It happened in 2008 and 2009, and despite a huge rally off the bottom, many of the top companies that investors are very familiar with have taken a beating. Needless to say, the ones that have been beaten down the most are in sectors that are struggling the most with the temporary new normal routines. While conditions are improving as the country opens up, some sectors continue to fare better than others.
We screened the BofA Securities research database looking for companies that are likely to survive the current troubles and could very well offer patient investors some huge returns over the next year or so. Patient investors that did that in 2008 and 2009 absolutely killed it over the next few years.
Goldman Sachs is the premier investment bank in the world, so we screened the firm’s outstanding research database and found five stocks trading under the $10 level that could provide investors with some solid upside potential. While much better suited for aggressive accounts, they could prove exciting additions to portfolios looking for solid alpha potential.
While all five of the stocks are rated Buy at Goldman Sachs, it’s important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
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ADT
This top security company is a well-known protector of homes and businesses. ADT Inc. (NYSE: ADT | ADT Price Prediction) is the largest residential and second-largest commercial security monitoring company in North America. The company serves over 7 million customers, installing over a million systems per year. Roughly 94% of revenue is generated in the United States, with the remainder from Canada.
The company announced earlier this month that it had won a contract from Dollar Tree to provide advanced security technologies and monitoring services at thousands of stores. ADT Commercial will service Dollar Tree and Family Dollar locations across the United States, the company said. The contract, the value of which was not disclosed, includes equipment and service enhancements, as well as round-the-clock remote support from ADT.
Goldman Sachs has an $8 price target on the shares, while the consensus across Wall Street is lower at $7.69. ADT stock traded mostly above $8 since the beginning of June but slipped below that level late in the week.
Noble Energy
Noble Energy Inc. (NYSE: NBL) is an independent energy company engaged in the acquisition, exploration and production of crude oil, natural gas and natural gas liquids (NGLs) worldwide. Its principal projects are located in Denver-Julesburg Basin, Marcellus Shale, Eagle Ford Shale and Permian Basin of the United States, as well as in deepwater Gulf of Mexico, offshore Eastern Mediterranean and offshore West Africa.
The company has been in the process of a reset in operating cash flow toward gas in Israel, which trades at above two times U.S. gas prices and could substantially contribute to cash flow this year.
The Goldman Sachs price target is $14, which compares to the consensus target of $12.71. Noble Energy stock retreated below $10 a share last week.
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Oceaneering International
This deepwater driller and contrarian play could have potential as a takeover target. Oceaneering International Inc. (NYSE: OII) is a global provider of engineered services and products, primarily to the offshore oil and gas industry, with a focus on deepwater applications. Through the use of its applied technology expertise, Oceaneering also serves the defense, entertainment and aerospace industries.
The services and products it provides to the oil and gas industry include remotely operated vehicles, specialty subsea hardware, engineering and project management, subsea intervention services, including manned diving, survey and positioning services and asset integrity and nondestructive testing services. The company serves the defense, aerospace and commercial theme park industries.
The $10 Goldman Sachs price objective compares to the $6.02 consensus estimates. Oceaneering International stock ended last week just above $6.
Plains All American Pipeline
This remains a top master limited partnership (MLP) pick across Wall Street. Plains All American Pipeline L.P. (NYSE: PAA) is primarily engaged in midstream crude oil activities, including transportation, gathering, marketing and terminaling.
Top analysts, including the Goldman Sachs team, feel the company deserves a premium valuation given its leverage to the Permian and attractive organic growth backlog. The company owns an extensive network of pipeline transportation, terminaling, storage and gathering assets in key crude oil and NGL producing basins and transportation corridors and at major market hubs in the United States and Canada.
On average, Plains All American handles more than 6 million barrels per day of crude oil and NGL in its Transportation segment.
Investors still receive a solid 8.60% distribution. Goldman Sachs has set an $11 price objective, but the consensus target is higher at $12.26. Last week, Plains All American Pipeline stock fell below $9 for the first time in a month.
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TechnipFMC
The analysts remain positive on this large-cap company. TechnipFMC PLC (NYSE: FTI) is a large, diversified oil services provider with a strong strategic focus on the offshore market.
The company, which is headquartered in the United Kingdom and listed in both Paris and New York, is the second-largest oil services provider with a European listing. It has a truly global footprint, employing 37 thousand people around the world, with its revenue mix temporarily skewed towards Russia, where it executes the large Yamal LNG project.
The second-quarter earnings estimate has been raised by a penny to $0.07 per share. The full-year estimate for 2020 is up to $0.38 per share from the previous $0.35. However, the 2021 estimate has been reduced by a penny to $0.59 per share.
The Goldman Sachs price target is $12.50. The consensus figure is $11.52. TechnipFMC stock was trading above $7 late last week.
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These five stocks trading under the $10 level have big upside to the analyst price targets. Again, while not suitable for conservative accounts, aggressive investors can get some solid share leverage buying more shares and can make money on a much smaller share price move. Plus, they are all covered with a Buy rating at the top firm on Wall Street, Goldman Sachs.
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