These 4 stocks are on Goldman's 'conviction buy' list — and it gives one 115% upside

Published Sun, May 21 20238:12 PM EDT

A look at Goldman Sachs' "conviction buy" stocks this year reveals some names with serious upside potential. The Wall Street bank's list comprises its top buy-rated stocks that it expects to outperform. Here are five of them: Sensata Attleboro, Massachusetts-based Sensata makes sensors used in the auto industry and beyond. Goldman in a note this week said investors should consider auto suppliers as a way to tap the electric vehicle trend. "Many of the auto suppliers also have more defensive characteristics (e.g. solid margins and [free cash flow], and diversified customers/end market exposure)," Goldman analysts wrote, listing U.S.-based Sensata as one such stock. The bank gave Sensata a price target of $60, or around 43% potential upside from its current level. ASML Goldman named Dutch semiconductor firm ASML in its screen of "long-term quality compounders" earlier this year. "Slower economic growth and the recent spike in market volatility support the case for stable, high quality companies," said the bank in a report. Goldman's analyst Alex Duval said he maintains a positive view on ASML's long-term growth trajectory, given its "monopoly" in extreme ultraviolet lithography — an incredibly short wavelength of light that ASML generates in large quantities to print small, complex designs on microchips. Duval said that demand continues to significantly outpace supply for ASML, with new order intake set to be "robust." Goldman gave ASML a price target of 785 euros ($846), or upside of nearly 23%. Alibaba Goldman said in a recent note that Chinese tech giant Alibaba continued to be its top pick within the China internet and e-commerce segments. According to the bank, its share price performance in 2023 will be underpinned by the following: A return to positive high-single-digit growth in advertising and commission from June onwards, including a recovery in its apparel and cosmetics segments; Growth drivers across AliCloud, its cloud services arm, and its international businesses such as its e-commerce unit Lazada; A "valuation repair" story brought on by its "comprehensive" business model. Goldman gave the U.S.-listed shares of Alibaba a 12-month price target of $136, or potential upside of 58%. Vonovia European real estate company Vonovia made two of Goldman's screens in a report earlier this year: high dividend yielders and value buys with earnings upside potential. Vonovia is among "buy rated stocks that are trading at attractive valuations relative to their own history and the market," according to Goldman. Key catalysts for the stock include the completions of sales, which should allow for deleveraging, and the expected strength of rental markets looking ahead, said the bank's analyst. Goldman gave the stock a price target of 37.30 euros ($40.20), or nearly 115% potential upside. — CNBC's Michael Bloom contributed to this report.