Goldman Sachs says buy these 19 downtrodden stocks that have badly lagged the S&P 500 this year — but have immense upside potential heading into earnings season

  • Goldman Sachs says investors will find the best opportunities in individual stocks.
  • The bank has compiled 19 names that have underperformed the S&P 500 this year.
  • The stocks should get a boost when they report earnings in the weeks ahead, they said.
  • See more stories on Insider’s business page.

With stock indexes near all-time-highs and valuations broadly overextended as investors anticipate a robust economic recovery, opportunities in the market are getting harder to come by.

Wall Street giants like Morgan Stanley and Bank of America see little or no upside left in the S&P 500 this year from its current level around 4,150. Goldman Sachs is a little more constructive with a target of 4,300, but it too is recommending that investors look to individual stocks for the best opportunities.

To identify some of these opportunities, Goldman analyst Vishal Vivek and his team identified names that have trailed the S&P 500 so far this year and that they believe will see a boost in the weeks ahead as they report earnings.

“Many stocks have underperformed the broad market, despite solid fundamentals and potential for upside over the next year. With earnings season coming up, we see potential for a reversion in performance in these stocks,” Vivek said in an April 14 note. “Our past studies have shown earnings events frequently drive mean reversion in stocks that have underperformed in the days leading to the event.”

On average, the stocks identified have lagged the S&P 500 by 8% over the last three-month period. Their average upside, the bank said, is 20%, with one having as much upside as 72%.

Goldman Sachs

All of the companies will report earnings over the last two weeks of April or the first two weeks of May. Stocks below that are also included on the bank’s “conviction list” include Mastercard, Advanced Micro Devices, Fiserv, McKesson, Verizon, and Activision Blizzard.

The full list of 19 is compiled below in alphabetical order with the potential upside to Goldman’s price target for each.

1. Activision Blizzard

Ticker: ATVI

Past 3-month performance vs. SPX: -1.7%

Price target: $116.00

Upside: 19%

Source: Goldman Sachs

2. Air Products and Chemicals

Ticker: APD

Past 3-month performance vs. SPX: -8.3%

Price target: $315.00

Upside: 10%

Source: Goldman Sachs

3. Advanced Micro Devices

Ticker: AMD

Past 3-month performance vs. SPX: -26.5%

Price target: $106.00

Upside: 32.%

Source: Goldman Sachs

4. CF Industries Holdings

Ticker: CF

Past 3-month performance vs. SPX: -4.2%

Price target: $60.00

Upside: 33%

Source: Goldman Sachs

5. Charter Communications

Ticker: CHTR

Past 3-month performance vs. SPX: -12.1%

Price target: $715.00

Upside: 15%

Source: Goldman Sachs

6. Comcast

Ticker: CMCSA

Past 3-month performance vs. SPX: -4.4%

Price target: $62.00

Upside: 15%

Source: Goldman Sachs

7. Edison International

Ticker: EIX

Past 3-month performance vs. SPX: -11.1%

Price target: $75.00

Upside: 24%

Source: Goldman Sachs

8. Enphase Energy

Ticker: ENPH

Past 3-month performance vs. SPX: -33.1%

Price target: $264.00

Upside: 72%

Source: Goldman Sachs

9. Everest Re Group

Ticker: RE

Past 3-month performance vs. SPX: -1.1%

Price target: $292.00

Upside: 14%

Source: Goldman Sachs

10. Fiserv

Ticker: FISV

Past 3-month performance vs. SPX: -0.8%

Price target: $144.00

Upside: 16%

Source: Goldman Sachs

11. Global Payments

Ticker: GPN

Past 3-month performance vs. SPX: -2.8%

Price target: $227.00

Upside: 6%

Source: Goldman Sachs

12. Intercontinental Exchange

Ticker: ICE

Past 3-month performance vs. SPX: -8.1%

Price target: $135.00

Upside: 14%

Source: Goldman Sachs

13. Leggett & Platt

Ticker: LEG

Past 3-month performance vs. SPX: -1.6%

Price target: $52.00

Upside: 10%

Source: Goldman Sachs

14. Mastercard

Ticker: MA

Past 3-month performance vs. SPX: -0.4%

Price target: $402.00

Upside: 6%

Source: Goldman Sachs

15. McKesson

Ticker: MCK

Past 3-month performance vs. SPX: -5.9%

Price target: $231.00

Upside: 22%

Source: Goldman Sachs

16. Morgan Stanley

Ticker: MS

Past 3-month performance vs. SPX: -4.4%

Price target: $89.00

Upside: 12%

Source: Goldman Sachs

17. TE Connectivity

Ticker: TEL

Past 3-month performance vs. SPX: -8.3%

Price target: $163.00

Upside: 4%

Source: Goldman Sachs

18. T-Mobile US

Ticker: TMUS

Past 3-month performance vs. SPX: -10.6%

Price target: $160.00

Upside: 22%

Source: Goldman Sachs

19. Verizon Communications

Ticker: VZ

Past 3-month performance vs. SPX: -8.7%

Price target: $64.00

Upside: 11%

Source: Goldman Sachs

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