Goldman Sachs Says These 3 Stocks Could Surge Over 30% From Current Levels
After a real Annus Horribilus, we are all ready for better times. Goldman Sachs’s US equity strategy team, led by David Kostin, sees this better time in the near future. The team predicts the S&P 500 will grow 25% over the next 24 months - or to put it in absolute terms, they believe the index will hit 4,600 by December 2022.
Kostin gives four clear reasons for believing that we are at the beginning of another lengthy bull run. First, he notes the generally improved economic conditions; second, it points to corporate earnings growth; Third is the historically low interest rates as the Fed sticks to its zero-zero interest rate policy. and finally there is TINA or “there is no alternative”. Stocks enter a positive cycle, Kostin believes, as they offer the highest returns available today.
In a recent interview, Goldman's chief equity strategist said of these points, “That's the story, it's about an economy getting better, coming out of the pandemic and getting better in general, and the Fed on hold. All of this is positive and I think the market is recognizing this and will continue to do so. "
Goldman Sachs analysts, following Kostin's lead, point out three stocks that they believe will benefit from the broader market advance. We took the trio through the TipRanks database to see what other Wall Street analysts have to say about them.
Lordstown Motors (DRIVE)
Goldman's first choice is Lordstown Motors. The Ohio-based company, closely associated with the General Motors Big 3 standard, is an electric vehicle manufacturer. The company operates at GM's old Lordstown, Ohio assembly plant that it purchased last year. Lordstown has a manufacturing area of over 6.2 million square feet and a capacity of 600,000 vehicles per year. The company's flagship is the Allurance Endurance Pickup. The vehicle is based on a unique design in which individual electric motors are used on each wheel hub. Delivery of the Endurance is planned for autumn 2021.
Lordstown Motors was founded in 2018 and went public earlier this year through a merger with a blank check company. These transactions are designed to provide capital for companies wishing to enter the public market.
As part of the preparations for the release of its endurance truck, Lordstown has signed an agreement with Camping World Holdings (CWH), the manufacturer of RVs. Camping World will train its mechanics on the new truck and provide garage space for Lordstown customers. The agreement includes potential for expansion such as the sharing of sales, space and the provision of electric drive systems for motor homes.
Mark Delaney, Analyst for Goldman Sachs, wrote of the stock: “We believe this collaboration is a first step towards improving Lordstown's service footprint and charging infrastructure, and we consider Lordstown's decision to have an existing service footprint Leverage as a Cost-Effective Strategy The broader customer experience, including service and fees, plays an important role in product differentiation and can help EV startups thrive. In our view, easy and reliable maintenance and recharging is particularly important to Lordstown's fleet / commercial customer base, which is focused on vehicle availability. "
Consistent with these comments, Delaney rates RIDE stock a buy along with a target price of $ 31 for the next 12 months. At the current level, this means an upside potential of 67%. (To see Delaney's track record, click here.)
Overall, RIDE stock is being held back by analyst consensus, reflecting Wall Street's caution towards a new - and highly speculative - venture. The rating was derived from 4 current ratings, evenly split between 2 purchases and 2 sales. However, the average target price of $ 27.50 suggests that RIDE is seeing an upward trend of 48% for the year ahead. (See RIDE stock analysis on TipRanks)
Liberty Global (LBTYA)
Next up is Liberty Global, a holding company in the telecommunications sector. Liberty is represented in seven European countries worldwide: Great Britain, the Netherlands, Ireland, Belgium, Poland, Slovakia and Switzerland. The company has annual sales of over $ 11 billion.
Through its subsidiaries, Liberty serves over 11 million customers with a total of 25 million subscriptions for broadband Internet, TV and telephone services. The company also claims to have 6 million cellular and WiFi subscribers. Liberty is a leading investor in European digital and online infrastructure projects.
One of the company's latest moves was last month's acquisition of Swiss telecommunications provider Sunrise Communications. Upon completion of the transactions, Liberty Global now owns over 98% of Sunrise's total share capital. This makes the Swiss company a wholly-owned subsidiary of the Liberty Global Group.
Andrew Lee, an analyst at Goldman Sachs, points out the takeover of Switzerland as a key factor for the future of the company in a comprehensive overview of Liberty's current business and market position. He writes: “We regard Sunrise as a quality product with sustained market share potential. We assume that LBTYA will benefit directly from this, as Sunrise continues to gain shares in Swisscom, but also helps to stabilize UPC's assets. "
Lee gives LBTYA shares a buy rating along with a price target of $ 33. This number implies an upward trend of ~ 36% within a year from the current level. (To see Lee's track record, click here.)
As with RIDE above, Liberty has an even split among its most recent ratings - 3 buy and 2 hold in this case, making the analyst consensus a moderate buy. The share price is $ 24.32, and the average target price of $ 30.12 indicates growth of ~ 24% from that level. (See LBTYA stock analysis on TipRanks)
Lufax Holding (LU)
Fintech is a fast growing niche, and Lufax operates a personal financial services platform for the Chinese market. The company provides wealth management services to China's rapidly growing middle class, a population that is growing not only in size but also in wealth. Lufax offers this population financing solutions for personal and business loans that are not always well served by the established Chinese banking sector. The company's customer base includes small business owners and white-collar workers.
Revenue for the third quarter reported earlier this month was $ 2 billion in US currency. Earnings per share of 24 cents exceeded estimates by 10 cents, or 71%. However, these numbers were down year-on-year.
The greatest uncertainty Lufax is currently facing is government regulation. China's government, while allowing a market-driven economy, has a tight grip on economic activity in general, and modern, cutting-edge companies like Lufax can get in the way of regulators who are sometimes uncomfortable with the digital world. The prospect of tighter regulation as government officials attempt to control fintech has worried some investors.
After an extensive review of the Chinese regulatory technical landscape, Goldman's Elsie Cheng, who works with Lufax, noted, "We remain constructive about Lufax's ability to navigate the ever-evolving regulatory environment and provide consistent value to its consumers / financial partners to offer."
With this in mind, Cheng values LU a Buy along with a price target of USD 20, which means an upward trend of 34% for the coming year. (To see Cheng's track record, click here.)
All in all, the Moderate Buy analysts' consensus rating for Lufax is based on 7 ratings, including 4 purchases and 3 holds. The average target price of $ 17.70 indicates a potential 15% gain over the next year. (See LU stock analysis on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the analysts presented. The content is intended to be used for informational purposes only. It is very important that you do your own analysis before making any investment.
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