Summer is turning into fall, and winter isn’t coming back, with the holidays and the New Year—and already, investors are thinking about finding the best stocks to shape their portfolios for 2024. Meanwhile, Goldman Sachs analysts are busy making their ‘top picks’ for the coming year.
Goldman Sachs’ top picks give investors a valuable pointer to strong stock picks, but they aren’t the only ones. The other comes from Smart pointAn AI-driven, algorithm-based data collection and aggregation tool that performs the task of collecting, sorting and analyzing raw data generated in the markets. Each stock is assigned a score, a simple one-digit score that shows how the stock measures up against 8 factors known to predict future returns. A ‘perfect 10’ from SmartPoint indicates a stock worth watching closely.
These ‘Perfect 10′ Smart Score stocks align with Goldman Sachs’ top picks, creating a compelling signal that the average investor can’t ignore.
With that in mind, let’s take a look at some of those tickers – those that earned a spot on Goldman Sachs’ Top Picks list and nailed a ‘perfect 10’ on the SmartScore.
Philip Morris International (PM)
We start with the famous ‘stock of sin’, the tobacco company Philip Morris International. Philip Morris has been a leader in the industry for a long time and has its main asset – the full rights to manufacture and market the Marlborough brand, one of the world’s largest cigarette brands, in international markets. The company owns the Next, Chesterfield, L&M and the well-known Philip Morris brands. PM is present in more than 175 markets worldwide, and boasts first or second-tier market share in most of them.
The tobacco industry was valued at more than $867 billion last year and, despite social pressures, is expected to grow to $1.05 trillion by the end of this decade – so Philip Morris’s market-leading positions are no small potatoes. The company is working hard to maintain its position and adapt to social trends, moving into new products. The Prime Minister has invested more than $10.5 billion over the past several years to develop and promote smokeless tobacco products. This is an expanding market for Philip Morris, which sees non-nicotine products accounting for 29.1% of its total revenue by 2021 and 32.1% by 2022.
The company’s efforts – in smokeless and ‘traditional’ product lines – have paid off. Philip Morris realized net income of $9 billion in 2Q23, up 14.5% year-over-year and beating forecasts by $259.5 million. On the bottom line, PM reported adjusted diluted EPS of $1.60, representing a gain of nearly 17% y/y and 12 cents ahead of estimates.
With all that in mind, Goldman took a bullish view of Philip Morris. The firm’s consumer product analyst Bonnie Herzog sees the company’s smokeless and traditional cigarette product lines as strong assets and writes of the stock: “We see strong iQOS integration results for the stock this year. A cash-generating combustible cig portfolio and promising investments beyond nicotine… We believe PM’s revenue visibility and momentum will remain strong throughout the year, particularly with broader and more aggressive ILUMA rollout, an accelerated RRP (reduced risk product) innovation pipeline, and the iQOS/accelerated User acquisition has entered low-income markets Further price segmentation… PM is one of our top picks.
Herzog maintains a buy rating on the stock with a $122 price target, indicating potential upside of 27.5% in the coming months. (For a look at Herzog’s record, Click here)
Philip Morris stock maintains a consensus rating of Strong Buy from Street analysts, and is a consensus based on 7 recent positive ratings. The shares are trading at $95.68, and their average price target of $116.71 represents a one-year upside of 22%. (look out PM stock forecast)
PepsiCo, Inc. (PEP)
Next is another well-known name in consumer products, PepsiCo, the famous cola challenger Coke. In addition to the Pepsi line of beverages, the company’s brands total more than 500 including Doritos, Gatorade, SodaStream and Cheetos.
PepsiCo has a global footprint with strong markets in Latin America, Europe, the Asia-Pacific region, and North Africa and the Middle East. The company has a long and successful track record of adapting product lines to suit local preferences — just ask Canadians about their Le Dill Coke flavored potato chips — and from its New York state headquarters, the company oversees a food and beverage territory worth more than $86 billion. Last year’s total revenue.
