Goldman Sachs added dozens of global stocks to its 'conviction list' this year — here are 12

Published Tue, Aug 10 202111:30 PM EDT

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

Goldman Sachs has added dozens of global stocks to its buy-rated "conviction list" so far this year, ranging from renewable energy firms to tech companies and semiconductor firms. It also added a raft of stocks to its U.S. conviction list . Goldman's conviction list is made up of buy-rated stocks the bank's analysts expect to outperform the market. Here are 12 of their picks. Tech, telecoms and semiconductors French payment services firm Worldline joined Goldman's conviction list in June. "We believe the market underappreciates the scope for growth acceleration as economies reopen and discretionary spending rebounds," the bank stated in an investment note. Goldman added British telecom firm Vodafone to its conviction list in May under analyst Andrew Lee. "Vodafone stands out as a 'value' stock in European telcos. Our thesis is predicated on the group's superior structural growth, compounded by best-in-class digital efficiencies, driving sector-leading FCF [free cashflow yield] and returns improvement," the bank stated in an investment note. Taiwanese semiconductor firm United Microelectronics was added to Goldman's conviction list in July, under analyst Bruce Lu. "We believe UMC will be one of the biggest beneficiaries under the mega-trend of the growing semiconductor content in vehicles," Goldman's analysts stated in an investment note. Goldman put Chinese security company Venustech on its conviction list in January, under analyst Verena Jeng. "We add the stock to our Asia ex-Japan CL [conviction list] noting growing cybersecurity market demand in China; increasing digitalization in China; expanding applications (e.g. cloud security, industrial internet security, IoT security) and product lines," the bank stated in an investment note. Renewable energy Sungrow , a Chinese solar firm, was added to Goldman's conviction list in January, with analysts led by Chao Ji liking its "early mover advantage in the energy storage business." "We expect Sungrow's global market share to reach 30% in 2022 on the back of what we see as its high product quality and attractive pricing strategy," the bank stated in an investment note. Another Chinese solar company, Longi Green Energy , was added to Goldman's conviction list in January, covered by analyst Chao Ji. "We like Longi for its leading market share in the wafer [a type of semiconductor] segment, aggressive capacity expansion plans, industry-leading R & D and strong cost-reduction initiatives," the bank said in an investment note. Goldman added Spanish wind and solar energy firm EDP Renovaveis to its conviction list in March. "Already one of the largest global renewable developers, it is planning to nearly double its installed base by 2025, and nearly quadruple it by 2030," the bank wrote of the company's development plans. Analysts led by Alberto Gandolfi said the company had made "solid progress on scaling the business up," in a July 28 research note. Consumer goods French beauty giant L'Oreal joined Goldman's conviction list in April, with coverage led by analyst Olivier Nicolai. The bank's analysts said the beauty sector had grown at a "fundamentally attractive" 3% to 5% compound annual growth rate (CAGR) over the past 20 years. "L'Oréal has consistently outperformed the category and we believe this outperformance will continue," they said in an investment note. Japanese drinks company Suntory was added to Goldman's conviction list in June, under analyst Keiko Yamaguchi. "We have high conviction on Suntory Beverage & Food as we expect business in Europe and Southeast Asia, including Vietnam and Thailand, to recover and think the company is well-positioned to continue gaining market share in Vietnam," the bank said in an investment note. Zalando , an online fashion retailer based in Germany, joined Goldman's conviction list in May, under analyst Richard Edwards. The bank expects a shift to online shopping driven by the pandemic to benefit the firm, and also likes its partner program, which lets brands sell directly via the Zalando site. Health care Japanese medical and optical lens firm Olympus was added to Goldman's conviction list in January, with analysts led by Akinori Ueda noting that the firm expects its endoscopy business to grow at around 6% CAGR in a June 28 research note. "We think business structure transformations should start bearing fruit," Goldman added in an investment note. Chinese medical firm Aier Eye Hospital Group was added to Goldman's conviction list in February and is covered by analyst Tianyi Yan. The bank expects the country's ophthalmic hospital services market to increase at a compound annual growth rate of 8% to reach $84 billion by 2030. "Aier is the leading player in the China market but held only a 3.9% market share in 2019 as the market is still highly fragmented. We expect Aier to keep gaining more share," the bank stated in an investment note.

Eva Longoria at a L'Oreal Paris show as part of Fashion Week on September 28, 2019 in Paris, France.

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