Goldman’s favorite stocks amid the market’s uncertainty
There’s a slew of buy-rated stocks that are just too attractive to ignore, Goldman Sachs says. The firm said companies such as Walmart are well positioned to ride out the macro uncertainty. Other stocks include Cheesecake Factory , Smithfield Foods and Ducommun. Walmart Shares of Walmart have plenty of room to run, even as they are up more than 50% over the past 12 months. Analyst Kate McShane said she is sticking with the retail giant after its fiscal fourth-quarter earnings report . The company beat expectations on the top and bottom lines, but it offered disappointing guidance. McShane is still predicting “continued share gains” with “solid earnings growth in 2025.” Walmart has a “compelling proposition for value and convenience” and an improving profitability profile, she said. The company also has an upcoming investor meeting in April, which McShane expects to be a key catalyst for the stock as updates are expected on strategy and initiatives, such as automation. “We reiterate our Buy rating for WMT with a price target of $106,” she said. Smithfield Foods Analyst Leah Jordan recently initiated coverage of the pork producer with a buy rating. She said she sees a “solid growth story tied to its industry-leading packaged meats portfolio as consumers shift toward high-protein diets & value-added options for convenience and flavor diversity.” Further, Jordan said profit margins are looking up as Smithfield “has a strong track record of improving profitability over time.” Smithfield shares are down more than 8% over the past month, which may present a buying opportunity. “All in, SFD provides a compelling total return profile with earnings growth and a ~5.5% dividend yield, supported by strong [free cash flow] and low leverage,” she went on to say. Ducommun Don’t sleep on shares of Ducommun, according to Goldman. Analyst Noah Poponak says the aerospace engineering services company is undervalued. The “medium-term outlook for aerospace growth and margin expansion remains compelling,” he wrote. Ducommun reported a mixed fourth-quarter report in late February, but Poponak said he is standing by the stock. “DCO has been steadily improving margins and cash flow conversion, while it has the tailwind of commercial aerospace growth,” he said. The stock is down 11% this year, but Poponak said fundamentals are getting better and shares are just too attractive to ignore. Walmart “We believe WMT is well positioned to continue driving solid earnings growth in 2025, supported by market share gains given its compelling proposition for value and convenience while its profitability profile should also improve, noting that operating income outpaced sales in 4Q. … We reiterate our Buy rating for WMT with a price target of $106.” Smithfield Foods “We are initiating on SFD with a Buy rating, as we see solid growth story tied to its industry-leading packaged meats portfolio as consumers shift toward high-protein diets & value-added options for convenience & flavor diversity. … All in, SFD provides a compelling total return profile with earnings growth & a ~5.5% dividend yield, supported by strong FCF and low leverage. … SFD has a strong track record of improving profitability over time.” Ducommun “Medium-term outlook for aerospace growth and margin expansion remains compelling. … DCO has been steadily improving margins and cash flow conversion, while it has the tailwind of commercial aerospace growth. … We expect company-specific operating fundamentals to continue improving in the forward; and we remain Buy rated on the stock.” Cheesecake Factory “Solid 4Q beat; Reaffirms best-in-class unit growth story. … We believe that this quarter’s results continue to support the bull case for CAKE, offering the most compelling unit growth story in FSR [full serve restaurants]. … The brand’s latest menu features 20+ new items and continues Cheesecake Factory’s unique strategy of offering diverse SKUs to eliminate guests’ ‘no’ vote when deciding where to eat…”
