These five stocks are best positioned for long-term growth, Goldman analysts say
Goldman Sachs said this week that there are a bunch of stocks that are poised for long-term growth. These five companies are all coming off of quarterly results, and analysts say they have attractive upside for patient investors. CNBC Pro combed through the top Wall Street research to find some of Goldman’s top buying opportunities following earnings. They include: Pepsi, Alcoa , Wolfspeed , Tesla and BlackRock . Pepsi The beverage giant is firing on all cylinders if the company’s third-quarter earnings report earlier this month is any indication, according to Goldman Sachs. “PEP reported yet another impressive quarter with a strong beat on both the top and bottom lines driven by the strength of its portfolio and underlying momentum in its businesses,” analyst Bonnie Herzog said. The firm said in a note that Pepsi’s strong organic revenue growth continues to impress and that the stock is one of the most attractive in Goldman’s coverage. Pepsi also has immense pricing power and the durability of its brand portfolio can’t be understated, she added. In addition, Pepsi’s Frito-Lay brand and its energy drinks division are showing signs of accelerating share gains, Herzog said. “PEP, and the broader beverage universe, continues to benefit from strong underlying demand with little changes in consumer elasticities…” she noted. Herzog said management is also maintaining the right balance between productivity, cost initiatives and profitable growth. “PEP remains very well positioned given its strong brand portfolio and long-term growth opportunities in Beverages,” she wrote. Shares are up 4.9% this year Alcoa Goldman analyst Emily Chieng is standing by Alcoa, the aluminum and metals producer. Shares are down nearly 34% this year, and the company is coming off a disappointing third-quarter earnings miss last week. The culprit was higher-than-expected raw materials costs, according to the firm. Chieng acknowledged that challenges remain, but she also said the buying opportunity is too attractive to ignore. Chieng highlighted Alcoa’s management, writing that they’ve taken the right steps to leave the company well positioned with numerous levers to pull. The balance sheet is robust with over $1 billion in cash on hand, she said. “Despite the aforementioned cost pressure, the years-long mission to weather-proof the business through various investment cycles does allow Alcoa’s management team more strategic flexibility,” she wrote. The stock is well priced for investors who have a “positive view on the secular growth story for longer-term aluminum demand,” she added. Chieng said that the “recent pullback in shares offers an attractive entry point for those seeking leverage to commodity price upside, once near-term earnings expectations have been recalibrated.” Alcoa remains on Goldman’s conviction buy list, and Chieng has a target of $46 per share. Wolfspeed “Buy the dip,” analyst Alexander Blostein said following Wolfspeed’s mixed fiscal first-quarter earnings report earlier this week. Indeed, shares of the company slumped 18% the day after Wolfspeed issued its results. The semiconductor company beat on the top and bottom line, but provided guidance that came below consensus. Blostein noted that gross margins underwhelmed and are likely to do so for the foreseeable future. However, the firm said it’s sticking with the stock. Demand is “extremely strong and continues to grow above expectations,” he wrote. Supply chain challenges look temporary, he says, and an important catalyst is Wolfspeed’s upcoming analyst day. Blostein has confidence that long-term revenues remain intact despite a quarterly report that may have left some investors feeling uncertain. Still, he said investors should keep accumulating shares. “[The] near-term hiccup [is] disappointing, but long-term strategy and opportunity intact,” Blostein said. The stock is down 23% for the year. Tesla “Mixed 3Q report; Company remains well positioned for long-term growth in part from potential cost and EPS drivers. … We maintain our Buy rating on the stock. We continue to believe that Tesla is well positioned for long-term top and bottom-line growth, given its leading position in the EV market (which we attribute in part to its ability to offer full solutions including charging and software, brand, and cost leadership), as well as drivers for cost and EPS.” BlackRock “Macro hurdles persist, but long-term growth outlook remains. … We remain Buy-rated on BLK following 3Q22 results in the context of our Traditional Asset Management coverage, though near-term EPS downside to consensus estimates remains a headwind for the stock. … While BLK continues to face a challenging market backdrop, we believe the firm is likely to be a big beneficiary from potentially re-surging Fixed Income demand across both ETFs/index as well as actively managed products.” Pepsi “PEP reported yet another impressive quarter with a strong beat on both the top and bottom lines driven by the strength of its portfolio and underlying momentum in its businesses. … “PEP, and the broader beverage universe, continues to benefit from strong underlying demand with little changes in consumer elasticities. … PEP remains very well positioned given its strong brand portfolio and long-term growth opportunities in Beverages.” Alcoa “Particularly for investors who maintain a positive view on the secular growth story for longer-term aluminum demand, we believe the recent pullback in shares offers an attractive entry point for those seeking leverage to commodity price upside, once near-term earnings expectations have been recalibrated. …. Despite the aforementioned cost pressure, the years-long mission to weather-proof the business through various investment cycles does allow Alcoa’s management team more strategic flexibility.” Wolfspeed Buy the dip; near-term hiccup disappointing, but long-term strategy and opportunity intact. … On that point, management emphasized that overall demand continues to be extremely strong and continues to grow above expectations as evidenced by WOLF reporting another record quarter of design-ins of $3.5bn, which were up +35% qoq. Yield and supply challenges expected to be temporary.