Goldman Sachs has pinpointed the favorite stocks of mutual funds collectively managing over $2 trillion. The investment fund examined the recent trades of 499 mutual funds to put this list together. According to the firm’ strategist, David Kostin, the share of large-cap funds outperforming their benchmarks now stands at 41%. But out of all the stocks funds are buying, which should you track the most closely?
Here we highlight five of the list’s most promising stock picks. This is according to the latest insights from the Street. By tracking over 4,800 analysts, we can use TipRanks market data to better evaluate crucial investing decisions. Which stocks boast a ‘Strong Buy’ analyst consensus for example? Answer: all the stocks listed below. Let’s take a closer look now:
1. Visa Inc (NYSE:V)
Payments giant Visa is already up 24% year-to-date. And analysts are optimistic that the stock can continue its steady growth trajectory. In the last three months, Visa has received 16 buy ratings and only 2 hold ratings. Meanwhile the $159 price target speaks of 13% upside potential from the current share price.
For Cantor Fitzgerald’s Joseph Foresi (ranked #5 out of 4,860 tracked analysts) Visa scores big on multiple levels. He explains: “Fundamentally, we like Visa’s opportunity to capitalize on the global conversion of cash into credit, international opportunities, and digital payment tailwinds. Technically, V is in a solid upward channel.”
Visa may trend at a premium to the group, but don’t let this worry you, says Foresi (Profile & Recommendations). He argues that Visa deserves to trade higher due to three key reasons. These are 1) above-average industry growth rates 2) attractive market position, and 3) superior margins.
2. ServiceNow (NYSE:NOW)
ServiceNow transforms information technology for global businesses by managing all their IT service relationships. This can involve creating a single system of record for IT and automating manual tasks, or standardizing processes and consolidating legacy systems.
Encouragingly, top-rated Argus analyst Joseph Bonner (Profile & Recommendations) has just raised his NOW price target to $215 from $201. He also maintained his Buy rating due to “another strong” Q2. Most notably, NOW’s EPS doubled while revenue surged by a whopping 41%.
NOW is benefiting from the “secular trend away from the enterprise data center and toward the more easily scalable and cost-effective cloud software-as-a service model.” Plus the company’s customer retention renewal rate are consistently in the upper 90’s. Bonner notes that in Q2 this rate hit an extremely impressive 98%.
In the last three months, 16 out of 19 analysts have called this stock a ‘Buy’. This is with a $205 average analyst price target. See NOW Price Target and Analyst Ratings Detail.
3. Anthem Inc (NYSE:ANTM)
This healthcare stock is a top mutual fund pick says Goldman Sachs. With over 74 million people served by its affiliated companies, including nearly 40 million within its family of health plans, Anthem is one of the US’s leading health benefits companies.
“We remain very constructive on Anthem shares as the company continues to invest in health plan performance and sees the benefits of its new PBM [pharmacy benefits manager] strategy beginning in 2020” states five-star Cantor Fitzgerald analyst Steven Halper (Profile & Recommendations). Last year Anthem announced plans to launch its own pharmacy benefits manager in 2020, under the name IngenioRx.
“Drug costs, and the escalation of drug costs, is top of mind for everyone in our industry,” as well as clients, commented Anthem CEO Joseph R. Swedish. Pharmacy “can be a key ingredient to better managing the total cost of care.” In fact, the company expects to “achieve greater than $4 billion in gross savings annually,” from 2021 when the new setup will be fully phased in.
Anthem, a ‘Strong Buy’ stock, has received 3 recent buy ratings from the Street. This is vs just 1 hold rating in the same period. Meanwhile the average analyst price target stands at $280. See ANTM Price Target and Analyst Ratings Detail.
4. Electronic Arts (NASDAQ:EA)
EA is one of the largest video game publishers in the world. For much of the last 20 years, its product line has been the envy of its peers. And now the stock is buzzing following a key rating upgrade from Argus Research’s Joseph Bonner. He bumped up the stock from Hold to Buy at the beginning of August with a $155 price target.
Bonner now spies a favorable entry point with shares marginally down over the last three months. Don’t be fazed by the massive success of Fortnite, advises Bonner, as he expects EA to put on a relatively stronger performance in the September and December quarters with popular new titles like Battlefield V.
Luckily the stock is also primed for a strong 2019. “We believe FY2019 could be another year of stable revenue growth owing to positive industry trends, sport franchises performance, and new mobile games” cheers five-star Oppenheimer analyst Andrew Uerkwitz (Profile & Recommendations).
Overall EA scores a bullish ‘Strong Buy’ rating from the Street. In the last three months, 12 out of 13 analysts have published Buy ratings on the stock. This comes with a $158 average price target (22% upside potential). See EA Price Target and Analyst Ratings Detail.
5. The Estée Lauder Companies (NYSE:EL)
Last but not least we have Estée Lauder, the world-famous beauty company. As well as Estée Lauder itself, the company also owns multiple brands including MAC, Clinique and Bobbi Brown. And good news for funds, the stock has just been upgraded by DA Davidson’s Linda Bolton Weiser (Profile & Recommendations).
Estée Lauder’s “fundamentals are the strongest we’ve seen in years,” she told clients. The analyst listed the company’s “margin expansion goal” and “strong growth in China” as reasons to turn bullish on the company’s prospects. Her upgrade comes with a $167 price target- suggesting the stock can spike over 23% from current levels.
Indeed JP Morgan’s Andrea Teixeira (Profile & Recommendations) believes Estée Lauder offers the best organic growth opportunity among large-cap HPC [home and personal care] in her coverage universe. Overall this ‘Strong Buy’ stock has 100% Street support right now. Four analysts have published Buy ratings in the last three months with an average price target of $159.
Discover Your Own Top Stock Ideas
Our new screener allows users to find investment inspiration fast. The best part about the screener, apart from the fact that (as you will see) it is very easy to use, is that alongside standard filters like market cap, sector, yield etc. users can also screen for the analyst consensus rating. You can find stocks that only have an analyst consensus rating of strong buy, or if you prefer, strong sell.
