With 2022 rolling right along and the first quarter almost over, many investors are resetting for what could be a very volatile rest of the year. The confluence of the highest inflation in 40 years, a deadly conflict between Russia and Ukraine, a rising interest rate scenario that could include as many as seven additional rate hikes this year, and the fear that the market and the economy could crash has caused many growth stock investors to pause.
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The safe route is the best route for many, but growth investors who are more aggressive have the opportunity to scoop up some companies now that have big-time upside potential. Those investors with a risk profile that can accommodate the current environment are probably looking for Wall Street’s best ideas.

One of Wall Street’s most respected lists of stocks to buy is the Goldman Sachs Conviction List. These are the firm’s top picks for high net worth and institutional accounts spread across 10 sectors. We screened the list looking for the companies that had the largest upside to the Goldman Sachs assigned target prices, and we found five that aggressive investors may want to add to portfolios. It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.

AZEK

This is an off-the-radar idea for many, but it has among the largest upside potential of the Conviction List stocks. AZEK Co. Inc. (NYSE: AZEK) engages in the design, manufacture and sales of building products for residential, commercial and industrial markets in the United States.

The Residential segment designs and manufactures engineered outdoor living products, which includes decking, railing, trim and molding, and accessories under the TimberTech, AZEK Exteriors, Versatex and Ultralox brand name.

Its Commercial segment manufactures engineered polymer materials that are used in various industries, including outdoor graphic displays and signage, educational and recreational markets, as well as the food processing and chemical industries. The segment also offers bathroom partitions, shower and dressing stalls, lockers and other storage solutions under the Aria, Eclipse, Hiny Hiders, TuffTec and Duralife brand name to schools, parks, stadium arenas, industrial plants and retail, recreational and commercial facilities.

Goldman Sachs said this about AZEK stock:

Our channel checks suggest continued strength in demand for composite decking. Given the operating backdrop and greater visibility into fiscal 2021, along with our increased confidence in management’s ability to execute against its multi-year strategy, we believe AZEK presents one of the most compelling risk/reward profiles in our coverage universe. Additionally, management has announced plans to increase capex by $80mn over the next two years, better positioning it to capture growth, and our proprietary model now forecasts 8.5% annual gains for the composite decking industry through 2025.

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The Goldman Sachs price target of $50 and the analysts’ consensus target of $45.27 are both well above the most recent close at $25.04 per share. Hitting the Goldman Sachs target would be a 100% gain.

BioMarin Pharmaceuticals

This is a Wall Street favorite that posted very solid earnings last year. BioMarin Pharmaceuticals Inc. (NASDAQ: BMRN) develops and commercializes innovative biopharmaceuticals for serious diseases and medical conditions. Its product portfolio comprises five approved products and multiple clinical and preclinical product candidates.

Over the past decade, BioMarin has become one of the top orphan drug companies, and it looks poised to stay there. Roche recently has been mentioned as a company that could be looking at BioMarin. Roche is focused on oncology drugs and invests heavily in early-stage molecules.

Goldman Sachs said this:

We recommend BioMarin shares based on pipeline optionality and clinical and commercial execution. BioMarin is actively involved in evaluating new programs, both genome medicine and others, and its manufacturing expertise positions the company to take a key leading role and/or “catch up” to competitors in genome medicine while solid fundamentals will continue to support long term pipeline innovation.

The Goldman Sachs price objective on BioMarin Pharmaceuticals stock is $168. The consensus target price is $116.68, and stocks closed trading most recently at $79.02. The upside to the Goldman Sachs target is 112%.

Datadog

This is another name investors may be unfamiliar with that holds tremendous upside potential. Datadog Inc. (NASDAQ: DDOG) engages in the development of monitoring and analytics platforms for developers, information technology operations teams and business users. The company’s platform integrates and automates infrastructure monitoring, application performance monitoring and log management to provide real-time observability of its customers’ entire technology stack.
Datadog recently announced the extension of Network Performance Monitoring (NPM) to Windows. Datadog NPM now monitors the performance of network communications between applications running on Windows Server and Linux, providing seamless network visibility across cloud environments, on-premises data centers and operating systems.
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This is what the analysts think about the company:

Datadog is a unique software asset in that it is one of the very few business models that is operating at the Rule of 94 in fiscal year 2021 through a combination of 70% revs growth and 24% FCF margins, well above the peer average at the Rule of 40. Based on the strength of its expanding product portfolio that addresses critical aspects of customers’ cloud migration, coupled with a solidly profitable business model that generates rising free-cash-flow margins alongside hyper-growth, Datadog is poised to grow into a preeminent infrastructure software business.

