Goldman Sachs analysts reveal the most attractive stocks on Wall Street following earnings

Published Sat, Aug 6 20229:02 AM EDT

Analysts at Goldman Sachs have named a slew of the most attractive buy-rated stocks coming out of earnings. The firm said this week there's a whole host of companies that have huge upside potential going forward. They include: Novartis , General Electric, Union Pacific, The Brink's Company and Herc Holdings . General Electric It might have been a "low bar to clear" for GE earnings, but that doesn't meant things aren't looking up for shares of the multination conglomerate. The company released strong second-quarter results on July 26and analyst Joe Ritchie wrote in his follow-up note that investors should immediately start accumulating shares. "The bottom line is that this was a stronger than expected result though management now expects 3Q EPS to be down y/y which we view as highly conservative," he said. The analyst praised company management as the turnaround continues adding that divisions like healthcare and aviation are picking up steam. Ritchie admitted that GE's renewables section remains challenged, but says that's not unexpected given the company plan to shrink that part of the business. "For 2022, our EPS of $2.80 is unchanged, as the 2Q beat helps to de-risk 2H," he wrote. Shares of the company are up almost 20% over the last month and Ritchie says the stock is priced just right for investors. "We remain Buy-rated, as we think GE has attractive longer-cycle exposure and believe valuation is not reflecting the progress GE has made to become a fundamentally stronger company," Ritchie said. Union Pacific Goldman analyst Jordan Alliger is doubling down on shares of the rail company. The firm said in a note to clients in late July that's it staying upbeat on Union Pacific after the company's strong earnings report where it beat on the top and bottom line. Alliger is anticipating a better second-half setup for rails than other transport subsectors, he wrote. Rails provide "optionality,' the firm says, particularly as "labor and in turn service levels return to form quicker than the recent pace." That could lift volumes higher than the firm's forecast and in turn "produce more incremental margin." Meanwhile, despite a tough macro, the second-quarter results showed rail demand is still solid and will likely continue to be, the analyst said. In addition, the company is executing well, Alliger said, although the firm's guide on volumes is lower than what management expects. Finally, the stock's valuation is attractive, and the analyst sees a good entry point to own the stock. Shares are are down 9% this year. Herc Holdings The outlook for construction rentals is at a "crossroads," but analyst Jerry Revich is standing by shares of the equipment and tool rental company Revich said in his follow up note to the company's mixed earnings report late last month that Herc stock is "attractive" for patient investors, even as some cyclical headwinds swirl near term. In prior market downturns the rental stocks traded down as rates declined and inventories diminished, according to Revich. "However, in this cycle - similar to 2008-09 - the stocks have pre-traded the industry downturn due to rising macro risks," he said. Still, the firm said investors should buy the stock. Despite the warning, a material slow down is still not the firm's base case as used equipment inventories are rising. The stock is also down 23% this year. "However the rental stocks - and HRI specifically - provide compelling risk-reward for long-term investors at current levels," Revich wrote. Novartis "Robust execution amidst attractive valuation. ... .We continue to see Novartis as well-placed to drive strong operational execution for the Innovative Medicines business medium term, with multiple new product launches and late-stage pipeline optionality supplementing top-line growth. ... .Novartis delivered a solid 2Q with Core EPS of $1.56, ahead of both GS/company-compiled consensus EPS of $1.43 and $1.50 respectively." Union Pacific "That said, we continue to prefer the optionality rails can provide should the labor and in turn service levels return to form quicker than the recent pace - which would potentially drive volumes above our current forecast and in turn produce more incremental margin than in our model — this is in conjunction with valuation levels that are recently compressed to relatively attractive levels versus recent years." Brink's "Healthy revenue growth trends with defensive characteristics and attractive margin outlook post 2Q. ... We believe Brink's is executing well to deliver on its growth objectives despite the uncertain macro environment, with 2Q results coming in ahead of our expectations on revenue as well as earnings. ... BCO has now recovered its revenue back to pre-COVID levels, and is tracking to deliver at least high-single-digit organic growth off of this new baseline in the second half of 2022 and over the medium-term." General Electric "Bottom line. Strong 2Q, low bar to clear in 3Q, valuation attractive. ... The bottom line is that this was a stronger than expected result though management now expects 3Q EPS to be down y/y which we view as highly conservative. ... For 2022, our EPS of $2.80 is unchanged, as the 2Q beat helps to de-risk 2H. ... We remain Buy-rated, as we think GE has attractive longer-cycle exposure and believe valuation is not reflecting the progress GE has made to become a fundamentally stronger company." Herc Holdings "We see the construction rental stocks at a crossroads between attractive long-term risk reward and deteriorating short-term cyclical indicators. ... However, in this cycle - similar to 2008-09 - the stocks have pre-traded the industry downturn due to rising macro risks. ... However the rental stocks - and HRI specifically - provide compelling risk-reward for long-term investors at current levels."