Goldman Sachs unveiled a slew of stocks this week that could have major upside throughout 2023. The firm’s analysts said these companies have unique growth potential even in a bumpy macro environment. CNBC Pro combed through Goldman Sachs’ research to find the top must-own stocks. They include Kraft Heinz, Philip Morris , Gartner, Zoetis and Howmet Aerospace. Gartner The tech research and management consulting firm is firing on all cylinders, according to Goldman. Analyst George Tong recently raised his price target to $403 per share from $391 and said the stock has more room to run. The firm’s main thesis is based on Gartner’s “robust revenue growth profile and opportunity [to] capture market share,” according to the analyst. Gartner’s research and consulting business are particularly well positioned for a macro slowdown, the analyst said. Tong sees “double-digit contract value growth” due to customers needing assistance to “optimize costs and operations” during a period of uncertainty. “Consulting growth this year is further supported by a healthy backlog, while Conferences growth is being driven by a return of in-person events,” he added. Shares are up about 20% in the past year, but Tong said the stock remains compelling especially after the company’s recent earnings report. “Gartner reported healthy 4Q results , with a 2023 guide that’s conservative & has attractive upside potential,” he wrote. Philip Morris The tobacco giant issued its quarterly earnings report earlier this month, which analyst Bonnie Herzog described as “a robust Q4.” Shares are down more than 2% this month, but Herzog sees a “compelling set-up” for the stock. In addition, Philip Morris continued its march toward smoke-free products like IQOS, which includes heated tobacco and electronic cigarette products. Goldman Sachs said this is paying off. “[IQOS] continued its very strong momentum in Q4 delivering yet another quarter of impressive share gains across key markets fueled by a re-acceleration of new user growth,” she wrote. Herzog said that management is executing well with robust investments to ensure profitability now and in the future. “We increasingly believe [IQOS] has a powerful positive mix effect on PM’s overall business given its higher margins relative to cigs,” she said. Other positive catalysts include an analyst day later this year and the U.S. entrance of nicotine pouch maker Swedish Match. Philip Morris acquired more than 93% of the company’s shares as of December 2022. “PM remains one of our top stock picks,” Herzog said. Howmet Aerospace Goldman Sachs is standing by its buy rating on the aerospace products company. Howmet unveiled its fourth-quarter earnings report earlier this week, with earnings that were in line with analysts’ expectations, according to FactSet. The company beat on revenue, though. “The company provided initial 2023 guidance below consensus, but made clear in the release and on the call how those were commitments not aspirations, and we see it likely they beat and raise through the year,” analyst Noah Poponak wrote in a note to clients. The firm sees Howmet as a long-term play, meaning investors need to be patient. Company management is “consistent and delivers,” the analyst added. Poponak raised his price target to $48 per share from $46. Shares are up 9% this year. “Howmet remains well positioned in the commercial aerospace growth market, delivering critical components, taking market share, generating strong margins and cash flow,” he said. “We remain Buy rated on the stock,” Poponak added. Gartner “IT reported healthy 4Q results, with a 2023 guide that’s conservative & has attractive upside potential. IT’s Research business is posting resilient double-digit contract value growth driven by sales force headcount growth, sustained growth in enterprise IT technology vendor spend, & the essential nature of its solutions in helping customers optimize costs & operations during a macro slowdown. … Consulting growth this year is further supported by a healthy backlog, while Conferences growth is being driven by a return of in-person events.” Philip Morris “iQOS continued its very strong momentum in Q4 delivering yet another quarter of impressive share gains across key markets fueled by a re-acceleration of new user growth. … As a result, we see a very compelling set-up for the stock this year given the robust compounding effect of iQOS, PM’s hugely cash-generative combustible cig portfolio, its promising investments beyond nicotine, and a less onerous f/x environment. … PM remains one of our top stock picks.” Zoetis “2023 outlook reflects robust growth and upside potential. … We reiterate our Buy rating as we think ZTS could deliver upside to 2023 guidance, the launch of Librela in the US could increase confidence in 2024 growth, and updates on the pipeline could serve as catalysts. … Given the focus on potential competition in the coming years, we think incremental innovation could bolster investor confidence in the growth outlook.” Howmet Aerospace “The company provided initial 2023 guidance below consensus, but made clear in the release and on the call how those were commitments not aspirations, and we see it likely they beat and raise through the year. Management is consistent and delivers operationally. Howmet remains well positioned in the commercial aerospace growth market, delivering critical components, taking market share, generating strong margins and cash flow. … We remain Buy rated on the stock.” Kraft Heinz “KHC delivered a top-line-driven EPS beat in the quarter, as higher sales were aided by greater productivity savings to drive higher margins despite greater re-investments. The quarter was one of progress on multiple fronts, including margins, market share, and cash flow. … We believe it is poised to exceed that goal and expect a positive estimate revision cycle to continue to carry the stock higher.”
