Goldman Sachs' 9 Best Stocks for 2012

(Adds that Goldman's outlook was cut by S&P.)

BOSTON ( TheStreet) -- Goldman Sachs ( GS) analysts have nine technology stocks on their short list for now, with six-month price targets that are as high as 61%.

The Wall Street investment bank regularly updates its "conviction buy" list and the technology recommendations include some of the most commonly held technology stocks, including personal-computing bellwether Apple ( AAPL), and business-technology giants Oracle ( ORCL) and EMC ( EMC), as well as some smaller unknowns such as Synchronoss Technologies ( SNCR).

Technology stocks have been battered this year, losing 4.4% of their value in a volatile ride, but in the quarter to date, they are up 2.3%.

The gist of it is, if the economy gets rolling, so will technology stocks, but for now, Goldman Sachs is saying this is the best of the bunch. Goldman's main rival, Morgan Stanley ( MS), most recently has favored stocks with a defensive bent. The firm said earlier this month that its model portfolio of 48 stocks is overweight in utilities, health care and consumer staples, and is underweight in consumer discretionary and industrials, both of which have underperformed this year.

Goldman Sachs itself, along with its competitors, had long-term credit grades cut today by Standard & Poor's, hurt by Europe's debt crisis and a tweaking of rating criteria.

On the following pages are Goldman Sachs' nine stock picks in the technology sector:

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Aeroflex Holding ( ARX) gets a $14 price target from Goldman, a 61% premium to its current price.

The company makes sophisticated components used in wireless-communications systems. It's a volatile stock, losing 47% this year and 40% over the past 12 months.

But Goldman analysts say part of its potential is as a takeover target. "We maintain our (conviction list-buy) rating as we expect strong growth in 4G wireless to drive results for Aeroflex's test division and make the company an even more attractive (merger and acquisitions) target."

The analysts add that "management noted that several companies are considering Aeroflex as an merger and acquisitions candidate, and we expect interest to increase next year."


Apple ( AAPL), one of the most widely held stocks in the world and maker of the iPad and iPhone, gets a $520 price target from Goldman's analysts, which means a 38% appreciation potential. Despite this stock's great run, up an average of 43% per year over the past 10 years, Goldman analysts still see great value.

The firm's analysts write in a recent research note that "we still expect the company to deliver solid December-quarter results, boosted by iPhone sales momentum."

They say the company had "a tough miss" in its fiscal quarter ending in September, falling short of analysts' estimates "but (we) expect a sharp holiday snapback. "

"Revenues of $28 billion and (earnings) of $7.05 (per share) were below our estimates of $29 billion and $7.30 and consensus of $30 billion and $7.38," said the Goldman research note. "This was an uncommon earnings miss for Apple, which has not missed consensus earnings in years."

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EMC ( EMC) is given a $29 price target, a 29% premium, by Goldman analysts. The company is known as a data-hardware and software server specialist but its greatest opportunity may be seen in the growth of cloud computing or the use of over-the-Internet data storage.

The company has an impressive growth record. From 2006 through 2010, EMC's revenue increased at a compound annual growth rate of 11%.

EMC's shares have a five-year average annual return of 10.8%.


NCR ( NCR) gets a $22 price target from Goldman analysts, a 30% premium. NCR shares are up 5.8% this year and 10.5% over the past 12 months, giving it a market value of $2.6 billion.

The company is the largest global vendor of automated teller machines and point-of-sale terminals, as well as self-service check-out systems for retail stores, and self-check-in kiosks for airlines and hotels.

In conjunction with the release of third-quarter earnings, the company raised its 2011 earnings forecast to $1.79 to $1.83 a share, up from $1.73 to $1.80 a share.

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Oracle ( ORCL) gets a $39 price target, a 31% premium to its current share price. The company is a leading supplier of enterprise database management systems and business applications. It took a giant step forward into hardware with the 2010 acquisition of Sun Microsystems.

Oracle's shares are down 7.5% this year, but the company has a three-year average annual return of 22%. Its shares have a market value of $150 billion.


Qualcomm ( QCOM) earns a $65 price target, or a 19% premium, from Goldman analysts. They're currently trading at $53.76. The company develops and licenses wireless technology and manufactures semiconductors for mobile phones and has several key patents in the area.

Its shares are up 6.5% this year and have an average annual return of 18% over three years.

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Synchronoss Technologies ( SNCR) gets a $37 price target, a 29% premium, from Goldman analysts.

Synchronoss provides transaction-management services to communications-service providers. Its ConvergenceNow platform is used by most large U.S. wireless, wireline, cable and Voice over Internet Protocol providers to capture, manage, provision and bill orders and other transactions. In the third quarter, the company reported a 67% surge in earnings for the third quarter to 9 cents a share.

Synchronoss shares are up 2.2% this year and have a three-year average annual return of 61%.


Visa ( V) gets a $110 price target from Goldman analysts, a 21% premium to its current price.

Visa, a well-known brand name, manages a group of global payment card brands, which it licenses to financial institutions that issue cards to their customers. The firm acts as the payment processor by facilitating the authorization, clearing and settlement of transactions.

Visa shares are up 27% this year and have an average annual return of 22% over the past three years.

Warren Buffett's Berkshire Hathaway ( BRK.B) made a notable investment in the company in the third quarter.

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VMWare ( VMW) has a $125 price target from Goldman, a 40% premium to its current price.

The company is the largest global vendor of virtualization software for server operating systems. Over 80% of the company is owned by storage technology firm EMC, which is also on Goldman's current "buy" list. In the third quarter, VMWare reported that revenue jumped 32%, while net income doubled to $178 million, or 41 cents per share.

VMWare's shares have appreciated a mere 0.5% this year, but over the past three years, they have an average annual return of a whopping 67%. The company has a $40 billion market valuation.

>>To see these stocks in action, visit the 9 Top Goldman Sachs Stocks for 2012 portfolio on Stockpickr.
Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.

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