Goldman Sachs analysts have increased conviction in these 5 stocks
Investors looking for value heading into the holiday season should look no further than the following stocks, Goldman Sachs says. CNBC Pro combed through Wall Street research to find stocks that Goldman says are 'consistently delivering.' They include: Warner Brothers Discovery , Trex, TransDigm , Ross Stores and Willis Towers Watson. TransDigm Group The aerospace manufacturer is firing on all cylinders, according to Goldman analyst Noah Poponak. Shares are up a whopping 52% this year, but the firm still sees more room for the stock to run especially after its robust earnings report earlier this month. The company beat on both the top and bottom lines in the fiscal fourth quarter. TransDigm continues to display consistent cash flow, capital deployment and margin upside, Poponak added. The analyst also called TransDigm a "core holding," adding that with patience, long-term investors stand to be rewarded. Following the quarterly report, the firm lifted its price target on the stock to $1,128 per share from $1,059. "This remains arguably the best business model we cover, still early in an aerospace recovery, consistently delivering upside to profit margins, and incrementally deploying more capital," he said emphatically. Willis Towers Watson The transformation is on for the global advisory and client solutions firm, analyst Robert Cox said in a recent note to clients. "The company is heading into its seasonally strong revenue and free cash flow quarter just as we have seen the most tangible evidence that turnaround initiatives are taking hold," he said. In addition, Willis reported a strong top and bottom line beat for its third quarter in late October. But investors still seem skittish, according to Cox, who says there's still plenty of room for upside. "It is our sense that skepticism remains, however, which could serve as a near-term catalyst for the stock should our 4Q expectations be realized," he wrote. Shares of the company are up 14.5% in the past month, and Cox has a new price target of $284 per share up from $175. Meanwhile, there's plenty of room for growth, too, he says, as investments in employees are leading to retention and new business. "We view 3Q23 results as quite supportive of our thesis around ramping talent production and cost efficiencies, and we reiterate our Buy rating as we expect momentum to continue on both top and bottom line results," he went on to say. Warner Brothers Discovery The Hollywood strikes are over, but analyst Brett Feldman is sticking with his buy rating on the media and entertainment giant following Warner's solid earnings report earlier this month. "The company beat on FCF [free-cash flow] of $2.06bn in the quarter due to WBD's continuing transformation efforts and focus on cost efficiencies and to a much lesser extent strike benefits," he wrote in a follow up note to clients. Additionally, Warner's direct-to-consumer initiative is showing signs of progress, Feldman says, and that should give the company momentum heading into 2024. "A key highlight of the quarter was that DTC segment profitability continues to track ahead of management expectations," he added. Feldman did lower his price target on Warner Brothers to $15 per share from $17 as ad headwinds linger, but he says shareholders shouldn't give up on the stock. The company remains on the firm's conviction buy list. "While our estimates and price target are lower, we remain Buy-rated as we continue to expect that WBD will grow EBITDA, generate substantial FCF and drive significant balance sheet delevering," he said. The stock is up almost 13% this year. Ross Stores - buy rating "ROST reported a strong F3Q beat and raised its full year guidance, with a traffic-led comp beat fueling the outperformance. Margins were also notably strong even after accounting for a timing shift benefit, & we are encouraged by the flow-through of 3Q outperformance to the full year guide. ... . We step away from the quarter with increased conviction in ROST's opportunity to continue to gain market share. TransDigm- buy rating "TDG reported F4Q23 key metrics above consensus, guided the same ones for FY2024 above consensus, announced a large special dividend & announced a new sizable acquisition. This remains arguably the best business model we cover, still early in an aerospace recovery, consistently delivering upside to profit margins, and incrementally deploying more capital. We think TDG should be a core holding in the aerospace supply chain & we remain Buy rated on the stock." Willis Towers Watson - buy rating "We view 3Q23 results as quite supportive of our thesis around ramping talent production & cost efficiencies & we reiterate our Buy rating as we expect momentum to continue on both top & bottom line results. The company is heading into its seasonally strong revenue & free cash flow quarter just as we have seen most tangible evidence that turnaround initiatives are taking hold. It is our sense that skepticism remains, however, which could serve as a near-term catalyst for the stock should our 4Q expectations be realized." Warner Brothers Discovery - buy rating "The company beat on FCF of $2.06bn in the quarter due to WBD's continuing transformation efforts and focus on cost efficiencies & to a much lesser extent strike benefits. ... .A key highlight of the quarter was that DTC segment profitability continues to track ahead of mgmt expectations. ... .While our estimates & price target are lower, we remain Buy-rated as we continue to expect that WBD will grow EBITDA, generate substantial FCF & drive significant balance sheet delevering." Trex Company - buy rating "We are also encouraged by mgmt's optimism for further top-line gains in 2024, supporting our forecast for robust FCF to allow for investments in growth opportunities and shareholder returns. As such, with the stock trading at 17.0x our forward EBITDA estimate, vs the 5-year average of 23.6x, we see the current valuation as an attractive entry point and maintain our Buy rating."