Market Outlook: Where Are We Headed?
With only two months left in 2024, investors are eager to know what the future holds for the markets. Despite a lukewarm October jobs report, the trend remains upward, and many believe the Fed will cut rates again this month and possibly in December. This could be supportive of equities.
Diversification is Key
The team at Goldman Sachs recommends staying in the stock market and diversifying holdings. They suggest moving beyond mega-cap tech firms and exploring strength in fundamental sectors such as industry, finance, building, and energy.
Goldman Sachs’ Conviction List
Goldman Sachs’ analysts have compiled a ‘conviction list’ for November 2024, highlighting their top picks. Using the TipRanks database, we’ve examined two of their favorites.
Meritage Homes Corporation (MTH)
Meritage Homes, a top-five homebuilder in the US market, specializes in affordable homes with distinctive styling and quality construction. The company reported Q3 earnings, meeting Street expectations with revenue of $1.59 billion and EPS of $5.34. Goldman Sachs analyst Susan Maklari sees Meritage in a sound position for growth, predicting an increase in ROE by ~70bps to 14.8% through 2025. Maklari upgraded MTH to a Buy rating with a price target of $235, implying an upside of 28% for the coming year.
Suncor Energy (SU)
Suncor Energy, a major producer of synthetic crude, operates in the oil sands of Alberta. The company boasts a $48 billion market cap and generated total revenues of $37 billion-plus last year. Goldman Sachs energy sector expert Neil Mehta likes Suncor’s positioning, noting its strong potential for generating free cash flow and commitment to capital return. Mehta has a Buy rating on SU with a US$45 price target, implying a gain of 20% in the year ahead.
What’s Next?
Both Meritage Homes and Suncor Energy have Moderate Buy consensus ratings from the Street’s analysts. With the Fed likely to cut rates again, these stocks could be poised for growth. However, it’s essential to do your own analysis before making any investment.
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