Goldman Sachs says these 5 global stocks could rally over 80% this year

Published Sun, Jan 30 20226:36 PM ESTUpdated Mon, Jan 31 202210:21 AM EST

Goldman Sachs ' list of top stock picks covers both global and U.S. companies — and includes five that it says have serious potential upside. Chinese electric vehicle manufacturer Li Auto is one such stock on Goldman's global conviction list. The company is differentiating itself from the broader Chinese auto-making industry by envisioning and creating compelling EV consumer experiences, Goldman's analysts, led by Fei Fang, said on Jan. 10. The company is also showing a willingness to take on the risk of unconventional technologies and act innovatively, Fang added. Goldman believes the success of the company's Li One sports utility vehicle reflects the company's understanding of consumer needs, operational capability, and brand establishment, which the company is leveraging to develop next-generation models with evolving autonomous driving technologies, Fang said. The company's second hybrid vehicle — the X01 — is set to be unveiled in the second quarter of 2022, with the launch expected to "drive gross margin higher," Fang added. Goldman has a price target of $64 on the stock, implying a 173% upside to the stock's closing price of $23.45 on Jan. 27. United Microelectronics is another Goldman favorite. The Taiwanese chipmaker is still "largely undervalued" by investors and trading at a "significant discount" to its key peer GlobalFoundries , despite the former's "superior" profitability, Goldman's analyst Bruce Lu said on Nov. 24. Lu believes the company will be "one of the biggest beneficiaries" of the mega-trend of growing semiconductor content in vehicles. He expects the company to achieve higher average selling prices and margins across its products in the coming quarters. The bank has a price target of $20 on the stock, which closed at around $9.40 on Jan. 27 — an implied potential upside of 113%. Building materials manufacturer Azek is also highly rated by Goldman. The bank is "confident" about the company's ability to deliver double-digit earnings per share growth over the coming years, analyst Susan Maklari said on Nov. 22. She also noted the company's strong cash generation, which she said will support an "active" M & A pipeline that will drive further growth. The bank has ascribed a price target of $58 on the stock, representing a 94.8% potential upside to its closing price of around $29.80 on Jan. 27. Fiber broadband provider Frontier Communications is one of Goldman's top picks within the telecom services sector. The bank believes the company is among the most catalyst-driven stocks in its sector, with "multiple opportunities" for inflection points into 2023, analyst Brett Feldman said on Jan. 11. He also highlighted the company's potential for "material value creation." Goldman has a price target of $48 on the stock, which implies an 83.5% potential upside to its closing price of around $26.20 on Jan. 27. Rounding off the list is U.S. biotechnology firm Seagen . The company, which specializes in innovative antibody-based therapies for cancer treatment, is an "attractive commercial oncology growth story" in Goldman's view. The company's commercial business is also performing well, while management has raised full-year revenue guidance across all of the company's drugs, Goldman's analyst Salveen Richter said on Oct. 28. The bank has ascribed a price target of $222 on the stock, representing a potential upside of 80.6% to the stock's closing price of around $123 on Jan. 27. Correction: An earlier version of this article incorrectly stated that the 5 stocks named in article are constituents of the S & P 500.

Brendan McDermid | Reuters

Goldman Sachs' list of top stock picks covers both global and U.S. companies — and includes five that it says have serious potential upside.