In an ever-changing financial environment, analysts play a critical role in guiding investors toward potential opportunities. However, the predictions of these analysts often differ significantly from the majority opinions circulating on Wall Street. Goldman Sachs, a titan in investment banking and financial services, has recently highlighted stocks that may offer lucrative returns, even as the broader market experiences volatility. This article delves into Goldman Sachs’ distinctive perspective on select underdog stocks, examining the firm’s rationale, projections, and the unique qualities that make these stocks worth considering.
Goldman Sachs has recently conducted a thorough analysis of stocks within its coverage universe, focusing on those that are currently rated as “buy.” Notably, these selections diverge from the consensus view, where many analysts maintain a neutral or sell rating. By identifying stocks that possess the potential to outperform the broader market, Goldman encourages investors to consider a contrarian approach, especially in light of the recent market stasis observed in early October trading.
Alluded to in a note by analyst Deep Mehta, the firm identified stocks that exhibit strong earnings potential, estimating that their earnings per share (EPS) for 2025 will be at least 2% higher than the consensus. These stocks are painted as potential havens for savvy investors willing to embrace a less popular opinion. Notably, these selections are characterized by an expected price appreciation of at least 10% relative to Goldman’s price targets, further emphasizing their attractiveness in uncertain times.
One such stock that has caught Goldman’s attention is Tripadvisor, a well-known online travel agency. Despite a dismal year where the stock price has plummeted nearly 32%, only about 20% of Wall Street analysts currently recommend buying its shares. The firm Cantor Fitzgerald has especially been wary, recently initiating an underweight rating, signaling a lack of confidence in Tripadvisor’s core hotel business.
Despite these challenges, Goldman believes Tripadvisor is on an innovative path, introducing new experiences and products that may attract consumers. However, it faces substantial headwinds that have spurred skepticism among analysts and investors alike. Notably, a precipitous drop in stock value occurred after the company dismissed prospects for a sale, sparking doubts about strategic direction and value creation. This skepticism may provide an opportunity for contrarian investors to reposition themselves ahead of any potential recovery.
Shake Shack: Emerging Growth Potential
Another significant player under Goldman Sachs’ radar is Shake Shack, a popular fast-casual dining chain. Analysts project that Shake Shack’s earnings before interest, taxes, depreciation, and amortization (EBITDA) for 2025 will exceed broader consensus estimates by 5%. Goldman’s Christine Cho is in favor of this stock, suggesting it holds promise not just for growth but also for an expanding market presence.
The stock has seen a remarkable 48% surge so far this year, indicative of its rising popularity and investor confidence. Shake Shack’s capacity for growth is bolstered by its ability to cater to dining trends—especially with its products appealing to a demographic less affected by economic fluctuations. This aspect positions the company favorably against its peers, enhancing guest frequency and brand loyalty even amidst shifting consumer spending patterns.
In the realm of packaged foods, Conagra Brands is another name Goldman Sachs is getting behind. Recently added to the firm’s conviction list, Conagra’s portfolio of frozen foods and snacks aligns well with prevailing consumer preferences, which lean towards convenience and comfort. Although the company witnessed a dip in stock price after earnings fell significantly short of expectations, it maintained its positive fiscal guidance for 2025.
The resilience exhibited by Conagra amidst challenging quarters is noteworthy, suggesting that it has potential for recovery and growth as consumers continue to embrace its product offerings. This perceived durability could make it a worthwhile consideration for investors seeking stability in turbulent market conditions.
The stock recommendations from Goldman Sachs underscore the importance of looking beyond mainstream consensus, particularly during volatile market periods. The firm’s insights into under-recognized stocks—such as Tripadvisor, Shake Shack, and Conagra Brands—highlight the potential rewards awaiting contrarian investors who are willing to tread paths less traveled. By focusing on the long-term earnings potential and unique circumstances surrounding these investments, Goldman Sachs paves the way for savvy investors to seek alpha and harness growth in an uncertain economic landscape.