Goldman Sachs: Buy and Avoid

This was a tangential subject of discussion during the March Round Table. We’ve added Goldman Sachs price targets and will be monitoring them versus ACE and S&P.

Nutshell: Might this be a way to gauge sentiment? In this case, these differentials could deliver influence or impact, providing a potentially meaningful sentiment indicator.

Gs buy avoid list 20150331

As a quick reminder to be careful out there, this is what this morning held for Garmin (GRMN).

That’s a reduction from $63 to $54.


Grmn gs opinion 20150402

More Fun With Goldman Sachs

When they’re not doing “God’s work” or referring to retail investors as Muppets, Goldman Sachs (GS) makes some calls — long and short — that can be influential in the market. In some Wall Street circles, the legions of Goldman Sachs are playfully known as Masters of the Universe.

In addition to the two lists shared above, here’s a list of nineteen stocks that Goldman Sachs believes are headed for price swoons — a list of stocks to sell short.

Goldman Sachs offers three criteria on how to pick stocks to short:

  • Look for individual stocks with high valuations that have a tendency to underperform;
  • take hints from mutual funds as they do a good job of selecting shorts;
  • and look for stocks that are likely to move on company-specific factors and are less prone to moving with general market and sector trends.

Among the overvalued stocks Goldman thinks could drop are Celgene (CELG), OReilly Automotive (ORLY) and Red Hat (RHT). Stocks underweight by mutual funds that could fall are HST, CTL and EQR; and likely to deviate from the broad market and their sectors are KLAC, JEC and COH.

Rounding out Goldman’s 19 stock recommendations that could reward short sellers: ARG, DO, DISCA, FLS, KSS, MOS, NDAQ, NVDA, TDC, WU.

Tracking Dashboard:

Here are the tracking dashboards for the Goldman MOST UPSIDE and MOST DOWNSIDE stocks as of 3/31/2015:

Round Table: Standing Room Only?

Queue Dozing?

If this persists, we may have to go to assigned seating for Pavilion seats at next year’s Round Table Awards?

Some of these long-term investors have camped out to save their place in the queue.

“Dude, if you’re gonna go with Southwest Airlines cattle car seating programs, we’re going to have to resort to this. But no worries, we do this all the time at places like Duke or Michigan State University.”

Yes, it’s true that Southwest Airlines (LUV) is in the running for one of the most prestigious categories on Saturday morning.

“No. We’re not cold. It’s not like we’re doing this in Michigan … or New York … or Wisconsin. This is a cyber event, Silly! Besides, word on the street is that Ken Kavula has been red hot with his Round Table picks lately. We want to know how hot.”

True. But you’ve got the pajamas optional part right. Attendees are welcome to drop in with a cup of coffee and don their favorite casual attire. There is no truth to the rumor that Kathy Griffin or Joan Rivers will be doing fashion commentary tomorrow. I wouldn’t rule out a few pushups by Jack Palance, particularly if he’s nudged by Billy Crystal or Ellen Degeneres.

There’s still room and long-term investors are welcome and invited to join us. Yes, you may bring your sleeping bag.

Date: Saturday — March 1, 2014
Time: 11 AM ET (but the red carpet festivities will start at 10:30 AM ET)

Value Line Low Total Return Screen (3/1/2013)

Companies of Interest

Normally we limit the list of companies to the highest annualized total return candidates that also have a first or second quintile quality ranking. I made an exception in this case for Southwest Airlines (LUV) because of the forecast boosts in this week’s updates — earning LUV a spot on the Materially Stronger part of the update.

Materially Stronger: Clean Harbors (CLH), CoStar Group (CSGP), Gartner (IT), Genessee & Wyoming (GWR), Jack in the Box (JACK), Southwest Airlines (LUV)

Materially Weaker: Arkansas Best (ABFS), Frontline (FRO), United Parcel Service (UPS)

Market Barometers

The Value Line low total return forecast is 7.2%, down slightly from 7.3% last week.

Although we could face a correction near-term, no alarms are sounding on the New Highs vs. New Lows trend … suggesting that protective measures are not yet necessary. The S&P 500 relative strength index has relaxed back to 55.9 after recently being in the overbought (>70) range. Be selective and with MIPAR at 7%, select high-quality and bias overall portfolio quality and financial strength to the higher end of long-term target ranges.