These stellar stocks are very popular with passive funds right now. Goldman Sachs highlights its top passive stock picks here. Even active investors can gain from passive fund picks says the firm’s Arjun Menon: “Similar to sector allocations, we encourage active managers to assess their factor exposures in light of the potential boost or headwinds from passive inflows.” He notes that the most overweight passive fund stocks (+38%) have outperformed the Russell 3000 (+20%) by more than 15 percentage points during the past 12 months.
So here we take a better look at four solid stocks from GS’s list worth keeping an eye on. As you will see we use further analysis from the Street to back Goldman’s recommendations:
VMware, Inc. is the leading provider of virtualization solutions for businesses. This includes data center consolidation and remote management.
“We’re adding VMware to our top picks” cheered top Oppenheimer analyst Ittai Kidron (Track Record & Ratings) at the end of August. This comes with a Buy rating and $180 price target (15% upside potential) up from $170 previously.
Following the company’s VMWorld conference, Kidron feels more confident in his bullish thesis. “With stock trading at ~15x CY19/FCF estimates, we believe there’s still skepticism with respect to VMware’s competitive positioning and ability to grow in the face of a cloud transition. Our checks/meetings indicate otherwise. We’re bullish.”
Indeed, his customer survey points to both 1) strong spending intentions and 2) new product uptake ahead. In fact, ~77% of VMWare customers revealed plans to increase spending over the next 12 months vs none to reduce.
Net net: “We’re positive on VMware’s technology and execution, and believe it is now well positioned to be a leader in enabling hybrid cloud deployments.” See what other Top Analysts are saying about VMW.
Estee Lauder (EL)
This stock has just scored a double-whammy show of support from the Street. Both DA Davidson and Morgan Stanley have upgraded their Estee Lauder ratings from Hold to Buy. Dara Mohsenian (Track Record & Ratings) of Morgan Stanley also edged up his price target from $159 to $160.
He argues that a slowdown in China is now already priced in to the stock, while a strong macroeconomic backdrop supports discretionary companies like Estee Lauder. Indeed, the prestige beauty category specifically has been growing at a faster rate than the lower-end mass products in eight of the past nine years.
The analyst comments “After two years of significant negative revisions, we now see scope for topline stabilization and synergy-led margin progression to drive above-consensus EBIT. With shares having fallen ~40% YTD, we see solid ~20% base case upside, with ~85% bull case upside and a 2:1 bull/bear ratio.”
GOOGL stock may seem expensive at $1194/ share. But it’s actually pretty ‘reasonable’ argues five-star RBC Capital analyst Mark Mahaney (Track Record & Ratings). He has a Buy rating on the stock with a $1,450 price target (16% upside potential).
First of all, GOOGL retains a very strong market share in its core search business. On top of that, an asset like YouTube also positions the company extremely well for the strong growth in video advertising. Add in significant competitive moats due to scale, aggressive innovation and substantial reinvestment and you can see why the company remains in a league of its own.
Moreover, Mahaney has also carried out a survey monitoring online advertising spend. Spending at Google is higher than the other Ad Networks, he notes, and future growth continues to skew positively. This drives the conclusion that Google is “an almost essential marketing channel for most businesses – something of a utility.” See what other Top Analysts are saying about GOOGL.
Simon Property (SPG)
Simon Property is the largest retail real estate investment trust, and the largest shopping mall operator in the US. From a Street perspective, this stock certainly looks like a top pick. Five analysts have published back-to-back Buy ratings on SPG over the last three months. This is alongside a $186.40 price target.
Top Wells Fargo analyst Jeffrey Donnelly (Track Record & Ratings) recently upped his price target from $175 to $183. He sees Simon Property as the premier retail real estate operator with a superior balance sheet, strong redevelopment pipeline, combined with a high quality, diversified core portfolio. See what other Top Analysts are saying about SPG.
Get the latest scoop on top stocks.
Looking for further investing inspiration? TipRanks follows the latest ratings from over 4,800 Wall Street analysts through its unique NLP algorithms. The result: you can quickly and easily track the latest stock recommendations from the best analysts on Wall Street today. Go To Analysts’ Top Stocks Tool Now<<