As the financial world navigates through the uncertainties of a fluctuating market, Goldman Sachs’ research team is taking a contrarian stance by identifying underappreciated stocks that could ultimately deliver significant returns. The conventional wisdom on Wall Street leans toward caution, with numerous analysts downgrading certain stocks, but Goldman believes that some firms possess untapped potential. By focusing on stocks rated as “buys” within their coverage but broadly viewed as neutral or sell positions by others, Goldman Sachs aims to provide insights that could benefit investors willing to look beyond the prevailing negative sentiment.
Goldman’s recent assessment employed a screening process that focused on stocks with buy ratings that diverged from the more pessimistic views of the majority of analysts on Wall Street. A hallmark of these selections is that Goldman’s estimated earnings per share (EPS) for 2025 exceeds the consensus by at least 2%, indicating expectations of growth contrary to wider market sentiment. Furthermore, these stocks are identified as having a price target with a minimum upside potential of 10% according to Goldman’s projections. Less than half of the analysts covering these stocks have issued a buy rating, revealing a dissonance between their financial outlooks and Goldman’s more optimistic projections.
One notable name emerging from this analysis is **Tripadvisor**, an online travel agency that is currently experiencing headwinds. According to Goldman, only 20% of Wall Street analysts have rated the stock as a buy. This lack of confidence stems from a staggering 32% decline in share value year-to-date, attributed to cautious stances from multiple analysts. For instance, Cantor Fitzgerald recently began coverage of Tripadvisor with a negative outlook, expressing concerns over the challenges facing its core hotel meta-business. Compounding this, the company faced a significant drop in stock price following an announcement that potential sale talks had stalled. Despite these setbacks, Goldman suggests that Tripadvisor may represent a hidden opportunity for savvy investors who can spot value amid pessimism.
Another standout on Goldman’s radar is **Shake Shack**, a chain known for its burgers and shakes. The firm estimates that the company’s earnings before interest, taxes, depreciation, and amortization (EBITDA) will surpass the consensus by 5% for 2025. Shake Shack’s stock has already jumped by an impressive 48% this year, suggesting that investor confidence could be building, despite challenges it may be facing. Analyst Christine Cho emphasizes this brand’s potential, citing its expansive total addressable market and customer engagement strategies, particularly in appealing to a broader demographic. Shake Shack’s ability to grow customer frequency could position it favorably in a competitive market.
**Conagra Brands** also offers a noteworthy case study in Goldman’s findings. Following an inclusion in Goldman’s upgraded conviction list, the company’s diversified portfolio in frozen foods and snacks aligns well with current consumer trends. Although Conagra recently faced a downturn, with a 9.1% stock drop following disappointing quarterly earnings reports, it managed to reaffirm its fiscal 2025 guidance. Despite the recent volatility, Goldman remains bullish on the company’s prospects, suggesting that the drop may provide a buying opportunity for investors.
With a growing number of stocks receiving bearish ratings from analysts, Goldman Sachs is signaling to investors that opportunities exist in the least expected places. Their analysis illustrates that even while the market sentiment tilts toward selling, there can be roots of strong performance just below the surface. Embracing a contrarian approach could yield notable rewards for those willing to delve deeper into the metrics that drive these companies, far removed from the noise of negative headlines and analyst downgrades.
While traditional market sentiment may steer investors away from stocks like Tripadvisor, Shake Shack, and Conagra, Goldman Sachs positions these names as potential success stories waiting to unfold. Investing in these stocks might require a leap of faith, but for those with a discerning eye, the potential rewards could be substantial.