Goldman says buy these stocks to cash in on a $25 trillion opportunity

Published Wed, May 11 20229:14 PM EDTUpdated Sat, May 14 20222:29 AM EDT

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

Goldman Sachs has picked a slew of buy-rated stocks that it says are currently "underappreciated" by the market, predicting that they will benefit from new business models that could be worth $25 trillion by 2050. Goldman's picks include ride-hailing services Uber and Lyft , as well as sportswear firms Nike and Adidas and several waste management firms. These are companies that Goldman says make up part of the "circular economy," a way of producing goods and services that reuses or recycles materials, reduces consumption or regenerates the environment. "A Circular Economy could help add $4.5 trillion in additional economic output by 2030, and $25 trillion by 2050. The World Economic Forum estimates that by 2025 recycling, reuse, and remanufacturing could help the economy unlock $1 trillion a year [in] untapped resource savings," Goldman's analysts led by Evan Tylenda said in a May 3 research note. "We see rising commodity prices leading to increased deployment of energy/waste/food efficiency solutions from both individuals and corporates," they added. Renting and sharing Uber and Lyft are buy-rated picks under an "asset utilisation" category, per Goldman's research. These firms "optimize demand for travel to reduce the number of cars on the road and increases the use intensity of vehicles," the bank stated. Uber's stock price fell 11.6% around midday ET on Monday as CEO Dara Khosrowshahi revealed plans to slash marketing and incentives spending and treat hiring as a "privilege." Lyft, meanwhile, saw its shares fall nearly 30% after it announced spending on driver incentives and marketing last week. Goldman is also buy-rated on equipment rental company Herc , which went public after separating from auto rental firm Hertz in 2016. Footwear design Goldman is buy-rated on both Nike and Adidas for their efforts in recycled materials. "Two upcoming sneakers are held together only by tension, with the lack of glue allowing the shoes to be taken apart of end of life and more easily recycled," the analysts said of Nike. Last year, Nike said it would refurbish worn sneakers and sell them on at a cheaper price, while Adidas partnered with Allbirds to make shoes with a low carbon footprint . Waste management While many corporates have made zero-carbon pledges in an effort to mitigate climate change, few have made zero-waste pledges, the analysts noted. "Both are necessary for a sustainable low carbon economy due to the intrinsic link between resource usage, energy and emissions," the analysts stated. Read more Here are five things investors can watch for signs of when to buy stocks again Picking through the pandemic winners that have plunged for any comeback candidates CNBC Pro Talks: Investor Kevin Simpson on generating income and return during a tumultuous market Goldman described food waste as a "massive problem," with around $160 billion thrown away in the U.S. alone, it said. The bank is buy-rated on U.S. firm Grocery Outlet , a chain that buys excess food from manufacturers that may otherwise have gone to landfill, and the bank also likes French waste management company Veolia Environment . Waste Management , a company that owns landfill sites in the U.S. is expanding its renewable natural gas business to the tune of $825 million over four years, Goldman said, and it is buy-rated on the stock. The firm's CEO Jim Fish described the company's outlook as "pretty darned robust" for 2022 in a CNBC interview in February. - CNBC's Hannah Miao contributed to this report.

Sopa Images | Lightrocket | Getty Images