Goldman Sachs has a bunch of new top stock picks and says 5 could rally more than 70%

Published Sun, Feb 6 20226:39 PM EST

Goldman Sachs has added 24 new names to its global conviction list — a compilation of its top buy-rated picks — since the start of the year, and says five have potential upside of more than 70%. Fiber broadband provider Frontier Communications is one such stock. Added to Goldman's conviction list on Jan. 11, the company — one of Goldman's top calls in the telecom services sector — is among the most catalyst-driven stocks in its sector, analyst Brett Feldman said. It has "multiple opportunities" for inflection points into 2023 and potential for significant value creation, he added. The bank has a price target of $48 on the stock, which implies an 82.2% potential upside to its closing price of around $26.40 on Feb. 3. Dutch internet company Prosus also makes Goldman's list. The bank likes the company for its potential revenue growth in the online gaming, international market share gains, and higher margins into the next two years, analyst Piyush Mubayi said on Jan. 20. Meanwhile, new investments should drive higher earnings growth, Mubayi added, with 265 investments completed in 2021 alone. The company is one of Goldman's top picks in the European internet and media sector. The bank also sees the company — which owns a 28.9% stake in Chinese software giant Tencent — as a "major beneficiary" of Tencent's future divestments. Goldman has a price target of 127.10 euros ($145.70) on the stock, which implies a 79.8% potential upside to its closing price of 70.70 euros on Feb. 3. Chinese wind equipment manufacturer Riyue Heavy Industry is another of Goldman's picks. "We like Riyue for its leading market share in the wind casting segment, rapid capacity expansion plans, industry leading R & D and strong cost-reduction initiative," Goldman's analyst Chao Ji said on Jan. 19. The bank sees "compelling upside" for the stock at its current valuation, and forecasts an upturn in downstream demand and a recovery in margins this year. This is not yet fully appreciated by the market, Chao said. The bank has a price target of 54 Chinese yuan ($8.50) on the stock, representing a potential upside of 93.8% to its closing price of around 28 Chinese yuan on Jan. 28. Goldman also likes laser equipment maker Shanghai Friendess Electronic Tech. The bank expects the industrial laser equipment market to grow 9% this year from a year ago, and believes the stock is set to outperform, analyst Jacqueline Du wrote on Jan. 11. This will be driven in part by the company's market share gains and new offerings in the pipeline, Du added. The bank has ascribed a price target of 572 Chinese yuan on the stock, which closed at 315 Chinese yuan on Jan. 28 — an implied upside of 81.6%. Solar inverter manufacturer SolarEdge is another new addition to Goldman's conviction list. The bank said the company is best positioned within the clean technology space to beat market estimates given the strength of its battery storage products and improving margins, analyst Brian Lee said on Jan. 9. Lee noted that the company sees "strong demand" in its residential storage product and expects the company's utility-scale inverter product to contribute to revenues in the fourth quarter of 2021. The company also expects margins to normalize in the first half of 2022, Lee said in a separate note on Jan. 31. Goldman has price target of $404 on the stock, which closed at $231.20 on Feb. 3 — an implied potential upside of 74.7%.

A Goldman Sachs Group Inc. logo hangs on the floor of the New York Stock Exchange in New York, U.S., on Wednesday, May 19, 2010.

Daniel Acker | Bloomberg | Getty Images

Goldman Sachs has added 24 new names to its global conviction list — a compilation of its top buy-rated picks — since the start of the year, and says five have potential upside of more than 70%.