Hotels & Resorts (NYSE: WH)

Wyndham Hotels & Resorts (NYSE: WH) is an hotel franchisor that operates worldwide, and a subsidiary of Wyndham Worldwide Corporation. It licenses its owned hotel brands, including Super 8, AmericInn, Days Inn, Hawthorn Suites, La quinta, Microtel Inn & Suites,Ramada, The Trademark Collection, and Wyndham to hotel owners in 80 countries.

In all, WH operates a portfolio with 20 hotel brands, including approximately 9,000 franchised hotels with 790,000 rooms.

In its last earnings report on August 1, the firm’s quarterly revenue was up 31.4% compared to the same quarter a year ago and also announced a quarterly dividend of $0.25 per share to be paid on September 28.

Goldman Sachs has a price target for WH of $82, or 44% higher than today’s price.

Aramark Holdings (NYSE: ARMK)

Aramark (NYSE: ARMK) supplies food, facilities, and uniforms to a variety of businesses and venues, including universities, hospitals, sports, and correctional facilities.

The institutional hospitality company offers ROE of 17.37%, and EPS of nearly 14%. Last week, the company reported quarterly earnings of $0.48 per share, $0.08 higher than the same quarter a year ago, and posted revenues of $3.97 billion.

Goldman Sachs says there’s 38% upside with ARMK, while analysts’ 12-month average price target for the stock suggests 14% possible upside.

Las Vegas Sands (NYSE: LVS

Las Vegas Sands (NYSE: LVS) operates integrated resorts in the U.S., and Asia. Its resort names include The Venetian Resort Hotel Casino and The Palazzo Resort Hotel Casino on the Las Vegas Strip, and The Venetian Macao Resort Hotel, The Plaza Macao and Four Seasons Hotel Macao,  Cotai Strip, and the Sands Macao in Macao, China.

In its Q2 earnings report, LVS posted adjusted property EBITDA of 1.4% year-over-year to $1.23 billion, and adjusted net income increased 1.9% year-over-year to $588 million.

Goldman Sachs believes there’s upside potential of 31% for LVS, while the average 12-month analyst price target indicates 17.37% upside for the stock.

LVS has had a rough couple of months and is down 24% from its June highs. However, the chart indicates the stock’s deep correction since June may be nearing an end with a possible contracting triangle ending at the 61.8% retracement of the stock price’s ascent from February 2017 through June 2018.

Source: TradingView.

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