Goldman Sachs has identified five key stocks – Disney, Baker Hughes, Nu Holdings, UPS, and Omnicom – as strong buying opportunities ahead of their third-quarter earnings reports. The investment bank’s analysts cite various factors, including multi-year growth cycles for Disney, strategic acquisition synergies for Baker Hughes, a promising U.S. market entry for Nu Holdings, enhanced operational efficiency for UPS, and underestimated organic growth for Omnicom. These companies are poised for significant upside, according to Goldman Sachs’ analysis.
As the third-quarter earnings season approaches, Goldman Sachs has identified a compelling roster of stocks that it believes offer strong buying opportunities. The investment bank highlights several companies with robust fundamentals and strategic positioning, signaling significant upside potential ahead of their upcoming financial reports. Among the top recommendations are Disney, UPS, Omnicom, Nu Holdings, and Baker Hughes.
Disney: A Long-Term Compounder with Untapped Potential
Goldman Sachs analyst Michael Ng maintains a bullish stance on entertainment and theme park giant Disney, even after the stock's 10% decline this year. Ng views Disney as a "multi-year earnings compounder," asserting that the company is in the nascent stages of an extensive product and 'Experiences' investment cycle. The bank is optimistic across Disney's diverse portfolio, from theme parks to sports, anticipating strong performance ahead of its earnings later this quarter. While Ng adjusted his price target slightly to $140 from $144, he considers Disney's current valuation too attractive to overlook, projecting an impressive 13% estimated EPS compound annual growth rate (CAGR).
Baker Hughes: Post-Acquisition Synergies Driving Growth
Earlier this week, Goldman Sachs reinstated its 'buy' rating for oilfield services provider Baker Hughes. Analyst Neil Mehta lauded the company's performance, noting it's "firing on all cylinders" following the successful acquisition of Chart Industries. Mehta anticipates that the merger will unlock substantial "operational and geographic synergies," directly contributing to margin and revenue growth. Despite a robust 23% year-to-date run-up, Goldman believes the stock remains compelling, citing "multiple paths for earnings expansion through 2030." Baker Hughes is slated to report its earnings in late October. Notably, Goldman Sachs served as an advisor and provided debt financing for the Chart Industries transaction.
Nu Holdings: Expanding Fintech Footprint in the U.S.
The Latin American fintech powerhouse, Nu Holdings, offers considerable upside, according to Goldman Sachs analyst Tito Labarta. Labarta expresses particular enthusiasm for Nu's strategic entry into the U.S. consumer credit lending market. He contends that Nu's "ultra-low cost digital approach with a strong consumer experience could allow it to successfully enter the market." Furthermore, Goldman highlights Nu's proven capability to scale its operations effectively while keeping costs in check, positioning it for success in a "competitive market, but with significant upside potential." Goldman reiterates its Buy rating and a $23 price target, factoring in initial U.S. expansion costs while expecting substantial future gains. Nu Holdings is scheduled to release earnings in mid-November.
UPS: Operational Efficiency Fuels Profit Growth
Goldman Sachs predicts a "consistent profit growth inflection" for UPS, expected to materialize after the completion of its Amazon volume drawdown and associated cost-cutting initiatives. The bank foresees a "structurally leaner, highly automated & higher-yielding Domestic network" emerging for UPS. Goldman underscores the company's distinct advantage as "one of only three fully integrated time definite parcel carriers that can operate on a global network scale," suggesting the market has yet to fully account for its enhanced operational strength.
Omnicom: Overlooked Organic Growth Potential
Goldman Sachs believes that market consensus on Omnicom's organic growth is "too cautious." With the company's Q3 results due on October 20th, Goldman anticipates the report could act as a "positive catalyst." This expected growth is primarily driven by ongoing double-digit expansion in its media segment, which continues to benefit from strong end-market growth. Furthermore, with shares trading at an attractive 6x 2027e EPS, Goldman sees significant potential for upside from the advertising and marketing services giant.
