Goldman reveals its brand new ‘conviction list’ of European stocks — giving one nearly 150% upside
Goldman Sachs has a new list of top stock picks for Europe, which it called its “most differentiated” ideas for the region. The “European Conviction List – Directors’ Cut” is the bank’s “curated and active” list of 15 to 25 buy-rated stocks. Goldman already has a conviction list of stock ideas across regions — which includes its top buy-rated stocks it expects to outperform. But what makes the “Directors’ cut” list different is that the names are selected by a subcommittee designated by the bank’s Europe Investment Review Committee. “The subcommittee will collaborate with each sector analyst to identify top ideas that offer a combination of conviction, a differentiated view and high risk-adjusted returns,” Goldman wrote in the Oct.1 note. “After a couple of years of macro driven markets, we believe stock picking has become more important. Indeed, our strategists have written about alpha mattering more than beta during a period in which they see little index returns,” the bank said. “This new curated list seeks to highlight our best alpha opportunities.” Goldman presented 18 European names in this new list, which it will update monthly. Seven names Here are seven of them — one from each of the sectors that are presented in the list. Here’s what Goldman said about each stock. Puma : The bank pointed to the sportswear brand’s “strong brand momentum,” which bodes well for overall sales growth. “Puma remains the cheapest sportswear brand globally under GS coverage,” Goldman said. It said that’s “unwarranted” for a stock at mid-to-high teens in its earnings before interest, taxes, depreciation and amortization, and in its compound annual growth rate (from 2022 to 2024). That’s in line with most of its global peers, it said. Volvo : The automaker has one of the strongest balance sheets across the European industry, while being “relatively cash generative” at around 10% free cash flow yield, Goldman said. That means more scope for high cash returns to shareholders – including dividends and buybacks. Vonovia : Goldman said key drivers for this German property giant include low vacancy, high funding costs and an increasing population. Philips : The bank noted an improving growth and margin backdrop for the Dutch health-care equipment maker. “Philips is emerging from a challenging operating environment with underappreciated leverage to easing supply chain/logistics pressures,” said Goldman. Enel : The bank pointed to the Italian energy company’s balance sheet — which it said is “one of the strongest” in Europe — and said its improving balance sheet is underappreciated by the market. Goldman also sees scope for Enel to grow its dividends from 2026 onward. BT Group : Goldman said BT Group is at a “key inflection point,” with customer demand being more robust than BT itself expected. Investment in its infrastructure is also being monetized, with higher prices driving accelerating revenue growth. Bureau Veritas: The bank expects Bureau Veritas, which offers testing, inspection and certification services in a variety of sectors, to grow at a faster rate than its peers. That’s thanks to its “early-mover advantage” in terms of its exposure to areas like energy transition, energy security and sustainability, Goldman said. — CNBC’s Michael Bloom contributed to this report.
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