Goldman Sachs analysts reveal some of the most 'attractive' stocks as recession fears mount

Published Sat, Jun 25 20227:16 AM EDT

As recession fears intenstify, analysts at Goldman Sachs have named a slew of buy-rated stocks that every investor must own the firm says. These companies have attractive qualities and are well-positioned in a difficult macro environment, according to Goldman analysts. CNBC Pro looked through recent Goldman research to find top stocks to weather the storm. They include: Brink's, Lululemon, EQRx , S & P Global and Portland General Electric. Lululemon Lululemon continues to impress, Goldman Sachs analyst Brooke Roach wrote recently. Shares are down 25% this year, but the firm says it's standing by its buy rating especially after the company's solid first-quarter earnings report earlier this month. "Against a backdrop where many competitors have shown negative or decelerating Y/Y comps, LULU's acceleration in growth momentum increasingly highlights the attractive investment proposition of LULU's multiple levers for growth,"she said. Roach noted that while there's been some deceleration in China, almost all of Lululemon's geographic areas grew in the company's most recent quarter. The supply chain has and continues to be a headwind for Lululemon, but one that seems manageable, the firm said. "Management believes its inventories are well positioned to support growth in 2Q," she said. Despite the challenges, Roach says Lululemon's robust pricing power and brand awareness are enough to get the company through tougher times. "We come away from the [recent] quarter with increased conviction in LULU's strong brand engine fueled by innovation," she wrote. EQRx The Cambridge, Massachusetts-based biotech company was initiated with a buy rating by Goldman last week. Meanwhile, shares of the company are down nearly 40% since EQRx made its debut as a public company back on December 20. However, analyst Chris Shibutani says the stock is being unfairly punished. "Especially at current levels, we see a highly attractive entry-point in EQRX shares," he said. EQRx has several promising cancer products in its pipeline that are not getting enough investor attention, the analyst said. "The debate overall in our view is thus not if, but how and when," he wrote. Shibutani acknowledged the FDA has had some issues with the quality of data from clinical trials but the analyst expects this to be resolved favorably for EQRx. "We view the recent sharp declines as an over-reaction to bearish framing of management commentary relating to the US regulatory status for their lead assets," Shibutani said. The analyst also praised EQRx's aim to deliver drugs that are cheaper than competitor's, a goal Shibutani says that's very attainable. "The seeds of thinking that provided the genesis for EQRx, when combined with the company's novel strategy makes for an investment opportunity that in our view should command attention and not be overlooked," he said. The Brink's Company Goldman analyst George Tong said in a note to investors recently that as recession worries begin to heat up, he's getting more bullish on the security and protection company. The firm recently met with company management and came away feeling more confident about the direction of Brink's. "Generally, cash in circulation increases during recessions due to consumer preference for holding cash in uncertain times and reduced access to credit lines during downturns, supporting BCO's cash-in-transit (CIT) business," he wrote. Tong says he sees several positive catalysts in the near term for Brink's. "As the economy continues to reopen, management anticipates a full recovery to pre-COVID pro forma revenues by the end of this year," he said. Brink's also has a wide moat to expand its total addressable market. "We believe Brink's has an attractive runway for revenue growth given the large and unpenetrated cash management industry in the U.S.," according to the analyst. Meanwhile, shares of the company are down just 10% this year and Tong says the risk/reward couldn't be any more compelling. "BCO's resilient business model [is] favorable in [the] current macro environment," the firm wrote. Portland General Electric "With valuations elevated for many regulated utilities in our coverage universe, we recommend Buy-rated POR as a relative value play for investors seeking a combination of income - at an attractive 3.7% dividend yield - and regulated earnings growth with upside from potential clean generation additions not embedded in our above-consensus estimates." S & P Global "We continue to see attractive valuation upside potential at S & P Global following a non-deal roadshow with CFO Ewout Steenbergen. ... . Importantly, S & P's non-Ratings businesses representing 72% of total company revenue are exhibiting healthy overall growth trends in-line with management's prior expectations despite the uncertain macro backdrop, with notable tailwinds in Commodity Insights due to high energy prices and in Indices due to exchange-traded derivatives." Lululemon "Against a backdrop where many competitors have shown negative or decelerating Y/Y comps, LULU's acceleration in growth momentum increasingly highlights the attractive investment proposition of LULU's multiple levers for growth. ... .Management believes its inventories are well positioned to support growth in 2Q. ... .We come away from the quarter with increased conviction in LULU's strong brand engine fueled by innovation." EQRx "Especially at current levels, we see a highly attractive entry-point in EQRX shares. ... .The debate overall in our view is thus not if, but how and when. ... .We view the recent sharp declines as an over-reaction to bearish framing of management commentary relating to the US regulatory status for their lead assets. ... .The seeds of thinking that provided the genesis for EQRx, when combined with the company's novel strategy makes for an investment opportunity that in our view should command attention and not be overlooked." The Brink's "BCO's resilient business model favorable in current macro environment. ... .Generally, cash in circulation increases during recessions due to consumer preference for holding cash in uncertain times and reduced access to credit lines during downturns, supporting BCO's cash-in-transit (CIT) business. ... .We believe Brink's has an attractive runway for revenue growth given the large and unpenetrated cash management industry in the U.S."