Goldman Sachs Adds Utility Stock to Elite Picks for Clients
Goldman Sachs has included a key utility stock in its list of high-conviction picks for clients as the third quarter and second half of the year begin. The stock added to the list is the Southern Company, an Atlanta-based utility that Goldman views as a top idea due to its below average regulatory risk and unique positioning to provide above-average clean energy growth.
Goldman Sachs believes that Southern’s Vogtle Units 3 and 4 nuclear project will be a significant driver of growth. The market, according to the firm, may not fully appreciate the potential benefits of building the first U.S. nuclear power plant in decades. Additionally, Goldman expects nuclear energy, in general, to benefit from production tax credits within the Inflation Reduction Act, leading to faster-than-expected earnings per share growth through 2027.
The Wall Street firm predicts a 14% upside for Southern Company, which has seen a 1% decline year-to-date. Steven Kron, Goldman’s director of Americas equity research, describes the recently launched Conviction List- Directors’ Cut as a curated and active selection of 20 to 25 stocks that Goldman views as its most differentiated and fundamentally sound buy ideas within the U.S. stock market.
Aside from the Southern Company, other stocks that made Goldman’s elite list of picks include Apple, First Solar, WW International, Amazon, Warner Bros Discovery, Merck, and JPMorgan Chase.
Goldman sees the potential launch of the iPhone 15 in September as a big catalyst for Apple’s shares. The firm places importance on Apple’s services expansion, which is expected to drive growth in its installed base. Despite Apple’s strong performance in 2023, with a roughly 49% surge in the first half, Goldman believes there is still an 8% upside potential.
For First Solar, declining poly-silicon prices have impacted sentiment in recent months. Nevertheless, Goldman continues to see an attractive risk-reward scenario going into the second half of the year, driven by capacity expansion and an upcoming analyst day. The bank’s price target suggests a 43% upside for First Solar on top of its 30% gain so far this year.
WW International, a diet company venturing into obesity drugs with its planned acquisition of telehealth platform Sequence, is positioned for the most potential upside on Goldman’s list. With a $13 price target, its shares could nearly double. Goldman expects more than 20% upside to consensus earnings per share estimates and 30% revenue growth for WW International.
Goldman Sachs’ list of elite picks also includes Amazon, Warner Bros Discovery, Merck, and JPMorgan Chase, among others.
It is important to note that the inclusion of stocks on Goldman’s list does not guarantee their future performance, and investors should conduct thorough research and consider their own investment goals and risk tolerance before making any investment decisions.
