The bank's analysts predicted an increase in the S&P 500 index by almost 18% over the next 12 months. Among the top five securities from the broad market index, there are two with a growth potential of more than 100%.
In 2021, the S&P 500 broad market index grew by 26.9%, outpacing the dynamics of the NASDAQ Composite technology index, which grew by 21.38%. However, since the beginning of 2022, the S&P 500 index has already fallen by 7%, January may become the worst month since March 2020 amid the expected increase in Fed rates, high inflation and geopolitical tensions.
Some analysts on Wall Street predicted a strengthening of the correction of the broad market in the next few weeks, but experts from the American bank Goldman Sachs are still optimistic about the long-term prospects of the index. The bank has set a price benchmark for the S&P 500 at 5,100 points on the horizon of the next 12 months, which represents a potential increase of about 15.1% compared to the closing price of the index at 4,431.85 at auction on January 27, CNBC writes. Goldman Sachs analysts have pointed to the top five stocks from the S&P 500 list, which, in their opinion, have a growth potential of more than 80% in 2022.
Fei Fang, an analyst at the bank, believes that the Chinese electric car manufacturer Li Auto stands out from other automakers in the country by creating interesting consumer opportunities in electric cars, and is also ready to take risks by introducing innovative technologies.
The Goldman Sachs expert believes that the success of the LiOne sports car shows an excellent understanding of the needs of consumers. The company creates operational capabilities and a brand, which it will later use to develop next-generation models with autonomous driving technologies.
The company's second hybrid car, the X01, will be unveiled in the second quarter of 2022. Its launch is expected to "boost gross margins," Fang said. The bank has set a target price for the company's shares at $64, which implies an increase of 167%.
Bank analyst Bruce Lu noted that Taiwanese chip manufacturer United Microelectronics is another favorite from the S&P 500 index on the Goldman Sachs list. Experts believe that the company is "largely undervalued" by investors and is trading at a "significant discount" in relation to its main competitor GlobalFoundries.
The expert believes that the company will become "one of the largest beneficiaries" of the increase in the number of semiconductors in cars, and expects that in the coming quarters United Microelectronics will achieve higher sales and profitability of all its products. Goldman Sachs' target price for United Microelectronics shares is $20 per share, implying a 115% increase.
Construction materials manufacturer Azek is also highly rated by Goldman Sachs experts. Susan Mclary, an analyst at the bank, is confident in the company's ability to deliver double-digit growth in net earnings per share (EPS) in the coming years. She also noted that the company generates good cash flow. He will support the activity of mergers and acquisitions, which will help the company's further growth in the future. Goldman Sachs has set a target price for the company's shares at $58 per paper, which represents a potential 86% increase.
Broadband provider Frontier Communications is one of the best providers in the field of telecommunications services according to analyst Brett Feldman. Goldman believes that the company has "many opportunities" to reach a tipping point in 2023. Goldman Sachs has set a target price for the company's shares at $48 per paper with an 80% growth potential.
The American biotech company Seagen has become another company from the Goldman Sachs list. The company, which specializes in innovative antibody-based therapies for cancer treatment, according to experts, is "an attractive story in the field of oncology."
Goldman analyst Salvin Richter said that the company's business is also showing good results, and Seagen management raised its revenue forecast for the full year for all the company's drugs. Goldman Sachs experts have set a target price for the company's shares at $222 per paper, which represents a potential increase of 80%.
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