Goldman Sachs best stocks list
In an Aug. 17 research note, the analysts upgraded Singapore’s stock exchange SGX to buy. According to Goldman, SGX increased its revenue estimates for 2022-2024 by 2% to 3% due to a “stronger outlook” in the firm’s fixed income, currencies, and commodities division.
Goldman upgraded CICT, a real estate company based in Singapore, on August 5. “With [the] vaccination rate in Singapore on track to reach 80 percent by Sep-21, we adopt a more favorable view on commercial REITs [real estate investment trusts] and upgrade CICT from Neutral to Buy,” the bank’s analysts stated.
Yidu Tech, a Chinese medical technology firm, was also upgraded on August 17, with Goldman analysts estimating a “strong” 51 percent compound annual growth rate between 2021 and 2026 due to favorable policy and a growing client base.
In an Aug. 16 research note, Goldman upgraded Hong Kong real estate firm Swire Properties, saying, “we see early signs of stabilization with HK office take-up returning to positive, for the first time since mid-2019.” “Since the social unrest in mid-2019, the company has demonstrated strong portfolio management capabilities, allowing it to drive a continued decentralization trend,” the analysts wrote, referring to protests against a contentious extradition bill.
Vanguard, a Taiwanese semiconductor foundry, has been upgraded to a buy by the bank, which stated in an Aug. 4 research note that the firm “has solid execution and [a] good track record.” Analysts also like that it has long-term agreements with customers, which means it can expand its capacity.
Goldman upgraded Polish copper and silver company KGHM, saying it “provides good exposure to the copper theme at an undemanding valuation” in an Aug. 3 note.
Goldman Sachs upgraded XPO Logistics on Aug. 2, citing the company’s plans to spin off logistics arm GXO. The company has “strong” fundamentals and a “attractive valuation,” according to Goldman, and it has a 12-month target price of $103 per share after the separation, representing “about 23 percent upside from current levels.”
Daewoong Pharma, a South Korean pharmaceutical company, was upgraded to a buy on July 30, with Goldman Sachs analysts praising its “portfolio mix improvements” and “termination of low-margin contract manufacturing.” The bank expects the company to consistently outperform consensus earnings estimates.
Goldman upgraded oil industry supplier Halliburton to a buy on July 20, citing its turnaround plans. They believe the company has a “clearer path to improved returns and dividends,” and they like its “favorable” business mix with international customers.
Option Care Enterprises, a U.S. health care company, was upgraded by the bank on July 18. “COVID-19 has highlighted the importance of alternative channels of care delivery, including home health, and we anticipate continued strong tailwinds for the sector broadly for the foreseeable future,” Goldman analysts wrote in a research note.
HSBC best airline stocks are from China
Air China, China Eastern Airlines, and China Southern Airlines have all had their calls upgraded by HSBC. The carriers are traded on the mainland and Hong Kong stock exchanges, and their shares have dropped by 20% or more since their peak in 2021.
Air China’s Hong Kong-listed shares, or H-shares, were the biggest loser among the three major airlines, falling roughly 32% from their March 2021 peak.
“Having covered industrial cyclicals for more than a decade, we can say confidently that, when they’re trading at these levels, these stocks usually stop reacting to any further negative news,” HSBC analysts wrote in an Aug. 12 note.
They noted that when Covid restrictions are lifted, airline stocks typically recover quickly. “Similar to previous instances, we anticipate that these cyclical shares will rebound sharply as soon as China manages to contain this COVID-19 wave and domestic traffic recovers,” the bank said.
Cyclical stocks are those that are linked to the economic cycle, with profits and stock prices rising when the economy is doing well and falling when the economy is weakening.
The following airlines have HSBC price targets.
A-shares are Chinese mainland companies that trade on Chinese stock exchanges in Shanghai and Shenzhen, whereas H-shares trade on the Hong Kong Stock Exchange.
Why is HSBC optimistic about China’s “Big 3”?
HSBC anticipates that China’s “Big Three” airlines will perform well in the medium and long term because they are well-positioned to gain market share on domestic and international routes.
According to the analysts, those airlines have enough money and can generate a positive cash flow due to their exposure to domestic routes and cargo business.
Following Covid-19, the Big Three airlines are poised to emerge stronger.
Even if international air travel only reaches 50% of 2019 levels in 2023, the three carriers are expected to generate a double-digit return on equity, according to HSBC.
“After Covid-19, the Big Three airlines are poised to emerge stronger,” analysts wrote.
