Goldman Sachs says these global stocks have strong earnings growth — and tips them to rally more than 50%

Published Sun, Feb 13 20226:59 PM EST

A look at Goldman Sachs ' global conviction list reveals several stocks which the bank says have strong earnings-per-share growth and serious potential upside this year. Earnings per share, or EPS, is a key measure of a company's profitability and an important metric used by investors to gauge the value of a stock. As fourth-quarter earnings season picks up pace, CNBC spotlights 6 stocks which Goldman says will post EPS growth of more than 100% for fiscal year 2021, and have potential upside of more than 50% over the next 12 months. Airbus One such stock is European aerospace giant Airbus . The bank forecasts earnings that are 3-7% above consensus into 2024, driven by a ramp-up in A320 production and a shift toward its A320neo narrow-body planes. Goldman expects the company to achieve EPS growth of 245.3% in 2021. "We believe Airbus offers an attractive valuation opportunity on a post-crisis horizon," analyst Daniela Costa said on Jan. 12. The bank has ascribed a price target of 179 euros ($203.80) on the stock, which closed at 118.3 euros on Feb. 10. This implies a potential upside of 51.3%. Covestro German chemicals maker Covestro makes Goldman's list too. The bank believes that near-term share price pressure presents an "attractive entry point," and the company has strong fundamentals looking ahead. Goldman expects it to achieve EPS growth of 245.3% for fiscal 2021. It has a price target of 89 euros on the stock, which closed at around 54 euros on Feb. 10 — an implied upside of 63.4%. Asics Japanese sports equipment Asics is another stock favored by Goldman. The bank believes the company will benefit from a greater focus on health in response to Covid-19, especially when it comes to performance running. This will be reflected in earnings over the next three years, analyst Sho Kawano said on Sept. 8, as the stock was added to the bank's conviction list. Goldman has forecast the company to achieve 2021 EPS growth of 155.8%. It has a price target of 3,800 Japanese yen ($32.80) on the stock, which closed at around 2,480 Japanese yen on Feb. 10 — an implied upside of 53.2%. Li Auto Also on Goldman's list is Chinese electric vehicle manufacturer Li Auto . The company has differentiated itself from the broader Chinese auto-making industry by creating compelling EV consumer experiences, Goldman's analysts, led by Fei Fang, said on Jan. 10. The company also shows a willingness to take on the risk of unconventional technologies and act innovatively, Fang added. The bank 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 new 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 expects the company to grow its EPS by 155.3% for fiscal 2021. It has a price target of 248 Hong Kong dollars on the stock, implying a 118.3% upside to the stock's closing price of 113.6 Hong Kong dollars on Feb. 10. NYPCB Taiwanese chip maker Nan Ya Printed Circuit Board is also a Goldman favorite. The bank believes the company will see potential earnings upside due to tight supply of ABF — a key semiconductor material — which it says will be the "new norm" in the coming years. "We expect NYPCB to enjoy strong operating margin growth with its best-in-class operation efficiency and pricing uptrend," Goldman's analyst James Wang said on Jan. 10. The bank has forecast the company to achieve 2021 EPS growth of 187.7%, with its EPS estimates for the company 22% and 46% higher than consensus for 2022 and 2023, respectively . Goldman has a price target of 1,150 Taiwanese dollars ($41.30) on the stock, representing a potential upside of 122.9% to its closing price of 516 Taiwanese dollars on Feb. 10. Ganfeng Lithium The bank also likes Chinese battery manufacturer Ganfeng Lithium for its "dominant position" in lithium iron phosphate (LFP) batteries recycling, which the bank expects to contribute an additional 9% to the company's profit by 2030. Analyst Trina Chen believes the company will achieve a 50% market share in this segment by 2030, up from its current market share of 33%. Chen expects the company to achieve EPS growth of 195.4% for fiscal 2021. She has a price target of 250 Hong Kong dollars ($32), which closed at 120.4 Hong Kong dollars on Feb. 10 — an implied potential upside of 107.6%.

Brendan McDermid | Reuters

A look at Goldman Sachs' global conviction list reveals several stocks which the bank says have strong earnings-per-share growth and serious potential upside this year.

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