Goldman Sachs has a $250 price target. The consensus target on Datadog stock is $206.76, while Friday’s final print was $146.84 a share. Hitting the price objective would be a huge 70% gain.

Las Vegas Sands

With casinos open and thriving again, this is a great long-term play for growth investors. Las Vegas Sands Corp. (NYSE: LVS) develops, owns and operates integrated resorts in Asia and the United States. It owns and operates the Venetian Macao Resort Hotel, the Sands Cotai Central, the Parisian Macao, the Plaza Macao and Four Seasons Hotel Macao, Cotai Strip, and the Sands Macao in Macao, the People’s Republic of China, as well as Marina Bay Sands in Singapore.

The company also owns and operates the Venetian Resort Hotel Casino on the Las Vegas Strip and the Sands Expo and Convention Center in Las Vegas. Its integrated resorts feature accommodations, gaming, entertainment and retail malls, convention and exhibition facilities, celebrity chef restaurants and other amenities.

Goldman Sachs noted this about the recent sale of the Venetian Resort:

In February Las Vegas Sands closed on the $6.25 billion sale of the Venetian Resort in Las Vegas, selling the opco to affiliates of Apollo Global Management for $2.25 billion and the property to VICI (Buy) for $4 billion. With the transaction complete, the company’s geographic exposure (in terms of EBITDA) has shifted to be 100% Macau and Singapore, vs. 90% pre-pandemic. While the pace and exact timing of the recovery remains uncertain we believe Las Vegas Sands offers compelling upside, with 1) higher mass market exposure, 2) completed investments in Macau and Singapore through the pandemic that could drive share gains in a recovery (Plaza renovations/expansion and Londoner rebranding), and 3) optionality to invest further.

The $67 Goldman Sachs price compares with the $51.69 consensus target. The share price was last seen at $39.20, so hitting the target on Las Vegas Sands stock would be close to a 70% gain.

If you have ever changed the oil in your vehicle, this should be a familiar name. Valvoline Inc. (NYSE: VVV) manufactures, markets and supplies, engine and automotive maintenance products and services.
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The company offers lubricants for passenger cars and light-duty and heavy-duty vehicles; antifreeze/coolants for original equipment manufacturers; functional and maintenance chemicals, such as brake fluids and power steering fluids, as well as specialty coatings for automotive and industrial applications; and oil and air filters for light-duty vehicles. It also provides batteries, windshield wiper blades, light bulbs, serpentine belts and drain plugs.

In addition, the company operates Valvoline instant oil change service centers. As of September 30, 2021, it operated and franchised approximately 1,594 quick-lube locations under the Valvoline Instant Oil Change brand in the United States and the Great Canadian Oil Change brand in Canada. The company also serves car dealers, general repair shops and third-party quick lube locations, as well as through distributors and licensees.

Goldman Sachs is very positive on the shares:

Valvoline is pursuing plans to split into two businesses: a fast growing US retail services business and a global lubricant and chemical company. We see potential for meaningful value unlocking with the separation. The retail services business has a long runway for growth and we expect its high single-digit same-store-sales growth and high single-digit unit growth momentum to sustain for the foreseeable future. And in late 2022 and into 2023 its operating leverage should improve meaningfully as the margin drag from new stores begins to be neutralized by the benefits of the maturation of previously built stores.

Investors receive a 1.63% dividend. Goldman Sachs has set its target price at $56. The consensus target is lower at $43.86, and Valvoline stock ended last week at $31.35 a share. Matching the Goldman Sachs target would be over an 80% gain.

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These five top stocks across different sectors offer tremendous upside to the Goldman Sachs price objectives. While there is no guarantee they will get there, moving just halfway to the targets would be outsized gains for investors. Plus, all these top companies have very solid positioning in their respective business silos and look poised to continue to outperform.

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