As August rolls in, Goldman Sachs has refreshed its U.S. conviction list, spotlighting some compelling stock picks that savvy investors should watch closely. While markets took a breather on Friday, stocks remain perched near all-time highs, buoyed by a mix of solid corporate earnings, moderate economic data, and the tantalizing prospect of Federal Reserve interest rate cuts. Add to that the hopeful progress in trade talks, and the stage is set for some intriguing investment opportunities.
One standout newcomer to Goldman’s list is commercial insurance giant Aon (AON). Despite a modest 2% dip this year, Goldman’s bullish $430 price target suggests a potential 21% upside. What’s driving this optimism? It’s a potent combination of talent acquisition, strategic synergies, and a rebound in M&A and capital markets activity expected to generate robust free cash flow. Aon’s recent acquisition of National Financial Partners (NFP) in April 2024 is a key catalyst, enhancing its growth prospects. Goldman projects Aon’s free cash flow to exceed consensus estimates by over 9% through 2026 and 2027, signaling strong organic growth ahead.
Here’s a unique angle for investors: The insurance sector, particularly reinsurance and benefits providers like Aon, is positioned to benefit from rising demand for risk management solutions in an increasingly uncertain global environment. According to a recent report by McKinsey, global insurance premiums are expected to grow at a compound annual rate of 4.5% through 2027, driven by digital transformation and evolving risk landscapes. For advisors, this means integrating insurance stocks like Aon into client portfolios could provide a defensive yet growth-oriented hedge against market volatility—a strategy not yet widely embraced but ripe with potential.
Another high-flyer on Goldman’s radar is Pinterest (PINS), which has already surged 29% this year. Yet, with a revised price target of $44 per share from Guggenheim’s Michael Morris, there’s room for another 11% climb. Pinterest’s monetization story is gaining traction, especially through its Performance+ initiatives fueled by AI advancements and expanding partnerships with platforms like Magnite, Instacart, and Amazon. This positions Pinterest uniquely at the intersection of social media and e-commerce—a space growing at an explosive pace. For context, eMarketer forecasts U.S. social commerce sales to exceed $80 billion by 2025, underscoring the massive runway for companies like Pinterest.
What should investors do differently here? The key is to look beyond surface-level growth and focus on companies leveraging AI and strategic partnerships to unlock new revenue streams. Pinterest’s early-stage monetization efforts are a blueprint for other social platforms aiming to convert user engagement into sustainable cash flow. Advisors might consider increasing exposure to such digital ad players, particularly those integrating AI-driven advertising solutions, to capture the next wave of digital marketing growth.
Lastly, Duke Energy (DUK) rounds out Goldman’s top picks with a 14% gain year-to-date and another 9% upside potential. The utility’s story is one of regulatory progress and strategic capital expenditure in generation capacity—factors that Goldman believes are undervalued by the market. Duke’s recent upgrade from neutral to buy reflects increased confidence in load growth and balance sheet strength. Notably, Duke trades at a discount compared to other premium utilities, offering a compelling risk-reward profile.
From an investor’s perspective, utilities like Duke are becoming increasingly attractive as inflation hedges and sources of steady income amid economic uncertainty. The U.S. Energy Information Administration (EIA) projects that renewable energy sources will account for nearly 42% of electricity generation by 2050, and utilities investing in clean energy infrastructure stand to benefit immensely. Thus, incorporating utilities with strong regulatory and growth outlooks into portfolios can provide a stable foundation while aligning with the global energy transition.
In summary, Goldman Sachs’ latest picks—Aon, Pinterest, and Duke Energy—each tell a distinct story of growth, innovation, and resilience. For investors and advisors, the actionable takeaway is clear: diversify across sectors that combine structural growth drivers with favorable market conditions. Embrace insurance stocks for their defensive growth, digital platforms harnessing AI for explosive monetization, and utilities positioned for the energy transition. Staying ahead means not just following the crowd but understanding the nuanced trends shaping tomorrow’s market leaders.
What’s next? Keep a close eye on earnings reports and regulatory developments for these stocks. Monitor how AI integrations evolve in digital advertising and how insurance firms capitalize on M&A synergies. For utilities, watch for policy shifts and infrastructure investments that could accelerate growth. This multi-sector approach, backed by data and expert analysis, is your roadmap to navigating the complex market landscape ahead.
Source: Here are Goldman’s best-of-the-best stock picks heading into August