Goldman Sachs has identified several compelling buying opportunities as the third-quarter earnings season approaches, recommending stocks like Disney, UPS, Omnicom, Nu Holdings, and Baker Hughes. The investment bank highlights strong growth prospects and strategic advantages for these companies, including strategic investments, operational efficiencies, and market expansion. Analysts anticipate positive catalysts ahead for these buy-rated stocks.
As the third-quarter corporate earnings season looms, investment giant Goldman Sachs has pinpointed a select group of stocks poised for significant upside. The firm believes these companies represent compelling buying opportunities, citing robust fundamentals and strategic positioning. Among its top picks are entertainment behemoth Disney, logistics giant UPS, advertising powerhouse Omnicom, Latin American fintech innovator Nu Holdings, and oilfield services provider Baker Hughes.
Disney: A Multi-Year Earnings Compounder
Goldman Sachs analyst Michael Ng remains steadfastly bullish on Disney, despite a recent trim to his price target from $144 to $140 per share. Ng views Disney as a "multi-year earnings compounder," emphasizing the company's early-stage investment cycle across its diverse product offerings and "Experiences" division, which includes theme parks and sports. With an estimated 13% EPS (earnings per share) compound annual growth rate, Goldman Sachs maintains its constructive stance, believing the stock is too attractive to overlook at its current valuation, even after a 10% decline this year.
Baker Hughes: Synergies Driving Future Growth
Earlier this week, Goldman Sachs reinstated coverage of Baker Hughes with a "buy" rating, with analyst Neil Mehta highlighting the oilfield services provider's strong operational performance following its acquisition of Chart Industries. Mehta anticipates that the "operational and geographic synergies" from this merger will fuel substantial margin and revenue growth through 2030. Despite a 23% rally in its stock this year, Goldman considers Baker Hughes an attractive entry point, noting multiple pathways for earnings expansion. Baker Hughes is slated to report its earnings in late October, with Goldman Sachs having played a dual role as an advisor and debt financier for the Chart Industries deal.
Nu Holdings: Tapping into U.S. Consumer Credit
The Latin American fintech sensation, Nu Holdings, also features prominently on Goldman Sachs' buy list. Analyst Tito Labarta is particularly enthusiastic about the company's strategic expansion into the U.S. consumer credit lending market. Labarta believes Nu's "ultra-low cost digital approach" combined with a superior consumer experience positions it for successful market penetration. Goldman also commends Nu's ability to scale its business efficiently while rigorously managing costs, forecasting significant upside potential despite a competitive landscape. Nu Holdings is scheduled to release its earnings in mid-November.
UPS: Leaner Operations Post-Amazon Transition
Goldman Sachs sees a "consistent profit growth inflection" for UPS, driven by the completion of its volume drawdown with Amazon (AMZN) and subsequent cost reductions. The firm suggests the market has yet to fully appreciate the emergence of a "structurally leaner, highly automated & higher-yielding Domestic network" at UPS. As one of only three fully integrated time-definite parcel carriers operating on a global scale, Goldman Sachs anticipates a strong outlook for the logistics leader.
Omnicom: Underestimated Organic Growth Potential
For Omnicom, the global advertising and marketing services company, Goldman Sachs believes that consensus estimates for organic growth are overly cautious. The bank predicts that Omnicom's third-quarter results, due on October 20th, could act as a positive catalyst, primarily driven by continued double-digit growth in its media segment, benefiting from strong end-market expansion. With shares trading at a modest 6x its 2027 estimated EPS, Goldman sees significant potential for re-rating.
