Goldman Sachs Recommends These 14 Conviction Buy Stocks for the Rest of 2016
Goldman Sachs expects "rising uncertainty" to affect the markets in the second half of 2016. The investment firm expects the S&P 500 to be "range-bound" for the remainder of 2016, with the index closing out the year at 2100.
"The fallout from Brexit is just one of several headwinds to US equity returns in the next few months," Goldman analyst David Kostin wrote in the July 5 note. "Other risks include the upcoming US presidential election, unstable growth and policy in China, and a deceleration in corporate buybacks, which represent the largest source of demand for US equities."
Goldman Sachs says investors should be overweight the following defensive sectors: consumer discretionary, which is leveraged to the U.S consumer, the largest and healthiest component of the U.S. economy; health care, which combines defensive characteristics with prospects for strong earnings growth and margin expansion; and telecom services, which offers high dividend yield, low valuations and a defensive profile that is appealing in a sluggish growth environment.
Goldman Sachs is underweight energy and materials sectors as well as industrials. The firm is neutral on information technology, consumer staples, financial services and utilities and real estate.
Goldman warns, though, to balance those defensive sector stocks with "reasonable valuations and prospects for EPS growth," the note said.
Within the consumer, health care and telecom sectors, here are the 14 S&P 500 stocks that Goldman Sachs rates buy and includes on its Americas Conviction List.
Sector: Consumer Goods & Services/Internet Retail
Dividend Yield: n/a
Goldman Sachs has a price target of $790 on Amazon
.
Amazon is expected to report second-quarter financial results later this month. Analysts forecast the online retailing giant to post a profit of $1.10 a share on revenue of $29.5 billion, an increase of 27% year over year, according to Thomson Reuters.
Sector: Consumer Goods & Services/General Merchandise Retail
Dividend Yield: n/a
Goldman Sachs has a price target of $107 on Dollar Tree
.
Dollar Tree is expected to report fiscal second-quarter financial results in late August to early September. Analysts forecast the discount retail chain to post a profit of 73 cents a share on revenue of $5.08 billion, an increase of 69% year over year according to Thomson Reuters.
Sector: Consumer Goods & Services/Home Improvement Retail
Dividend Yield: 1.76%
Goldman Sachs has a price target of $93 on Lowe's
.
Lowe's is expected to report fiscal second-quarter financial results on Aug. 17. Analysts forecast the home improvement chain to post a profit of $1.41 a share on revenue of $18.27 billion, an increase of 5% year over year, according to Thomson Reuters.
Sector: Consumer Durables/Home Furnishings
Dividend Yield: n/a
Goldman Sachs has a price target of $240 on Mohawk Industries
.
Mohawk Industries is expected to report second-quarter financial results in early August. Analysts forecast the flooring manufacturer to post a profit of $3.36 a share on revenue of $23.4 billion, an increase of 15% year over year, according to Thomson Reuters.
Sector: Consumer Good & Services/Movies & Entertainment
Dividend Yield: 2.17%
Goldman Sachs has a price target of $86 on Time Warner
.
Time Warner is expected to report second-quarter financial results on Aug. 3. Analysts forecast that the media and entertainment company will post a profit of $1.17 a share on revenue of $7.1 billion, a decrease of 3% year over year, according to Thomson Reuters.
Sector: Health Care/Life Sciences Tools & Services
Dividend Yield: 1.03%
Goldman Sachs has a price target of $50 on Agilent Technologies
.
Agilent Technologies is expected to report second-quarter financial results in mid-August. Analysts forecast the medical technology and diagnostics company to post a profit of 47 cents a share on revenue of $10.4 billion, an increase of 3% year over year, according to Thomson Reuters.
Sector: Health Care/Pharmaceuticals
Dividend Yield: 0.10%
Goldman Sachs has a price target of $275 on Allergan
.
Allergan is expected to report second-quarter financial results in early-August. Analysts forecast the pharmaceuticals company to post a profit of $3.37 a share on revenue of $4.11 billion, a decrease of 28% year over year, according to Thomson Reuters.
Allergan is a holding in Jim Cramer's Action Alerts PLUS charitable trust portfolio. "Allergan is all about getting those billions from Teva for its generic drug group which should be available sometime this quarter," Cramer told TheStreet.
The stock is "very inexpensive," Cramer added, despite "dramatically higher growth rates."
It is a stock that "must be bought," he said.
Sector: Health Care/Biotech
Dividend Yield: 2.59%
Goldman Sachs has a price target of $202 on Amgen
.
Amgen is expected to report second-quarter financial results at the end of July. Analysts forecast the biotech company to post a profit of $2.74 a share on revenue of $5.57 billion, an increase of 4% year over year, according to Thomson Reuters.
Sector: Health Care/Health Care Equipment
Dividend Yield: 1.14%
Goldman Sachs has a price target of $52 on Baxter International
.
Baxter is expected to report second-quarter financial results on July 26. Analysts forecast the company to post a profit of 39 cents a share on revenue of $2.51 billion, a decrease of 35% year over year, according to Thomson Reuters.
Sector: Health Care/Pharmaceuticals
Dividend Yield: 2.06%
Goldman Sachs has a price target of $90 on Bristol-Myers Squibb
.
Bristol-Myers Squibb is expected to report second-quarter financial results on July 28. Analysts forecast the company to post a profit of 66 cents a share on revenue of $4.6 billion, an increase of 11% year over year, according to Thomson Reuters.
Sector: Health Care/Healthcare services and products
Dividend Yield: 2.29%
Goldman Sachs has a price target of $92 on Cardinal Health
.
Cardinal Health is expected to report fiscal fourth-quarter financial results on Aug. 2. Analysts forecast the health care services company to post a profit of $1.13 a share on revenue of $31.06 billion, an increase of 13% year over year, according to Thomson Reuters.
Sector: Health Care/Health Care Equipment
Dividend Yield: 1.98%
Goldman Sachs has a price target of $96 on Medtronic
.
Medtronic is expected to report fiscal first-quarter financial results on Aug. 25. Analysts forecast the medtech company to post a profit of $1.02 a share on revenue of $7.19 billion, a decrease of 1% year over year, according to Thomson Reuters.
Sector: Health Care/Life Sciences Tools & Services
Dividend Yield: 0.40%
Goldman Sachs has a price target of $165 on Thermo Fisher Scientific
.
Thermo Fisher is expected to report second-quarter financial results on July 28. Analysts forecast the company to post a profit of $2.01 a share on revenue of $4.49 billion, an increase of 5% year over year, according to Thomson Reuters.
Thermo Fisher Scientific is a holding in Jim Cramer's Action Alerts PLUS charitable trust portfolio.
"TMO is the cheapest of the various life science companies and is busy acquiring to grow," Cramer told TheStreet. The stock is "very inexpensive," despite "dramatically higher growth rates."
The stock should be bought, he said.
Sector: Telecommunications
Dividend Yield: n/a
Goldman Sachs has a price target of $66 on Level 3 Communications
.
Level 3 is expected to report second-quarter financial results on July 27. Analysts forecast the company to post a profit of 45 cents a share on revenue of $2.08 billion, less than 1% higher year over year, according to Bloomberg.