- Goldman Sachs says US stocks have 10% upside overall for the remainder of 2022.
- Like many firms, Goldman sees a stock picker’s market ahead.
- Chief US Equity Strategist David Kostin says eight names could double in value over the next year.
Like many of its Wall Street brethren, Goldman Sachs has steadily lowered its expectations for the stock market over the first half of 2022.
As of May, the firm believes the S&P 500 will finish the year at 4,300, about 10% above where it’s trading today. That target would have been a serious disappointment to most traders on January 1, but after the index’s worst first half of the year in more than 50 years, a rally like that would at least ease some of the pain.
Still, Chief US Equity Strategist David Kostin says earnings forecasts for S&P 500 companies are too high for both this year and next. If he’s right and investors conclude that profits won’t live up to their expectations, it could lead to even more stock market volatility .
While Kostin expects the US won’t fall into a recession next year, he says the S&P 500 could decline to 3,150 if a recession hits. That would wipe out a year’s worth of gains.
And it doesn’t look like economic stimulus packages, easy monetary policy, or rock-bottom interest rates are going to keep stocks rising in relative unison. So Goldman Sachs, like many other firms, think this is going to be a stock-picker’s market.
To that end, Kostin just published a list of the S&P 500 stocks with the most upside to his firm’s price targets. Unsurprisingly, stocks that have been slammed in the pandemic because of their sensitivity to COVID-19 are well-represented. Those include casinos, cruise lines, and companies connected to travel.
The 13 stocks are ranked below from lowest to highest based on how much upside Goldman Sachs thinks they offer relative to those price targets. Percentages were calculated based on Thursday’s closing prices.