Recently, PepsiCo beat quarterly forecasts in its 2Q23 report. The company’s total revenue was up about 10.4% to $22.3 billion and was $590 million better than expected. PepsiCo’s earnings, non-GAAP core EPS of $2.09, were 13 cents better than estimates.
Better yet, looking ahead, for the second time this year, the company has raised both its top- and bottom-line guidance for 2023, expecting 10% revenue growth (compared to 7%) and 12% core constant currency EPS growth (comparatively). to the previous 9%).
It’s a strong foundation for a consumer staple stalwart, and PepsiCo’s overall strong position is what attracts Goldman Herzog. A consumer goods expert wrote about the company, “We continue to believe that PEP is one of the companies in the global food and beverage landscape poised for significant growth over the next decade, based on our in-depth global category growth analysis.” Better exposure to demand in the sector and more moderate growth (compared to previous decades) in emerging and emerging markets as inflation-driven inflation fades. As a result, we believe PEP is poised to drive sustained long-term upside growth at a higher rate, possibly underpinning the company’s long-term algo – which should bode well for investors. PEP remains one of our top picks.
Based on her sanguine outlook at PEP, Herzog gives the stock a buy rating with a price target of $212, with potential for a 21% return over the one-year timeframe.
13 recent analyst reviews on PEP shares split 9 to 4 from Buy to Hold, with a consensus rating of Buy for a median. The stock has an average price target of $204.50, indicating a 17% upside potential from the $175.32 share price. (look out PepsiCo stock forecast)
Warner Bros. Discovery (WBD)
In conclusion, Warner Bros., a major name in the world entertainment industry. We watch Discovery. The company is the modern incarnation of the historic Warner Bros. company, and counts the brand’s library of popular films among its assets. WBD entered its current incarnation in April 2022, when TimeWarner acquired Discovery, Inc. Combined, the company brought in $33.8 billion in revenue last year and has a market capitalization of more than $28 billion.
All this is built on the sound platform of entertainment assets. In addition to Warner Bros. cartoons and movies, WBD can also claim ownership of DC Studios. DC Entertainment, the publisher of DC Comics; HBO and CNN; And the cable channels brought together through the Discovery Channel. The company’s offerings include something for every viewer, from sports and news to food and cooking to superhero movies and games. The entertainment portfolio is broad and diverse, and WBD offers a leading position as a global media distributor.
Looking at the results, Warner Bros. We find that Discovery had 2Q23 revenues of $10.36 billion. That’s up 5.4% year over year, missing expectations by $80 million. The company’s bottom line GAAP EPS was reported as a loss of 51 cents per share. This was a significant improvement from the $1.50 EPS loss reported in the prior-year quarter, but was still 10 cents deeper than forecast. Positively, free cash flow (FCF) .ff) was expected to be less than $1 billion, but came in at $1.7 billion by a margin.
That strong measure partly informs Goldman analyst Brett Feldman’s bullish thesis that, even if earnings miss in Q2, they see a lot to like here. Feldman wrote, “WBD’s strong 2Q23 report supports our view of material EBITDA growth, strong FCF generation, and rapid recovery through the remainder of 2023 and into 2024, driven by trends ahead of plan and improved go-to-market performance. Therefore, WBD remains our best in media.
For Feldman, this adds a buy rating on the stock, and his $20 price target has 73% upside potential over the next 12 months. (For a look at Feldman’s track record, Click here)
Overall, this stock has a consensus rating of Medium Buy, including 10 recent analyst ratings, 7 Buys and 3 Holds. The current trading price of $11.56 and the average price target of $20.88 combine to predict a one-year gain of 80.5%. (look out WBD stock forecast)
Visit TipRanks for great tips on trading at great prices Best stocks to buyA tool that unifies all TipRanks equity insights.
Disclaimer: The opinions expressed in this article are those of the featured analysts only. The content is intended for informational purposes only. It is very important to do your own analysis before making any investment.
