Goldman Sachs said this week that there are plenty of stocks with perfect stock prices. But the Wall Street investment bank recently named five other companies that analysts say still have plenty of growth potential. CNBC Pro combed through Goldman Sachs research to find some undervalued buy recommendations. These include Workday, CrowdStrike, CAE, BJ’s Wholesale Club and Ducommun. CAE analyst Noah Poponac said the Canadian training and simulation provider for pilots, flight attendants, maintenance technicians and ground crew has fallen in stock price, leading to a buy recommendation. Goldman said the stock price has been unfairly depressed by struggles in CAE’s two main divisions, civil aviation and defense. “The defense business’s struggles have contributed to the share price decline, and the company as a whole is at a significant discount to comparable aerospace supply chain peers,” he wrote. As a result, “[w]”We believe this valuation multiple does not adequately value the growth and margin profile of the private sector,” he added. CAE shares are down 17% this year. “It’s a significantly undervalued private aerospace asset,” Poponak concluded. BJ’s Wholesale Clubs BJ’s is certainly running at full speed, says analyst Kate McShane. The warehouse club offers fast-growing membership, traffic and other benefits, according to Goldman. McShane, who upgraded BJ’s earlier this year, says the company’s profitability is solid due to “favorable traffic trends, unit growth in the grocery department and improved customer engagement.” BJ’s recently reported better-than-expected results on sales and profits and reaffirmed its outlook for the future. Goldman sees the quarterly results as evidence that growth opportunities remain abundant. For example, BJ’s continues to open new stores in new markets, she says. “We’re watching BJ’s as it has a long path of growth for new clubs and should continue to gain market share going forward,” McShane said. McShane noted that BJ’s stock is up about 20% this year and has room to go even higher. Workday In a recent note outlining Enterprise Cloud Management’s second-quarter earnings report, analyst Kash Langan wrote that Workday also has growth opportunities thanks to management’s strategy execution. Goldman said Workday has been executing on several growth initiatives that are paying off. “We believe Workday is poised to grow into a $20 billion-plus business as the financial industry moves to the cloud following the cloud migration of its core business. [human capital management] “The company is a flagship product,” Langan wrote. Langan praised the company’s ability to retain customers even after the pandemic, as it continues to build “best-in-class customer retention rates.” Meanwhile, Workday’s stock is priced attractively, according to Goldman. “There is pent-up demand for large strategic projects related to Workday’s products, which should provide continued secular growth over the next few years,” Langan wrote. Workday’s stock has surged nearly 25% in the past three months, narrowing its year-to-date losses to about 5%. Crowdstrike “Based on management’s comments over the past few weeks and industry conversations, we are confident that CRWD can return to 20%+ revenue growth and 30%+ EPS growth within a 12-24 month time frame. Our view is further supported by CRWD’s comments on earnings, as we believe the company is executing a thoughtful strategy of transparency and engagement to regain its multi-year industry leadership position.” CAE “Major undervalued commercial aerospace assets… The struggling defense business has contributed to the stock price decline, and the company’s overall valuation level is significantly cheaper than comparable aerospace supply chain peers. … We believe this valuation multiple does not adequately value the growth and margin profile of the commercial segment.” BJ’s “We see BJ’s earnings continuing to rise due to better top-line prospects based on continued favorable traffic trends, unit growth in the grocery division, and expected improved customer engagement in the general merchandise division as a result of the company’s assortment refresh… We see a long trajectory of growth for BJ’s new clubs, which should continue to gain market share in the future.” Workday “WDAY believes it is poised to grow into a $20B+ business with financials moving to the cloud following its core HCM flagship product…We believe there is pent-up demand for large strategic projects related to WDAY’s products that will sustain long-term growth over the next 20 years.” [the] Over the next few years. WDAY’s best-in-class customer retention, successful cross-selling activities and early adoption of gen-AI services in-house provide a strong leverage area.” Ducommun “Strong growth outlook. We expect DCO to benefit from its exposure to aerospace original equipment as OEMs significantly increase production to meet strong demand. DCO is expanding into the aerospace aftermarket, where fundamentals are strong. The defense business has been under pressure recently, but recent orders and ease of comparisons should see that segment accelerate.” More details on this conference call can be found here.
Goldman Sachs Says You Should Buy These 5 Undervalued Stocks
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