1. Precision Castparts ( PCP) makes metal castings, forged products and fasteners with aerospace, satellite, automotive and energy uses.

The stock commands a trailing earnings multiple of 22 and a forward earnings multiple of 17, notable premiums to peer averages. But, Goldman gets "the sense that the stock has fallen somewhat out of favor." Precision's fiscal third-quarter adjusted earnings, announced Jan. 27, expanded 12% to $1.80, matching Goldman's estimate and the consensus. Sales, up 16% year-over-year, beat researchers' consensus estimate by 3.2%.

Goldman, consistent with its other picks, sees Precision as an ideal late-cycle play, predicting 20% revenue growth over the next three to five years. Goldman believes that Precision possesses "best-in-class management, returns on capital and cash generation, and a balance sheet already in a net cash position." It expects its stock to rise 22% to $180 in 12 months.

-- Written by Jake Lynch in Boston.


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Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

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