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 “consistently deliver.” 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 52% this year, but the company still sees more room for the stock to run especially after its strong earnings report earlier this month. The company took a hit on both the top and bottom lines in the fiscal fourth quarter. TransDigm continues to demonstrate consistent cash flow, capital deployment and margin, Poponak added. The analyst also called TransDigm a “core asset,” adding that with patience, long-term investors stand to be rewarded. After the quarterly report, the company raised its price target on the stock to $1,128 per share from $1,059. “This remains probably the best business model we cover, still early in an aerospace recovery, consistently delivering on profit margins, and incrementally deploying more capital,” he said emphatically. Willis Towers Watson The transformation is underway 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’ve seen the most tangible evidence that turnaround initiatives are taking effect,” he said. In addition, Willis reported a strong top and bottom beat for its third quarter at the end of October. But investors still seem pessimistic, 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 if our 4Q expectations materialize,” he wrote. Shares of the company have risen 14.5% in the past month, and Cox has a new price target of $284 per share, up from $175. Meanwhile, there is also plenty of room for growth, he says, as investments in employees lead to retention and new businesses “We view 3Q23 results as sufficiently supportive of our thesis of growing talent production and cost efficiency, and we reiterate our Buy rating as we expect momentum to continue in the top and bottom-line results,” he continued. Warner Brothers Discovery The Hollywood strikes are over, but analyst Brett Feldman is sticking with his buy rating on the media and entertainment giant after Warner’s solid earnings report earlier this month. “The company achieved FCF (free cash flow) of $2.06 billion in the quarter due to WBD’s ongoing transformation efforts and focus on cost efficiency and to a much lesser extent striking 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 in 2024. “A key highlight of the quarter was that DTC segment profitability continues to track ahead of management expectations,” he added. Feldman lowered his price target on Warner Brothers to $15 per share from $17 because advertising headwinds remain, but he says shareholders shouldn’t give up on the stock. The company remains on the company’s compelling buy list. “Although our ratings and price target are lower, we remain Buy-rated as we continue to expect WBD to grow EBITDA, generate substantial FCF and drive significant balance sheet dilution,” he said. The stock is up nearly 13% this year. Ross Stores – buy rating “ROST reported a strong F3Q beat and raised its full-year guidance, with traffic-led com beat driving the outperformance. Margins were also particularly strong even after accounting for a time-shift benefit, and we are encouraged by the 3Q throughput -outperform to full year guidance … .We leave 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 for FY2024 above consensus, announced a large special dividend and announced a significant new acquisition. This remains probably the best business model we cover, still early in an aerospace recovery, consistently delivering on profit margins, and incrementally deploying more capital. We believe that TDG should be a core asset in the aerospace supply chain and we remain Buy rated on the stock.” Willis Towers Watson – buy rating “We view 3Q23 results as sufficiently supportive of our thesis of increased talent production and cost efficiency and we reiterate . our Buy rating as we expect momentum to continue on both the top and bottom results. The company is heading into its seasonally strong revenue and free cash flow quarter just as we’ve seen the 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 if our 4Q expectations materialize.” Warner Brothers Discovery – buy rating “The company beat on FCF of $2.06 billion in the fourth year due to The ongoing WBD’s transformation efforts and focus on cost effectiveness and to a much lesser extent striking benefits. … .A clear highlight of the quarter was that DTC segment profitability continues to track ahead of mgmt expectations. … .While our ratings and price target are lower, we remain Buy rated as we continue to expect WBD to grow EBITDA, generate substantial FCF and drive significant balance sheet dilution.” Trex Company – buy rating “We are also encouraged. through mgmt’s optimism for additional topline earnings in 2024, supporting our forecast of 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, versus the 5-year average of 23.6x, we see the current valuation as an attractive entry point and maintain our Buy rating.”
(tagsTo Translate)Weekend roundup