Goldman Sachs top 2023 picks include Chipotle & Amazon
Goldman Sachs analysts have revealed their favorite stocks to buy for 2023. The firm said this week there’s a host of familiar names that analysts believe are attractive in a tough macro environment. CNBC Pro combed through top Goldman research to find the bank’s top picks heading into next year. They include: Amazon, Weyerhaeuser, Boeing, Chipotle, Humana and Bath & Body Works. Weyerhaeuser The wood products manufacturer is well positioned for high inflation and a recession, the firm said. Analyst Susan Maklari named the stock her top idea for 2023. Maklari said in a note to clients that, while housing may be down, raw materials are not, and that should delight investors of Weyerhaeuser. The firm said it expects timberland prices “will hold ahead of pre-Covid norms as they moderate given structural shifts in underlying cost structures.” In addition, timberlands have historically been an “attractive asset class” in a tough macro, she added noting timber represents 85% of the enterprise value. Another focus heading into next year is shareholder returns, Maklari noted, with more dividends and repurchases likely to come in the months ahead. Weyerhaeuser shares are down more than 20% this year. “”In our view, WY’s defensive profile is uniquely positioned against the macro backdrop,” she said. Boeing Everything is coming together for the aerospace giant, according to analyst Noah Poponak. Shares are up about 40% over the past six months, and they have more room to run in 2023, he said. “Global air travel has largely recovered, airlines are placing orders for new planes at a near-record pace, the MAX and 787 are delivering and production rates are ramping, and China is de-risked from the MAX skyline,” Poponak said in a recent outlook note. The firm sees “cyclical and long term upside” for the stock and urged clients to buy the stock now. Poponak added that the aerospace aftermarket is the place to be for investors right now. He called it one of the “best businesses in Industrials.” Boeing also sits on the firm’s prestigious conviction buy list, and Poponak has a price target of $242 per share. “Aerospace is a long-cycle industry, and we believe 2023 is very early days in a new cycle, with multiple years of strong growth from a low starting point still to come,” he noted. Chipotle Chipotle is down 19% this year, but analyst Jared Garber said the stock is greatly undervalued heading into 2023. Chipotle continues to “report strong same-store sales as incremental marketing and menu innovation for both companies contribute to top-line growth,” he said. Garber also said the company’s robust digital presence and loyalty program is attractive new consumers who appreciate Chipotle’s value. “We continue to see CMG as digital leader in the restaurant industry and believe the company will continue to use product innovation and promotional activity to create a protective moat around the brand and re-accelerate traffic in 2023,” he said. In addition, the stock has a relatively defensive business model, according to the firm. “A strong balance sheet and US-only exposure also removes potential overhangs into FY23 from interest rate risk or a more challenging macro in international markets,” Garber wrote. Humana “HUM: Upgrade to Buy on improved competitive positioning and underappreciated services opportunity. … We also see an attractive and still underappreciated HC services opportunity, with primary care earnings having potential to outperform guidance given at its Sept. investor day. … Despite the stock’s outperformance in 2022 the stock trades in-line with its historical median despite higher forward EPS CAGR of 15% vs. its 3-yr.history of 12%.” Boeing “We see substantial cyclical and long-term secular upside at Boeing & much of its supply chain. Aerospace aftermarket is one of the best businesses in Industrials. … Global air travel has largely recovered, airlines are placing orders for new planes at a near-record pace, the MAX and 787 are delivering and production rates are ramping, and China is de-risked from the MAX skyline. … Boeing also sits on the firm’s prestigious conviction buy list.” Chipotle “CMG and WING continue to add stores and report strong SSS as incremental marketing and menu innovation for both companies contribute to top-line growth, with price increases also a significant contributor to CMG’s SSS growth. … Continue to see CMG as digital leader in the restaurant industry & believe the company will continue to use product innovation & promotional activity to create a protective moat around the brand & re-accelerate traffic in ’23. A strong balance sheet & US-only exposure also removes potential overhangs into FY23 from interest rate risk or a more challenging macro in intl. markets.” Weyerhaeuser “In our view, WY’s defensive profile is uniquely positioned against the macro backdrop. Specifically, we highlight: 1) timberlands, which represent 85% of our enterprise value, have historically been an attractive asset class in an inflationary environment, 2) our estimate wood product prices will hold ahead of pre-Covid norms as they moderate given structural shifts in underlying cost structures.” Bath & Body Works “BBWI stock has started to appreciate more meaningfully since the company reported in late November after an inline sales result but better than expected merchandise margins. We continue to recommend BBWI into 2023 given a higher level of newness in stores, increased digital interest and higher sales driven by the company’s new loyalty program, and some easing inflationary headwinds on both products costs and transportation.” Amazon “AMZN (multiple years of stock underperformance as margins have absorbed COVID and macroeconomic headwinds; rising utility nature of the shopping habits of the Prime user base; cross platform narratives building across advertising & media consumption, potential for margin self-repair in 2023 and beyond; well established multi-year secular growth opportunity for AWS (despite near-term headwinds).”
