With Thanksgiving here and just five short weeks left in 2020, many investors are looking to next year and starting to reset portfolios. While many investors remain very nervous, especially given the massive fourth-quarter rally off the September market lows, the overall take is one of slow-but-steady going forward, given the incredible run in the equity markets and the potential for a slowing economy due to the COVID-19 flare-up.
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In a series of new reports, Goldman Sachs raises the price targets on shares of some companies that delivered the goods in a big way during earnings season. Given the increases in price targets, many still look to have some very solid upside potential. Here we spotlight four of those Buy-rated stocks. It is important to remember, though, that no single analyst report should be used as a sole basis for any buying or selling decision.
Align Technology
This company gapped up big recently and could be offering investors a breather for an entry point. Align Technology Inc. (NASDAQ: ALGN) designs, manufactures and markets a system of clear aligner therapy, intra-oral scanners and computer-aided design and computer-aided manufacturing (CAD/CAM) digital services for use in dentistry, orthodontics and dental records storage in the United States and internationally.
The company’s Clear Aligner segment offers Invisalign Full, a treatment used for a range of malocclusion. Its Invisalign Teen treatment addresses orthodontic needs of teenage patients, such as compliance indicators, compensation for tooth eruption and six free single arch replacement aligners. And its Invisalign Assist treatment is for anterior alignment and aesthetically oriented cases.
The analysts came away very positive after the company hosted its analysts day, and they noted this:
Align Technology hosted its 2020 analyst day, where the company raised its addressable market to 15 million annual ortho case starts (versus 12 million at its 2018 analyst day), and now sees a potential patient population of up to 500mn globally. The expanded total addressable market underscores the recent growth in the market for orthodontic treatment and longer runway for Align, which should support its reaffirmed long-term revenue growth target of 20-30%. The company also provided an update on the fourth quarter, stating that the strong momentum in October has continued in November, which we believe points to upside to fourth quarter consensus estimates.
The Goldman Sachs price target on the shares jumped to $535 from $472. The Wall Street consensus target is much lower $446. Align Technology stock closed Tuesday’s trading at $475.10 per share.
GOL Linhas Aereas
This is the Spirit Airlines of South America, and the stock now offers an excellent entry point and some potential big upside. GOL Linhas Aereas Inteligentes S.A. (NYSE: GOL) was founded in 2000 and has become the largest low-cost, low-fare carrier in Brazil, with roughly 40% market share in the country and a standardized fleet of 137 Boeing 737s.
The airline offers over 800 daily flights to 51 regional destinations and 16 international markets in South America and the Caribbean. It has a unique strategic positioning in the Brazilian airline market, combining the lowest cost structure in the industry with a premium exposure to the country’s most important airports.
Goldman Sachs raised its target price to $11.05 from $9.70. That compares to a posted $11.14 consensus target, as well as Tuesday’s closing print for GOL Linhas Aereas stock of $8.75 a share.
24/7 Wall St.Korn Ferry
This stock is a great international idea for growth investors seeking to expand portfolios. Korn Ferry Inc. (NYSE: KFY) engages in the provision of global organizational consulting firms. Its solutions include organizational strategy, talent acquisition, rewards and benefits, assessment and succession, and leadership development. The company helps organizations select and hire the talent they need to execute their strategy.
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The bullish earnings were well received, and the analysts said this about the company:
Korn Ferry reported healthy fiscal second quarter results, with revenue, margins and earnings per share that meaningfully surpassed our expectations and FactSet consensus. We believe the company’s diversified business model and rebounding new business trends will drive further improvements in top-line performance across its exec search, consulting, digital and recruitment process outsourcing businesses.
The $35 Goldman price objective was lifted to $40. The consensus target was last seen at $38.80, and the final Tuesday trade for Korn Ferry stock was at $40.97.
24/7 Wall St.Ternium
This is another south of the border idea that could work well in an improving economic picture. Ternium S.A. (NYSE: TX) is the second-largest Latin American flat steel producer, with crude steel capacity of 16.6 million tons, including 5 million of semi-finished capacity. Ternium’s facilities are located in Mexico, Argentina and Brazil. The company is controlled by Techint Group, which directly owns 59% of total capital, and the market free float is 14%. Ternium sells around 80% of its products in domestic markets, and 77% of all shipments are flat steel products.
The outlook for the company is solid and the analysts noted this in a research report:
We increase our EBITDA estimates for 2020, 2021 and 2022 by +20%/22%/13% mostly due to higher expected sales for all operations and higher expected steel prices in Mexico (thanks to demand recovery in North America and Brazil).
Goldman Sachs boosted its price target to $30 from $23. The posted consensus target is $22.96. Ternium stock closed at $26.96 a share on Tuesday.
These four top companies are executing well and their stocks look to have very solid upside to the Goldman Sachs price targets. These are stocks may be better suited for accounts with a somewhat higher risk tolerance, as they could be a touch more volatile, given the solid runs they have all made.
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