Goldman names the 12 global stocks set to pop when Covid lockdowns end

Published Thu, Feb 25 20211:48 AM EST

Lucy Handley @in/lucy-handley-b2b0a61a/@lucyhandley

Analysts from Goldman Sachs have named a dozen stocks with a "significant upside" as coronavirus vaccines are distributed and lockdowns start to lift. The bank has launched a scale tracking the pace of reopenings, looking at data such as highway traffic, retail sales, school openings and job advertising, and from that created a list of about 70 stocks that are set to benefit. In a note published Monday, analysts then selected the 12 stocks "strongly geared" to a recovery, all of which are buy rated by the bank. Below is the full list of stocks, and the Goldman analysts say most of them have the potential to rise 20% or more, with one set to rally as much as 60%. Goldman gives Airbus a buy rating, in part due to the number of older aircraft in service being at "all-time highs" and fleet renewals therefore due. "With decarbonisation high on the industry agenda, fleet renewal sits at an attractive point on the carbon cost curve," according to analyst Chris Hallam. The bank said Airbus has an upside potential of 47%. Spanish IT group Amadeus — which supplies the travel industry — is viewed as a "quality company" by analyst Matija Gergolet, who said growth was set to accelerate. It has a potential upside of 22%, according to Goldman. Drinks maker Diageo is a buy, according to the analysts, who called it a "high-quality growth stock" due to the scope of its distribution, spirits brands and demand for premium products. They gave it a potential upside of 12%. Apparel brand H & M is buy rated by the bank due to its focus on e-commerce, including next-day delivery, curbside pickup and loyalty program. As vaccines roll out, analyst Richard Edmonds expects a V-shaped recovery for retail and said that H & M is one of the "best positioned" stores to benefit. Goldman puts its potential upside at 14%. Watchmaker Swatch is a buy for analyst Louise Singlehurst, who likes the company's cost control, and forecasts underlying sales growth of 19% for the year. Its upside potential is 22%, according to Goldman. Data and exhibitions company RELX is buy rated, with analyst Katherine Tait expecting more demand for its health and medical tech, giving it an upside potential of 33%. BP has "strong upside potential to a post-vaccine recovery" and is set to give "higher cash returns" to shareholders in the third or fourth quarter of the year, Goldman said. Analysts put its upside potential at 60%. Real estate developer British Land is a value pick for analyst Jonathan Kownator — value investing refers to stocks that a buyer believes are undervalued. He also likes its "strong development pipeline" and its upside potential is 29%. Construction company Vinci is a buy for analyst Patrick Creuset, who praised its strong 2020 full-year results. It has an upside potential of 18%, according to the bank. Flughafen Zurich — Switzerland's international airport — is also a pick for Creuset, for its strong balance sheet and catchment area. Goldman puts its upside potential at 45%. British Airways owner IAG is another buy-rated stock for Creuset, which he says is set to "disproportionally benefit" from vaccine rollouts in the U.K. and U.S., and has upside potential of 20%. Book and newspaper retailer WH Smith is a buy for analyst Daria Fomina due to its "resilient" main street business and "strong cash position." Its travel arm should benefit when the sector opens up and investment bank gives it an upside potential of 21%. Goldman's European reopening scale suggests that activities such as flight searches, road traffic and ATM transactions are down 65% compared with pre-Covid levels, based on Google search and other data for the U.K. and European countries including Germany, France and Spain. This figure is a "significant" deterioration on mid-December, where the decline was around 50%. Its buy-rated stocks are those it thinks will benefit most from a reopening. Goldman's longer list of 70 stocks set to rise as lockdowns start being eased have underperformed by about 20% since January 2020, the bank said. "We would expect these stocks to outperform on the back of a sustained broader macro recovery," it added.

A trader works at the Goldman Sachs stall on the floor of the New York Stock Exchange.

Brendan McDermid | Reuters

Analysts from Goldman Sachs have named a dozen stocks with a "significant upside" as coronavirus vaccines are distributed and lockdowns start to lift.

The bank has launched a scale tracking the pace of reopenings, looking at data such as highway traffic, retail sales, school openings and job advertising, and from that created a list of about 70 stocks that are set to benefit. In a note published Monday, analysts then selected the 12 stocks "strongly geared" to a recovery, all of which are buy rated by the bank.

Below is the full list of stocks, and the Goldman analysts say most of them have the potential to rise 20% or more, with one set to rally as much as 60%.