When every rally attempt fails, like the two we have seen this week, market veterans know that it is likely that the path of least resistance for the stock market is lower, at least in the meantime. The negative gross domestic product reading for the first quarter (the first such print since the second quarter of 2020), and the fact that a lousy second-quarter GDP number (due out this week) is a given, is a very 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, and many investors have grown 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 now. While there could still be downside, to as low as 3,400 on the S&P 500 and perhaps farther, the time to buy is when there is the proverbial blood in the street, which may not be all that far off.

While all the following stocks are Buy rated, and among 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.

Alcoa

This company could be a solid play for more conservative investors looking to the mining sector. Alcoa Corp. (NYSE: AA) produces and sells bauxite, alumina and aluminum products. The company offers aluminum sheets for the production of cans for beverage and food.

Alcoa also engages in the aluminum smelting, casting and rolling businesses, as well as generation and sale of renewable energy and provision of ancillary services. The company was known as Alcoa Upstream until it changed its name to Alcoa in October 2016.

Goldman Sachs noted this about the company:

Our positive outlook on Alcoa is predicated on the following four points. (1) The company has significant leverage to a positive commodity price outlook, where we estimate every 10% increase in aluminum prices corresponds to a ~20% increase in EBITDA. (2) Alcoa has been successful in its deleveraging strategy, which we expect to free up balance sheet capacity for capital returns. (3) Alcoa screens favorably relative to the global industry, given the company’s lower carbon footprint and green growth initiatives. (4) Recent underperformance from May 2021 highs and a continued underappreciation of the company’s progress in repositioning itself has led to the shares trading at a discount, in our view, creating an even more attractive entry point for investors seeking aluminum exposure.

Shareholders receive just a 0.51% dividend. The Goldman Sachs price target on Alcoa stock is $104, while the consensus target is lower at $85.67. The shares closed Tuesday at $49.25, so hitting the analyst’s target would be a huge 109% gain.

This Wall Street favorite is a solid biopharma play. BioMarin Pharmaceuticals Inc. (NASDAQ: BMRN) 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.

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.

Goldman Sachs has a price target of $176, and the consensus target on BioMarin Pharmaceuticals stock is $112.61. Tuesday’s closing print was $83.15, so hitting the target would be a huge gain in excess of 106%.

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.
Boeing’s 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.

The $288 Goldman Sachs target price would be a 52-week high. Boeing stock closed on Tuesday at $138.70, suggesting that here to the upside potential is over 100%.

Datadog

This is a name that 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.

This is why the analysts are so positive:

We believe that Datadog is a strategic infrastructure software provider with its end-to-end observability platform poised to benefit from IT departments shifting usage from multiple point solutions into an integrated suite. Datadog’s product-led and grass-roots GTM engine coupled with a best-in-class technology stack is resonating increasingly well with customers. Furthermore, with its upmarket motion gaining traction, we believe the company is ahead of many years of durable revenue growth. 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 FY21 through a combination of 70% revs growth and 24% free-cash-flow 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 FCF margins alongside hyper-growth, Datadog is poised to grow into a preeminent infrastructure software business.

The price target on Datadog stock at Goldman Sachs is $223, much higher than the consensus target of $156.59. Tuesday’s closed at $97.32 was down close to 8% for the day, so hitting the price objective would be a 120% gain.

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.

Here is why Goldman Sachs is so positive:

We view Qualtrics as a market leader in Customer Experience, a segment of the customer relationship management (CRM) TAM that is growing in importance as customers leverage new pools of interactions data to optimize their own unit economics. We expect Qualtrics to benefit from net new budget as well as consolidation of spend from a long tail of fragmented vendors as a function of its technology breadth and depth, with key differentiators being its ability to process unstructured data and its integration with other action-oriented workflow tools. Lastly, we expect to see an inflection in FCF over the next 3 years as Qualtrics realizes productivity improvements from its 2018-2021 investment cycle into large enterprise and international.

The Goldman Sachs price objective is $40. The $36.53 consensus target is also well above Tuesday’s close at $12.92. The target would make Qualtrics stock a 165% upside winner.

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These stocks are presented with the strong caveat yet again that the selling may not be over. However, with that in mind, starting to add partial positions over the next few months, then filling out full positions when there is a complete and final washout, makes sense. Plus, two of the companies are solid ideas for more conservative growth investors who may want to take a swing but would rather stay with well-known blue-chip sector leaders.

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