Goldman says these stocks have the most upside, even as markets become choppy
The market might be making investors a little queasy, but analysts at Goldman Sachs urged calm this week. The firm named a list of buy-rated stocks that it says are well positioned to withstand choppy markets. CNBC Pro combed through Wall Street research to find Goldman's top ideas to ride out the storm. They include Match , AppLovin, Gartner , Cedar Fair and Phillips 66 . AppLovin The evolution of AppLovin rolls on, according to Goldman Sachs. Analyst Eric Sheridan said he's getting more bullish on shares of the the mobile marketing software platform company. The firm said it sees "upside in [the] face of improving industry trends" after AppLovin's strong second-quarter earnings report earlier this month. Investments in artificial intelligence are paying off, with precision execution by management, according to Sheridan. In addition, "the company remains focused on managing a mixture of balanced growth/margin in its gaming portfolio," he said. The analyst acknowledged robust investor debate remains as volatility continues in the advertising gaming market. Still, the firm said it's standing by the stock for the long term as it expects AppLovin to produce "above average industry growth and a strong margin profile in a recovered mobile ads/mobile gaming landscape." Meanwhile, Sheridan raised his price target on the stock to $50 per share from $25. Shares are up more than 260% in 2023. Cedar Fair Attendance is picking up, and that's giving Goldman analyst Lizzie Dove increased conviction in shares of the Ohio-based amusement park company. "We expect better underlying attendance trends to mitigate investor fears that consumer appetite for amusement parks had decreased," she wrote after Cedar's mixed second-quarter earnings report. Because of this, the firm said it sees "margin upside" for next year. Throughout the remainder of 2023, however, pricing pressures remain, she said. "Despite this, spending once the guests are in the parks is higher than we expected, and we expect this strength in food and beverage spending to partially offset our outlook for more muted ticket price growth, " Dove added. Still, attendance will be key for the stock to work, and the analyst is standing by the stock. "We view the better underlying attendance outlook, resilience of in-park spending and potential to drive stronger EBITDA margins over time to drive outperformance in the stock," she said. The firm recently raised its price target on the stock to $47 per share from $43. Shares are down nearly 4% this year. Gartner The IT business services company is firing on all cylinders, according to Goldman analyst George Tong. The firm said it sees "valuation upside" following Gartner's recent second-quarter earnings report. Tong cited the strength of Gartner's global business sales and its global tech sales divisions as reasons for the bullish thesis. Both continue to enjoy double-digit subscription revenue growth year over year, he said. Further, consulting and conference revenue have been solid, Tong said, and shares are just too "compelling" to ignore at current levels. The stock is down more than 2% this year. "We continue to see attractive valuation upside at Gartner following 2Q results, which outperformed our estimates and consensus on revenue, EBITDA margins and EPS," the analyst said. AppLovin "Software Platform Evolution Drives Revenue and Margin Upside in Face of Improving Industry Trends. … The company remains focused on managing a mixture of balanced growth/margin in its gaming portfolio While we expect short-term investor debates to stay focused on the volatility in the adv/gaming end markets, we continue to look long-term at the collection of businesses under APP as producing above average industry growth & a strong margin proﬁle in a recovered mobile ads/mobile gaming landscape." Cedar Fair "We expect better underlying attendance trends to mitigate investor fears that consumer appetite for amusement parks had decreased. … Despite this, spending once the guests are in the parks is higher than we expected & we expect this strength in food & beverage spending to partially offset our outlook for more muted ticket price growth. … We view the better underlying attendance outlook, resilience of in-park spending & potential to drive stronger EBITDA margins over time to drive outperformance in stock, and maintain our Buy rating & increase price target from $43 to $47." Match "In its Q2 '23 earnings report, Match Group produced a solid set of results with better than expected revenue and Adj. OI growth driven by ongoing revenue initiatives, benefits from weekly subscriptions and positive results from the Tinder brand campaign. … Beyond Tinder, we expect investors to increasingly focus on Hinge, any change in macroeconomic trends across regions, management's efforts to optimize its cost structure as well as other areas of upside optionality incl. a recovery in Asian markets and user growth of emerging dating assets such as The League and Archer." Gartner "2Q beat, as healthy Research CV growth and margin upside should offset muted tech vendor trends to drive valuation upside. … Gartner represents a compelling investment given core Research subscription and CV trends remain healthy & intact, complemented by upside in Conference revenue and solid backlog and pipeline trends in Consulting. … We continue to see attractive valuation upside at Gartner following 2Q results, which outperformed our estimates and consensus on revenue, EBITDA margins & EPS." Phillips 66 "More modest upside after recent rally, but stay Buy for corporate turnaround. … Relative to our estimates, the company delivered slight beats across Refining and Marketing while Chemicals and Midstream were more in-line with expectations. … We continue to see the company's shareholder returns strategy as attractive, as we estimate a ~10%/9% capital returns yield in 2023/2024. We currently see ~17% total return to our updated $125 price target."