As the third-quarter earnings season approaches, Goldman Sachs has issued a note identifying key stock opportunities for investors looking to profit from financial results.
Analyst John Marshall and his team shared their insights on Thursday, highlighting 18 stocks that could benefit from upward earnings revisions and seven stocks likely to face downward revisions.
The 'Stock Picker's Year': 10% Upside In S&P 500
Goldman Sachs analysts call 2024 "the year of the stock picker," emphasizing the importance of selective investing in a volatile earnings environment.
According to the investment bank's latest projections, the average S&P 500 stock could see a 10% upside over the next 12 months.
"We see relief rally potential," Marshall stated in his note. "Directional positioning in the options market is balanced, a much better set-up than this time last quarter."
The analysts also observed that activity in options markets, both from hedge funds and retail traders, has decreased recently, signaling a "wait-and-see" approach as investors prepare for third-quarter earnings reports and the upcoming U.S. elections.
Earnings Season Volatility Remains Elevated
Goldman Sachs highlighted that single-stock volatility surrounding earnings events remains at a 14-year high.
This trend, driven by critical market debates on topics like artificial intelligence, interest rates, and the upcoming election, is expected to continue through the remainder of the year.
"We expect earnings day moves to remain elevated as most of the key debates for the market have winners and losers in the equity space," the note added.
With this heightened volatility, the firm continues to recommend options-based strategies, advising investors to consider buying options ahead of earnings events and selling options between earnings periods to capitalize on price movements.
18 Stocks Goldman Sachs Is Bullish On For Third-Quarter Earnings
Goldman Sachs' analysts have identified 18 stocks they believe are primed for upside as earnings revisions could be favorable. These stocks span a variety of sectors, from energy and financials to healthcare and technology.
| Company | Sector | Earnings Date (e) |
|---|---|---|
| Gap Inc. (NYSE:GAP) | Discretionary | Nov. 15 |
| Permian Resources (NYSE:PR) | Energy | Nov. 7 |
| Citigroup Inc. (NYSE:C) | Financials | Oct. 15 |
| Synchrony Financial (NYSE:SYF) | Financials | Oct. 16 |
| Amgen Inc. (NASDAQ:AMGN) | Healthcare | Oct. 30 |
| Boston Scientific (NYSE:BSX) | Healthcare | Oct. 23 |
| Merck & Co. (NYSE:MRK) | Healthcare | Oct. 31 |
| Qiagen NV (NYSE:QGEN) | Healthcare | Oct. 30 |
| AZEK Company (NYSE:AZEK) | Industrials | Nov. 29 |
| ADT Inc. (NYSE:ADT) | TMT | Nov. 1 |
| Broadcom Inc. (NASDAQ:AVGO) | TMT | Dec. 6 |
| Dell Technologies (NYSE:DELL) | TMT | Nov. 25 |
| Klaviyo (NYSE:KVYO) | TMT | Nov. 7 |
| Monday.com Ltd. (NASDAQ:MNDY) | TMT | Nov. 13 |
| Nvidia Corp. (NASDAQ:NVDA) | TMT | Nov. 21 |
| Snowflake Inc. (NYSE:SNOW) | TMT | Nov. 29 |
| Toast Inc. (NYSE:TOST) | TMT | Nov. 7 |
| Sempra (NYSE:SRE) | Utilities | Nov. 4 |
7 Stocks Goldman Sachs Is Bearish On For Third-Quarter Earnings
In contrast, the investment bank has identified seven stocks that they expect to face downward earnings revisions in the third quarter, advising investors to exercise caution.
| Company | Sector | Earnings Date (e) |
|---|---|---|
| Choice Hotels (NYSE:CHH) | Discretionary | Nov. 7 |
| Cheniere Energy (NYSE:CQP) | Energy | Nov. 1 |
| Janus Henderson (NYSE:JHG) | Financials | Oct. 31 |
| LyondellBasell (NYSE:LYB) | Materials | Nov. 1 |
| Clorox Co. (NYSE:CLX) | Staples | Nov. 1 |
| Kraft Heinz Co. (NASDAQ:KHC) | Staples | Oct. 30 |
| Upstart Holdings (NASDAQ:UPST) | TMT | Nov. 7 |
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