Goldman Sachs: Buy these 12 stocks for double-digit earnings upside in 2024 as markets rebound from a lost year for profit growth
- Corporate earnings have barely budged this year but are expected to jump in 2024.
- Goldman Sachs says investors are overlooking several stocks with sizable earnings potential.
- Here are 12 stocks with forward profit estimates that are at least 10% too low.
Although US stocks have struggled in recent weeks, they have performed admirably given that corporate earnings growth is expected to be close to zero by the end of the year.
Despite flat profits, the S&P 500 is up about 12% in 2023, indicating that it has managed to expand its earnings multiple while facing the highest interest rates since 2007. And, until a sharp sell-off in mid-September, the index had risen by more than 17%.
According to Goldman Sachs, this volatile environment has been punishing for mutual fund managers. According to the firm’s strategists, as of the end of the third quarter, only 22% of managers behind large-cap funds outperformed their benchmarks. Avoiding tech behemoths has helped their returns recently, but it has been a drag on performance for the majority of 2023.
According to Goldman Sachs, funds that focused on economically sensitive stocks and shorter-duration equities, or stocks that generate near-term cash flow, performed best in Q3, despite the fact that the opposite was true during the first six months of the year.
Investors are looking for a fresh start as we enter the fourth quarter. According to Goldman Sachs, stocks will finish the year strong due to modest earnings growth that will only accelerate in 2024. Bottom lines are expected to grow by 12% next year, easily the fastest rate since the post-pandemic profit surge of 2021, according to the firm’s strategists.
12 stocks to buy for potential earnings growth
Investors looking for earnings growth should consider a dozen stocks with profit-generating potential that Goldman Sachs analysts believe is significantly undervalued.
According to Goldman Sachs, the 12 stocks listed below have a double-digit increase in earnings estimates. Each stock has its ticker, market capitalization, previous closing price, Goldman Sachs earnings estimates, consensus earnings estimates, and the difference between those earnings expectations.
1. Boeing
Ticker: BA
Market cap: $113B
Previous close: $187.38
GS earnings estimate: $7.29
Consensus earnings estimate: $4.28
Difference in earnings estimates: 70.3%
Source: Goldman Sachs
2. Seagate Technology Holdings
Ticker: STX
Market cap: $13.7B
Previous close: $66.05
GS earnings estimate: $3.62
Consensus earnings estimate: $2.63
Difference in earnings estimates: 37.8%
Source: Goldman Sachs
3. Biogen
Ticker: BIIB
Market cap: $38.1B
Previous close: $263.25
GS earnings estimate: $21.59
Consensus earnings estimate: $16.96
Difference in earnings estimates: 27.3%
Source: Goldman Sachs
4. Moderna
Ticker: MRNA
Market cap: $39.5B
Previous close: $103.88
GS earnings estimate: -$3.86
Consensus earnings estimate: -$5.15
Difference in earnings estimates: 25%
Source: Goldman Sachs
5. Mosaic
Ticker: MOS
Market cap: $11.2B
Previous close: $33.70
GS earnings estimate: $4.09
Consensus earnings estimate: $3.43
Difference in earnings estimates: 19.1%
Source: Goldman Sachs
6. Baker Hughes
Ticker: BKR
Market cap: $34.1B
Previous close: $33.73
GS earnings estimate: $2.32
Consensus earnings estimate: $2.01
Difference in earnings estimates: 15.2%
Source: Goldman Sachs
7. Take-Two Interactive Software
Ticker: TTWO
Market cap: $23.9B
Previous close: $140.91
GS earnings estimate: $6.76
Consensus earnings estimate: $5.88
Difference in earnings estimates: 15%
Source: Goldman Sachs
8. Bunge
Ticker: BG
Market cap: $15.5B
Previous close: $103.12
GS earnings estimate: $13.29
Consensus earnings estimate: $11.76
Difference in earnings estimates: 13%
Source: Goldman Sachs
9. Pfizer
Ticker: PFE
Market cap: $187.1B
Previous close: $33.13
GS earnings estimate: $3.70
Consensus earnings estimate: $3.29
Difference in earnings estimates: 12.4%
Source: Goldman Sachs
10. Live Nation Entertainment
Ticker: LYV
Market cap: $20B
Previous close: $87.53
GS earnings estimate: $1.87
Consensus earnings estimate: $1.69
Difference in earnings estimates: 10.6%
Source: Goldman Sachs
11. Arista Networks
Ticker: ANET
Market cap: $60.1B
Previous close: $194.02
GS earnings estimate: $7.47
Consensus earnings estimate: $6.79
Difference in earnings estimates: 10.1%
Source: Goldman Sachs
12. Expedia Group
Ticker: EXPE
Market cap: $14.4B
Previous close: $100.48
GS earnings estimate: $12.76
Consensus earnings estimate: $11.60
Difference in earnings estimates: 10%
Source: Goldman Sachs
