SUPERNEWS

Equities

Stocks with Over 30% Upside Potential Identified by Goldman Sachs

S&P 500 surges 24% in 2023; Goldman Sachs sees over 30% upside in selected stocks despite high valuations.

By Bill Bullington

ᐧ

3/7, 18:34 EST
Ally Financial Inc.
First Solar, Inc.
S&P 500
article-main-img

Key Takeaway

  • S&P 500 surged 24% in 2023; Goldman Sachs sees stocks with "extremely high valuations" akin to 2021 euphoria.
  • Goldman forecasts faster disinflation, predicting five ECB rate cuts this year and two next year.
  • Stocks like First Solar, Ally Financial, and Shell showed significant gains in 2023 with over 30% potential upside according to Goldman's targets.

Market Performance in 2023

The year 2023 proved to be a robust one for stocks, with the S&P 500 surging by approximately 24%, rebounding from the bear market experienced in 2022. Global markets also saw positive gains, as evidenced by the FTSE All World Ex U.S. index rising by 16.2% throughout the year. Despite the backdrop of higher yields, stock outperformance prevailed, with Goldman Sachs highlighting that the share of market cap in stocks with "extremely high valuations" has reached levels akin to the "euphoria of 2021."

Goldman Sachs Insights

Goldman Sachs, in a recent March note, pointed out that the current market rally has led to a resurgence of stocks with high valuations, although it deems the prevalence of extreme valuations today as less widespread compared to 2021, after adjusting for market concentration. The firm also forecasts a faster pace of disinflation than what the European Central Bank projects, anticipating five consecutive cuts this year and two cuts in the following year.

Stocks with Upside Potential

Goldman Sachs has identified several stocks that exhibited significant gains in 2023 and still hold more than 30% potential upside in 2024, based on the bank's latest price targets. Some of these stocks include:

  • First Solar: 15% gain in 2023, with a price target of $265 and a potential upside of 67.2%
  • Ally Financial: 42.8% gain in 2023, with a price target of $51 and a potential upside of 39.3%
  • Zegna: 10.5% gain in 2023, with a price target of $19 and a potential upside of 34.3%
  • Shell: 12.5% gain in 2023, with a price target of 40 euros and a potential upside of 36%
  • Tesco: 29.6% gain in 2023, with a price target of 370 GBX and a potential upside of 33.7%

Street Views

  • Goldman Sachs (Bullish on First Solar):

    "Goldman gives these stocks more than 30% upside... First Solar... $265 67.2%."

  • Goldman Sachs (Bullish on Ally Financial):

    "Goldman gives these stocks more than 30% upside... Ally Financial... $51 39.3%."

  • Goldman Sachs (Bullish on Zegna):

    "Goldman gives these stocks more than 30% upside... Zegna... $19 34.3%."

  • Goldman Sachs (Bullish on Shell):

    "Goldman gives these stocks more than 30% upside... Shell...40 euros 36%."

  • Goldman Sachs (Bullish on Tesco):

    "Goldman gives these stocks more than 30% upside… Tesco…370 GBX33.7%.