Apr 14, 2022
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Several factors continue to cast a shadow over the stock market.
“Uncertainty surrounding monetary policy, elevated inflation, and impacts stemming from Russia's invasion of Ukraine has weighed on the index since the start of the year,” says Goldman Sachs stock strategist David Kostin. “Slower domestic and global growth, paired with higher commodity prices, should continue to pose a risk to earnings and margins.”
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That said, not all stocks are the same. Kostin’s team has identified several companies that are well-positioned in today’s environment.
Let’s take a look at three in which Goldman Sachs sees huge upside ahead. If you wish to dive into stocks consider using this trusted trading platform that is now offering a $50 bonus when you sign up.
Bath & Body Works (BBWI)
Bath & Body Works is a specialty retailer of home fragrance, body care, soaps and sanitizer products. At a time when brick-and-mortar retailers face intense competition from online giants like Amazon, Bath & Body Works keeps growing at an impressive rate.
In the most recent quarter, net sales rose 11% year over year to $3.03 billion. Adjusted earnings per share from continuing operations increased 17% year over year to $2.30.
“We believe there is upside potential to current consensus estimates given the expected rollout of the company’s loyalty program to the entire chain in mid-2022,” writes analyst Kate McShane.
Goldman has set a price target of $85 for Bath & Body Works — roughly 70% above where the stock sits today.
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Salesforce (CRM)
Salesforce is a cloud-based software giant. More than 150,000 companies use its customer relationship management platform to scale their business.
Cloud computing is a booming industry, and Salesforce’s numbers completely reflect that.
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In the company’s most recent quarter, revenue surged 26% year over year to $7.3 billion. Management also issued upbeat guidance: It now expects full-year 2023 revenue of $32 billion, marking a year-over-year increase of 21%.
But the stock is down more than 20% in 2022, giving contrarian traders something to think about.
Last month, Goldman Sachs reiterated a ‘buy’ rating on Salesforce and raised its price target on the shares to $360, implying potential upside of more than 80%.
Penn National Gaming (PENN)
Penn National Gaming is a casino and racetrack operator with 44 properties in 20 states. It also provides online sports betting in 13 jurisdictions.
The shares rallied nicely in pandemic-struck 2020, but have slumped ever since on concerns over slowing growth. They’re down more than 60% over the past year. That could give bargain hunters an opportunity, especially considering how much the company’s business has improved.
In Q4, revenue grew 53% year over year to $1.57 billion, while net income spiked 253% to $44.8 million. The company generated record free cash flow in 2021 and is returning cash to investors. In February, the board approved a $750 million share repurchase program.
Goldman has a ‘buy’ rating on Penn and a price target of $77. With the stock trading at around $38 right now, that target suggests potential upside of 103%. Bargain hunters interested in another low-risk investment can also invest in "fractional real estate" for as little as $1.
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Jing is an investment reporter for Money.ca. Prior to joining the team, Jing was a research analyst and editor at one of the leading financial publishing companies in North America. Jing has covered numerous aspects of the financial markets, from blue chip dividend stocks to small cap tech stocks to precious metals and currency. An avid advocate of investing for passive income, he wrote a monthly dividend stock newsletter for the better half of the past decade. In his spare time, Jing plays basketball, the violin and the ukulele.
