Goldman Sachs highlighted a slew of stocks on its U.S. “conviction list — director’s cut” selection, naming several “most differentiated buy recommendations,” in an August 1 research note. Goldman’s “directors’ cut” is a list of stocks chosen by its U.S. research analysts and managers. The bank collated a list of “top ideas that offer a combination of conviction, a differentiated view and high risk-adjusted returns,” before shortlisting 20 to 25 names. In tech, media and telecoms, Apple made Goldman’s August 2023 Update list for its “Sustained Services expansion story enabled by growing installed base.” Goldman also included Salesforce , for its “Growth reacceleration story with a runway to outsized free cash flow,” and payment processor Shift4 , describing it as “rapidly modernizing.” In health care, Goldman chose HCA Healthcare as a “post-pandemic beneficiary” and drug company Merck for its “acquisition and innovation in immunology and cardio.” Industrial names on the bank’s “directors’ cut” list included several that Goldman said are benefiting from post-pandemic demand, such as building services firm Johnson Controls and waste disposal company Republic Services . Consumer stocks on the list include Bath & Body Works , with analysts liking the stock for its “turnaround with new management pulling on low hanging sales driving levers,” and WW International (formerly Weight Watchers) for its “corporate transformation with a steep runway for growth.” The bank also added two names to its conviction list: Chevron , for its “leading capital returns story supported by a clear cash flow inflection in 2023,” and Macy’s , describing it as a “department store focused on profitable growth through a host of self-help initiatives.” Goldman’s note also included a “What has worked” heading, under which its analysts named three stocks. Oil services firm Baker Hughes makes the list. “The company’s operational turnaround is taking shape, driving improvement potential in EBITDA margins and free cash flow conversion,” the analysts wrote – EBITDA refers to a company’s earnings before interest, taxes, depreciation and amortization. Also on the list is transport company JB Hunt , with analyst Jordan Alliger positive on the sector’s “long-term secular growth opportunity in shipping goods over a combined train and truck path.” JPMorgan is a pick for its “best-in-class results and guidance,” and Goldman reiterated its “buy” rating on the stock. – CNBC’s Michael Bloom contributed to this report.
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