Goldman Sachs released an updated version of its "conviction list" mid-January. It's time to take a closer look at the picks and decide whether they might be right to add to your own portfolio. But first, many may ask, "What is a conviction list"? Essentially, Goldman Sachs puts out a conviction buy and conviction sell list and updates it fairly regularly detailing which stocks they believe will either outperform or underperform their competitors. With the levity Goldman Sachs possess this list is often followed by analysts and individuals quite closely, and for good reason. Goldman's conviction lists have historically been fairly accurate in predicting market action and future stock prices. That being said, Goldman also has the ability to move markets whether intentionally or not simply by putting out this list. But enough with the preface, onto the list!
Note: The list has upwards of 70 picks, only 5 of which I will detail here. Feel free to contact me if you'd like the full list. Additionally, I do not own or recommend any of the following stocks, solely an overview of Goldman Sach's choices.
Potash Corp. (Ticker: POT) â€“ Signal: BUY - Last Close: $103.75 â€“ Target: $138.00
The Saskatchewan fertilizer and industrial needs producer is expected to do well in the following months as a food prices are expected to rise and thus the feed for fertilizer and related items will rise as well. The company is posting some impressive ratios including an EPS of 3.25 (an increase of over 150% from last year), a P/E ratio of 45 and a dividend yield of .39%.
D.R. Horton, Inc. (Ticker: DHI) â€“ Signal: BUY â€“ Last Close: $11.91 â€“ Target: $17.00
D.R. Horton, Inc. is a housing, mortgage and insurance financier as well as a homebuilding company that operates in over 25 US states and was founded in 1978. With a current ratio of 7.9x and a Leveraged Free Cash Flow Margin of 34.28% they are near the top of their pack in their industry.
Qwest Communications Intl. (Ticker: Q) â€“ Signal: Sell â€“ Last Close: $3.22 - Target: $3.00
Qwest Communications International and the entire telecommunications industry are being slated by analysts to do poorly in the next 12 months. Qwest hasn't had any good news lately, and with a return on equity figure of -221.90% analysts may be correct in betting this stock will be slowly losing its value over time.
Coventry Health Care, Inc. (Ticker: CVH) â€“ Signal: Sell â€“ Last Close: $23.03 - Target: $22.00
Coventry Health Care, Inc. is part of a new breed of managed
health care companies offering health plans, workers' compensation, various
insurances, as well as HMOs and PPOs. Despite
being in a rising industry Coventry Health Care has watched their net income
decrease from $626 Million to $382 Million this past year. On top of this, Coventry Health Care has watched
their debt-to-equity ratio increase to a whopping 47x.
Lazard Ltd. (Ticker: LAZ) â€“ Signal: BUY â€“ Last Close: $38.69 - Target: $49.00
Despite mistrust of Wall Street on main street and the economy still struggling to get out of a rut, some financial companies are recording record profits. Lazard Ltd. owns a handful of smaller subsidiaries involved in asset management and financial advisory including firms that oversee mergers and acquisitions, capital restructuring, and other institution sized financial services. It's an industry leader in several metrics including gross margin at 97.4% and tangible book value increase over the previous year of 8.3%.
Statistical values provided by: http://investing.businessweek.com/