Goldman Sachs has added several stocks to its conviction list. Here are 10

Published Wed, Oct 27 202110:30 PM EDTUpdated Thu, Oct 28 20215:28 AM EDT

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

Goldman Sachs has added a raft of U.S. and global stocks to its "conviction list" — buy-rated stocks it expects to outperform — with picks from sectors including tech, health care and real estate. Goldman has already put several tech, consumer and financial firms onto its conviction list this year , including Microsoft , Lululemon and Evercore Partners — and it has added the following firms over the past couple of months: U.S. stocks Real estate investment trust Prologis was added to Goldman's conviction list on Oct. 21, due to "strong" full-year guidance implying 14% growth in funds from operations per share (a key measure of performance) year-over-year. Demand for industrial space such as warehouses is set to increase in 2022, the analysts added. Walmart was added to Goldman's conviction list last week due to improved profitability. "We are adding Buy-rated WMT to the Americas Conviction List after the recent stock underperformance as we think the company is in a position to take share and do it more profitably into 2022," the bank said in an Oct. 18 note. Goldman added health-testing company Thermo Fisher to the conviction list on Sept. 23, due to "multiple growth drivers," including supplying Covid-19 vaccine manufacturers. "We now have strong confidence the company can hit HSD [high single-digit] growth, a material step-up from their historical growth rate, a level we see as highly achievable and above sector peers," the analysts stated in a research note. "We see DELL as one of the best return opportunities in our coverage with multiple near-term catalysts," Goldman's analysts said in a research note as they added the stock to the conviction list on Sept. 13. Along with "strong cash flow," the bank also likes the company's plans to spin-out software arm VMware and sell cloud platform Boomi. Waste disposal company Republic Services was added to Goldman's conviction list on Aug. 24, with the analysts giving the stock an estimated 20% upside to its 12-month price target. The bank likes the fact it has put prices up and said there is the potential for "double digit" profitability in some of its units in 2022. Increasing its recycling arm may add to earnings, given margins are higher than for landfill operations. Global picks Japanese sneaker firm Asics was added to Goldman's conviction list on Sept. 7. "We believe two positive catalysts have not been priced into Asics' shares: 1) the impact of the company's renewed focus on the performance running category (which accounts for roughly half of revenue); and 2) the potential for improvement in inventory turnover and its ability to avoid price discounts," the bank's analysts wrote. Chinese semiconductor foundry (or manufacturer) Hua Hong has been on Goldman's conviction list since Sept. 22, and its products have "strong" local demand. The bank gave the stock a 59.1% potential upside to its price target. Hua Hong trades on Hong Kong's Hang Seng Index. Factory automation firm Daifuku , based in Osaka, Japan, was added to Goldman's conviction list on Sept. 21. Such companies can help customers reduce carbon emissions and work more efficiently and the bank said a trend for firms to revamp their supply chains will be "more favorable" for Daifuku in the long term. "We look for the share price to ratchet higher following earnings releases in the coming quarters," the analysts said. Pharmaceuticals firm WuXi Biologics was added to Goldman's conviction list on Aug. 8, saying it expects the company to "grow into a global leader" in biological medicine contract manufacturing, due to its proprietary technology and global expansion. Wuxi Biologics trades on Hong Kong's Hang Seng China Enterprises index, available to investors outside China. Goldman added British real estate developer Segro to its conviction list on Sept. 20 and forecast a compound annual growth rate of 18% between 2021 and 2024, among the highest in the bank's European coverage. The rise in e-commerce in Europe will stimulate demand for warehouses, Goldman said, and raised its rental growth forecasts from 2.7% to 4.5% per annum over the next five years.

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