Higher oil prices, further delays in the recovery of international travel, and share prices falling due to consensus earnings downgrades based on the near-term outlook are all risks to the price targets, according to HSBC.
Analysts predicted impairment charges for China Eastern and Air China, particularly the latter, which has an older fleet and a higher proportion of wide-body planes.
Shall you buy Robinhood?
On Monday, many investment firms began covering the newly public brokerage stock, and the reaction was lukewarm. Several top firms gave Robinhood neutral or equal weight ratings, and JPMorgan’s Kenneth Worthington gave it a rare underweight rating.
Worthington set a price target of $35 per share, nearly 18 percent below where Robinhood’s stock closed Friday, and warned clients in a note that regulatory risks and the limited upside of small-dollar accounts should hurt the stock.
“We see investor recognition of Robinhood’s success priced into the share price,” according to the JPMorgan note. “Furthermore, we see a number of risks, such as regulation, pricing, and market saturation, as well as business challenges, such as its focus on smaller accounts, that we believe limit Robinhood’s ability to achieve competitive margins and profitability.”
Many analysts raised regulatory risk as a source of concern, particularly in relation to the contentious payment for order flow practice used by discount brokerages such as Robinhood.
Will Nance of Goldman Sachs, who has a neutral rating and a $56 price target on the stock, falls into this category.
“While we are constructive on the longer-term story, we are launching at Neutral due to 1) near-term uncertainty around the sustainability of retail trading levels, and 2) the ongoing overhang around payment for order flow, which could result in headline risk or, in the worst-case scenario, significant estimate risk,” according to the Goldman note.
Even some long-term bulls on Robinhood couldn’t bring themselves to recommend it as a buy.
According to Deutsche Bank analyst Brian Bedell, who has a hold rating and a $45 price target on Robinhood, the company is still a few years away from reaching a point where investors can be confident in its future.
“We find HOOD’s growth potential to be extremely appealing….” However, we believe the stock will be highly volatile over the next 6-12 months as [management] invests heavily to execute on its growth strategy, which may not begin to generate a more predictable revenue growth trajectory for at least 1-2 years,” according to the Deutsche Bank note.
Since the company’s initial public offering, shares of Robinhood have been volatile. The deal was priced at $38 per share, but it fell 8% on the first day. The stock rose above $70 earlier this month, but closed Friday at $42.64 per share.
To be sure, not every Wall Street analyst is concerned about Robinhood, with some predicting that it will eventually become a “single-money app.” Citi analyst Jason Bazinet assigned the stock a buy rating and a $63 price target, citing future growth opportunities.
“We anticipate two long-term opportunities. First, Robinhood may branch out from the brokerage business to become a more comprehensive money app, including banking. Second, we anticipate that the firm will expand outside of the United States over time,” according to the Citi note.
Environmentally friendly stocks
In the context of an increase in ESG and ecological investment, Barclays compiled a list of overweight equities which also shows good sustainability indicators.
The Barclays list is based on companies named to the CDP’s “climate change A list.” CDP is a non-profit organization that operates disclosure systems to assist individuals and businesses in understanding the environmental impact of their investments.
Barclays then screened the group’s list of more than 200 companies for companies that the firm rates as overweight and for which the firm’s price target implies at least a 10% upside from the current price.
Walmart is one of the companies on the list, and Barclays predicts that shares will reach $170, a 12 percent increase over Friday’s closing price. Walmart earned $1.78 per share on an adjusted basis, compared to the $1.57 expected by analysts polled by Refinitiv. Revenue was $141.05 billion, which was higher than the expected $137.17 billion.
“We remain very constructive as WMT continues to demonstrate that it can deliver on its near-term objectives while also investing in the long-term health of its business,” Barclays said in a statement following Walmart’s quarterly update.
Ecolab is another name on Barclays’ list. The company, based in St. Paul, Minnesota, specializes in water, hygiene, and infection prevention services. The firm referred to Ecolab as a “best-in-class company,” claiming that its business model generates “enduring competitive advantages.”
“In a post-Covid environment, Ecolab’s value proposition becomes even more important,” Barclays added.
Shares of Hanesbrands have risen 30 percent this year, outperforming the S&P 500′s 18 percent rise, and Barclays believes the retailer has more room to grow.
“The company is executing on its plan to position itself as the supplier of choice for core basic apparel among its mass-merchant partners, driving retail traffic through product innovation, marketing, and a more prominent digital presence, while reinvesting in elevating Champion’s global brand image in the faster growing athletic market,” the firm wrote in a client note.
Other companies on Barclays’ list include Ford, General Motors, Goldman Sachs, and Salesforce.