When every rally attempt fails, market veterans know that it is likely that the path of least resistance for the stock market is lower, at least for the meantime. The recent preliminary reading of negative gross domestic product for the first quarter (the first such print since the second quarter of 2020) is a good sign that things could get worse before they get better.
The highest inflation in 41 years, the ongoing war between Russia and Ukraine, supply-chain issues and a host of additional woes continue to pressure the equity markets. Many investors are getting nervous, especially with the Nasdaq already dipping in and out of bear market status.
We decided to screen the Goldman Sachs Conviction List looking for ideas that aggressive investors with longer time horizons and a higher risk tolerance may want to consider. While there could still be downside to as low as 3,700 on the S&P 500, perhaps farther, the time to buy is when there is the proverbial blood in the street. That may not be far off.
While all five of the following stocks are Buy rated and are the top picks at Goldman Sachs, it is 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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BioMarin Pharmaceuticals
This Wall Street favorite is a solid bio-pharma play. BioMarin Pharmaceuticals Inc. (NASDAQ: BMRN | BMRN Price Prediction) develops and commercializes innovative biopharmaceuticals for serious diseases and medical conditions.
The company’s commercial products include the following:
- Vimizim is an enzyme replacement therapy for the treatment of mucopolysaccharidosis (MPS) IV type A, a lysosomal storage disorder.
- Naglazyme is a recombinant form of N-acetylgalactosamine 4-sulfatase for patients with MPS VI.
- Kuvan is a proprietary synthetic oral form of 6R-BH4 that is used to treat patients with phenylketonuria (PKU), an inherited metabolic disease.
- Palynziq is a PEGylated recombinant phenylalanine ammonia lyase enzyme that is delivered through subcutaneous injection to reduce blood Phe concentrations.
- Brineura is a recombinant human tripeptidyl peptidase 1 for the treatment of patients with ceroid lipofuscinosis type 2, a form of Batten disease.
- Voxzogo is a once daily injection analog of c-type natriuretic peptide for the treatment of achondroplasia.
- Aldurazyme is a purified protein designed to be identical to a naturally occurring form of the human enzyme alpha-L-iduronidase.
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In addition, the company develops valoctocogene roxaparvovec, an adeno-associated virus vector, which is in Phase 3 clinical trial for the treatment of patients with severe hemophilia A. BMN 307 is an AAV5 mediated gene therapy that is in Phase 1/2 clinical trial to normalize blood Phe concentration levels in patients with PKU, and BMN 255 is in Phase 1/2 clinical trial for treating primary hyperoxaluria.
The Goldman Sachs price target of $169 compares with a lower $116.39 consensus target for BioMarin Pharmaceuticals stock and Thursday’s closing print of $76.38. Hitting the Goldman Sachs target would be a 112% gain.
Boeing
Investors looking for a blue-chip aerospace and defense idea can jump on this top stock. Boeing Co. (NYSE: BA) designs, develops, manufactures, sells, services and supports commercial jetliners, military aircraft, satellites and missile defense, human space flight and launch systems worldwide.
Its Commercial Airplanes segment provides commercial jet aircraft for passenger and cargo requirements, as well as fleet support services.
The Defense, Space & Security segment engages in the research, development, production and modification of manned and unmanned military aircraft and weapons systems; strategic defense and intelligence systems, which include strategic missile and defense systems, command, control, communications, computers, intelligence, surveillance and reconnaissance, cyber and information solutions and intelligence systems; and satellite systems, such as government and commercial satellites and space exploration.
The Global Services segment offers products and services, including supply chain and logistics management, engineering, maintenance and modifications, upgrades and conversions, spare parts, pilot and maintenance training systems and services, technical and maintenance documents, and data analytics and digital services to commercial and defense customers.
The Boeing Capital segment offers financing services and manages financing exposure for a portfolio of equipment under operating leases, sales-type/finance leases, notes and other receivables, assets held for sale or re-lease, and investments.
Goldman Sachs has a $288 target price on Boeing stock, while the consensus target is around $228. The shares closed Thursday at $123.14, so hitting the Goldman Sachs target would be a 120% gain.
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Datadog
This is a name investors may not be as familiar with, but it 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 announced last year 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.
The Goldman Sachs price target on Datadog stock is $223. That compares with a $171.72 consensus estimate and Thursday’s final print of $98.83. Hitting the Goldman Sachs price objective would be a 126% gain.
Qualtrics
This more off-the-radar idea has the biggest upside potential of all the Conviction List stocks. Qualtrics, International Inc. (NYSE: XM) operates an experience management platform to manage customer, employee, product and brand experiences worldwide. It was founded in 2002 and is headquartered in Provo, Utah. Qualtrics is a subsidiary of SAP America.
The company offers the Qualtrics Experience Management Platform, a system of action that guides users with specific instructions for improvement and automated actions to improve experiences, as well as for listening, understanding and taking action on both structured and unstructured data.
Qualtrics also provides professional services that primarily consist of research services, through its DesignXM, which allows customers to gain market intelligence, as well as implementations, configurations and integration and engineering services to help customers deploy its XM Platform.
The $40 Goldman Sachs price target and the $36.53 consensus target are well above Thursday’s closing share price of $14.91. Qualtrics stock hitting the Goldman Sachs target would make it a 156% winner.
Salesforce
This top stock is another solid idea for those leaning toward software and technology. Salesforce Inc. (NYSE: CRM) provides customer relationship management technology that brings companies and customers together worldwide. Its Customer 360 platform empowers its customers to work together to deliver connected experiences for their customers.
The company’s service offerings include:
- Sales, to store data, monitor leads and progress, forecast opportunities, gain insights through analytics and relationship intelligence and deliver quotes, contracts and invoices
- Service, which enables companies to deliver trusted and highly personalized customer service and support at scale.
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Its Service offerings also comprise flexible platform that enables companies of various sizes, locations and industries to build business apps to bring them closer to their customers with drag-and-drop tools; online learning platform that allows anyone to learn in-demand Salesforce skills; and Slack, a system of engagement. Further Service offerings include:
- Marketing, which enables companies to plan, personalize and optimize one-to-one customer marketing journeys
- Commerce, which empowers brands to unify the customer experience across mobile, web, social and store commerce points
- Tableau, an end-to-end analytics solution serving various enterprise use cases
- MuleSoft, an integration offering that allows its customers to unlock data across their enterprise
Salesforce provides its Service offerings for customers in financial services, health care and life sciences, manufacturing and other industries. It also offers professional services, as well as in-person and online courses to certify its customers and partners on architecting, administering, deploying and developing its service offerings. The company provides its services through direct sales and via consulting firms, systems integrators and other partners.
Goldman Sachs has set a $340 price target. The consensus target is lower at $289.68. Salesforce stock closed at $160.42 on Thursday, so hitting the Goldman Sachs price target would be a 105% gain.
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All five of these stocks are presented with the strong caveat, yet again, that the selling may not be over. With that firmly in mind, nibbling and starting to add partial positions over the next few months makes sense, then filling out full positions when there is a complete and final washout.
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