With the market in gridlock, Goldman Sachs has identified 14 stocks that seem to offer big upside potential. From the firm’s report, we used TipRanks’ powerful insights to pinpoint the five stocks with the most bullish Street outlook. Indeed, these are the stocks with a ‘Strong Buy’ analyst consensus right now. TipRanks’ algorithms track and rank almost 5,000 Wall Street analysts. This allows us to see the consensus from the best-performing analysts on Wall Street. This means that- as we will see below- you can immediately get the full picture on any stock mentioned in any financial report.
So with this in mind, let’s dive in now:
Semiconductor stocks have taken a hit in the last few days- dragged down by cautious reports from Taiwan Semiconductor (TSM). On a five-day basis, Broadcom Ltd (Nasdaq:AVGO) is down 4%. However Goldman Sachs sees big upside potential for AVGO of 40%. And it looks like the rest of the Street agrees. Over the last three months, 22 top analysts have published buy ratings on the stock vs just 1 hold rating. Meanwhile the average analyst price target of $322 translates into 36% upside potential.
These analysts are encouraged by AVGO’s recent announcement that it is buying back $12 billion of its stock, effective immediately. Although the buyback was widely expected, Raymond James’ Chris Caso reiterated his AVGO Strong Buy rating on the news. He believes the earnings boost makes shares look very cheap and sets out his calculations here:
We estimate the buyback – if completed – would be roughly 10- 15% accretive to FY20 EPS… FY20 non-GAAP EPS could exceed $25 per share, with the stock trading at less than 10x that earnings potential, improving on an already attractive valuation.
Plus, based on AVGO’s policy of returning half of free cash flow via dividend, Caso expects the dividend yield to hit 4% by December 2018. You can click on the screenshot below for further AVGO market activity: