BOSTON ( TheStreet) -- At the start of the year, the Goldman Sachs (GS) Conviction Buy List contained more than 50 stocks, which the bank expected to outperform. Since stocks have fallen to a five-week low, it's worthwhile to consider which Conviction Buys have led and which have lagged indices in 2011. Here's a look at the best- and worst-performing Conviction Buys.
2011 Conviction Buy Top Performers:
Viacom (VIA.B), +14%
Nasdaq (NDAQ), +14%
Lyondell (LYB), +14%
Juniper (JNPR), +15%
Cigna (CI), +17%
Teradyne (TER), +20%
Blackstone (BX), +22%
Alexion (ALXN), +22%
SuccessFactors (SFSF), +23%
Now here's a look at five of the worst-performing Conviction Buys, all still rated "buy", which offer significant upside based on Goldman's targets.5. Broadcom (BRCM) makes semiconductors for wired and wireless communications products, including consumer electronics and mobile devices. Its stock has fallen 8.7% in 2011. It is down 14% in the past three months. Fourth-quarter adjusted earnings more than quadrupled to 47 cents a share, but missed analysts' consensus estimate by 19%, sending shares down 5.6%. Quarterly revenue grew 45% to more than $1.9 billion, beating consensus by 2.5%. The gross margin fell from 55% to 52%, but the operating margin widened from 12% to 17%. Broadcom has $2.7 billion of cash and $697 million of debt, converting to a quick ratio of 2.7 and a debt-to-equity ratio of 0.1. Broadcom's stock trades at a forward earnings multiple of 13, a 12% discount to its semiconductor peer average. Its book value multiple of 3.6, sales multiple of 3.1 and cash flow multiple of 15 are near parity with industry averages. Of analysts covering Broadcom, 25, or 61%, advocate purchasing its stock, 12 recommend holding and four advise selling it. Jefferies has the highest target, at $60, implying 53% upside. Goldman expects a rise of 31% to $52. Deutsche Bank is the most bearish, rating Broadcom "hold" and forecasting that it will hover around $40 for 12 months.
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