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Goldman Cites Microsoft, Starbucks, Others for Profit Margins

Goldman Sachs published a list of 29 of its buy-rated stocks that are “unappreciated” for their growing profit margins.
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Coffee, computer chips and metals companies all figure in a list of 29 "underappreciated" stocks released by Goldman Sachs Friday.

Here’s Goldman’s commentary about some of the buy-rated stocks it says are not receiving their due.

· “Alcoa  (AA) : Significant leverage to a positive aluminum price outlook … should result in higher earnings and free cash flow generation allowing for deleveraging and capital allocation flexibility to pursue shareholder return.

· Advanced Micro Devices  (AMD) : Market share gains in client and server central processing segments augmented by gross margin expansion and operating expenditure leverage should drive positive revisions to near-and medium-term EPS.

· Microsoft  (MSFT) : Strong presence across all layers of the cloud stack amid a backdrop of accelerating digital transformation spending should drive foreseeable double-digit top line growth and margin expansion. Price increases announced recently should help offset potential margin headwinds. …

· Starbucks  (SBUX) : Tailwinds from the economic re-opening in the U.S. and abroad, along with the company’s significant scale, market share gains and operational efficiencies should drive strong multi-year earnings power. Management recently noted that cost of goods sold should not be a headwind in FY21/22 from coffee purchasing. …” 

Other names on the Goldman list include:

Applied Materials  (AMAT) , Charter Communications  (CHTR) , Chemours  (CC) , Cheniere Energy  (LNG) , ConocoPhillips  (COP) , Deere  (DE) , Diamondback Energy  (FANG) , EQT  (EQT) , Exxon Mobil  (XOM) , First Quantum Minerals FM.TO, Freeport-McMoRan  (FCX) , Hasbro  (HAS) , Herc Holdings  (HRI) ,

In addition, it called out Johnson Controls International  (JCI) ,  Ovintiv  (OVV) , PDC Energy  (PDCE) , Salesforce.com  (CRM) , Sherwin-Williams  (SHW) , Suncor Energy  (SU) , Trimble  (TRMB) , United Rentals  (URI) , Universal Display  (OLED) , Waste Connections  (WCN) , Wingstop  (WING) and Wyndham Hotels & Resorts  (WH) .

Salesforce.com, AMD and Microsoft are holdings in Jim Cramer's Action Alerts PLUS member club