Goldman Sachs: 5 High-Growth Stocks Poised to Rally

Even in the current climate, savvy investors can still find promising stocks with big growth prospects. So says Goldman Sachs’ chief US equity strategist David Kostin. His strategy is simple: “We continue to recommend investors own stocks with the highest forecast sales growth.”

He sees the S&P 500 rising only 4.5% by the end of the year to $2,850. In contrast, Kostin points out that the previous “high revenue growth” basket outperformed the S&P 500 by 8 percentage points over the last year. The stocks covered below all boast sales growth of over 20%, based on the Street’s 2019 estimates. These are the stocks to turn to if GDP growth begins to slow.

From Goldman Sachs’ list we used TipRanks’ powerful data to 1) pinpoint the stocks with a Strong Buy Street consensus based on the latest stock recommendations from over 4,700 analysts; and 2) delve into why top-performing analysts are so bullish on these stocks right now.

Let’s take a closer look:

1. Facebook (NASDAQ:FB)

  • 2019 estimated sales growth 27%
  • Shares up 4.5% year-to-date

Goldman Sachs isn’t the only firm with FB in its high-growth basked. Top RBC Capital analyst Mark Mahaney writes: “We still think FB is the Best Growth Story in Tech. And we believe that FB’s current low market shares – less than 20% of Global Online Advertising & mid-single-digit % of Global Total Advertising – will help it maintain premium growth for a long time”

At the same time, FB still has several new large revenue growth drivers up its sleeve (Instagram monetization, Messaging Platform monetization, Camera/AR, AI and Video). And all this can be yours for a ‘highly reasonable’ valuation. Mahaney has a $250 price target on FB (36% upside potential). This comes out above the Street’s average price target as you can see below. Also note the 30 buy stock recommendations vs just 2 bearish calls:

2. Align Technology (NASDAQ:ALGN)

  • 2019 estimated sales growth 22%
  • Shares up 28% year-to-date

Align is a pioneer in teeth-straightening technology. You may have seen its popular “clear aligners” known as Invisalign. These removable transparent aligners are fast becoming a viable alternative to traditional metal braces.

“We’ve seen a maturation of Invisalign’s clear aligners over the past decade,” writes Robert W Baird analyst Jeff Johnson. “They went from a product that was passable for some patients but not good for all back in 2011, to a product that by mid-2016, had orthodontists saying, ‘I can use this technology in most cases.’”

Although other large dental providers are now trying to muscle in on the clear aligner space (think MMM, HSIC and XRAY), analysts aren’t too concerned. According to Piper Jaffray’s Matthew O’Brien these introductions were very much expected. He is skeptical about their impact on Align in the coming quarters- but adds that a degree of caution will remain until their impact can be better assessed.

3. Amazon (NASDAQ:AMZN)

  • 2019 estimated sales growth 22%
  • Shares up 35% year-to-date

Amazon is firing on all cylinders. AMZN is both the leading online retailer as well as the e-commerce and fulfillment engine for most online retailers, and the leading provider of cloud infrastructure as a service to enterprise customers.

“We believe AMZN’s innovative ability and growing market share will continue to drive increased revenue growth and significant cash flow” states top Tigress Financial analyst Ivan Feinseth. Plus “as long as AMZN continues to show strong growth in Net Sales Revenue and Economic Cash Flow we believe the market will continue to reward the shares with a higher valuation.”

Although Feinseth reiterated his Buy rating without a price target, we can see that the $1,859 average analyst price target indicates 18% upside from current levels. Note also AMZN’s very impressive score of 36 recent stock recommendations vs just 1 hold rating.

4. Autodesk (NASDAQ:ADSK)

  • 2019 estimated sales growth 27%
  • Shares up 30% year-to-date

This groundbreaking 3D design company makes software for people who make things. This includes software for architects, animators, constructors and engineers. Top Oppenheimer analyst Koji Ikeda calls ADSK his Top Stock Pick in Saas/ Applications Software. He explains: “Autodesk is a well-established franchise and industry leader and operates as an industry-standard, must-have technology in nearly every industry it operates in.”

Looking forward, Ikeda sees big growth potential as “the business is well positioned in a large but lightly penetrated construction industry that is yearning for next-generation technologies, like Autodesk’s, to help digitize the industry.”

Similarly, five-star Robert W Baird analyst Robert Oliver calls ADSK a “Fresh Pick.” He ramped up his price target from $145 to $155 (14% upside) while praising the company’s strong execution.

5. Vertex Pharmaceuticals (NASDAQ:VRTX)

  • 2019 estimated sales growth 22%
  • Shares up 4% year-to-date

Global biotech stock Vertex Pharmaceuticals Inc boasts a growing portfolio of cystic fibrosis (CF) drugs. This is a genetic disorder that causes severe damage to the lungs, digestive system and other organs in the body.

The company has now launched its third CF drug Symdeko in the US, and management is anticipating EU approval in 2H18. “We continue to believe that VRTX’s dominance in the CF space, compelling bottom-line growth trajectory (43% CAGR through 2022), and significant free cash flow generation could potentially allow the company to substantially expand the breadth of its investor base” cheers JP Morgan’s Cory Kasimov.

Overall, this “strong buy” stock scored 9 recent bullish stock recommendations and just 1 hold rating. Five-star Cowen & Co analyst Phil Nadeau sees 28% upside potential and adds that “based on its prospects for strong long-term growth, VRTX remains a top large cap pick.” Meanwhile the average analyst price target suggests 20% upside from current share levels.

Plus…

Here we used TipRanks to dive into the ‘Strong Buy’ stocks. But there are two other stocks on the list, namely Netflix (NASDAQ:NFLX) and Pentair (NYSE:PNR). These two stocks have estimated 2019 sales growth of 25% and 22% respectively. However, the outlook from the Street is more mixed. Netflix has a Moderate Buy analyst consensus rating while Pentair has a more cautious Hold.

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