Goldman Sachs picks 11 global 'reopening' stocks to buy — and one has a 70% upside

Published Mon, Sep 6 20217:30 PM EDT

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

Analysts at Goldman Sachs have picked a raft of "reopening" stocks to buy as Europe's economic activity ramps up post-pandemic. Eleven of the bank's picks have a potential upside of at least 30% to the bank's 12-month price targets, one of which has 70%, according to the analysts. "Europe's reopening continues, with activity across reopening categories we track on average only 7% below pre-Covid levels," Goldman's analysts led by Patrick Creuset wrote in a research note published Monday as part of the bank's weekly "GS Reopening Scale for Europe" series. Highlighting trends and reopening activity across different sectors, the analysts noted that hotel revenue per available room (known as RevPAR) has been above 2019 levels in the U.K. "in recent weeks" while freeway traffic in Spain, Italy and southern France is also up on 2019, the analysts said. Data is for the week ending Aug. 29. Nonetheless while demand for domestic leisure has been "strong," international travel remains sluggish. "Long-haul, business, and U.K.-related traffic remain depressed, leaving the overall EU air traffic recovery trailing the U.S. and China," the bank stated. "Ongoing labour market recovery has been a key trend in the U.K., with job postings 20-30% above pre-Covid amid above average pay growth as hiring bottlenecks persist," the analysts added. Goldman's lists of "Reopening Beneficiaries" are stocks likely to do well from positive and sustained economic reopening, with oil giant BP topping its table of companies that do business internationally. The stock has a potential 70% upside to the bank's 12-month price target, according to the analysts, and is on Goldman's conviction list. Luxury watch company Swatch Group has a potential upside of 59%, according to the bank, followed by airline easyJet with 51% and engine company Rolls-Royce , with 41%. Airport group Flughafen Zurich makes Goldman's conviction list, with a potential upside of 38%, followed by French oil company TotalEnergies , with 37%. Swiss luxury group Richemont and Spanish security company Prosegur Cash both have an upside potential of 34%, according to Goldman. The bank also published a list of domestic-focused companies set to do well from the reopening, with Spanish infrastructure group ACS and French real estate company Unibail-Rodamco-Westfield having an estimated 36% potential upside, followed by British retailer WHSmith with 34%. Goldman analyst Zach Pandl suggested that the Covid delta variant "will prove less impactful" for countries that have vaccinated their populations than the market has priced in. "U.K. and European data remain broadly encouraging, U.S. case growth is expected to peak in the coming weeks and the economic impact of the variant appears more as shuffling the time profile of reopening over the next few quarters rather than derailing the basic trajectory," Pandl wrote in a Sept. 1 research note.

Shoppers pass a Swatch Group AG watch store in London, U.K., on Wednesday, Oct. 21, 2020.

Hollie Adams | Bloomberg | Getty Images