Goldman Sachs names 40 stocks to buy before they surge to meet its higher price targets – including 5 with more than 50% upside

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Markets saw a strong start to the second quarter. The S&P 500 rose to a record high on April 1 and surpassed 4,000 points for the first time on the back of increased confidence in the economy that stemmed from vaccinations and Biden's infrastructure plan. 

During the first quarter, all 11 stock-market sectors saw gains. Cyclicals were the biggest winners, with the energy, financials, and industrial sectors posting double-digit gains during that period given that they are closely correlated with the fluctuations of the economy. And although the utilities, tech, and consumer staples areas still enjoyed some returns, they ended up performing the worst. 

However, since reaching record highs, stocks have proceeded to trade in a flat manner. But that might change soon enough as earnings season kicks off this week with big banks like JPMorgan and Bank of America sharing their financial reports with investors. 

Investors assess earnings to determine a company's profitability and use earnings per share as a metric to estimate its valuation. And analysts are expecting S&P 500 companies to post a 6% rise in bottom-up per-share earnings, according to FactSet. 

FactSet Senior Earnings Analyst John Butters said 61 S&P 500 companies have issued positive first-quarter guidance, up from the five-year average of 35. Earnings, on average, are expected to come in at $39.86 per share.

And while many names are expected to report attractive earnings, Goldman Sachs believes there are some that could boom and pleasantly surprise investors and analysts. 

In a recent note to clients, David Kostin, Goldman's head of US equity strategy, said the bank is forecasting the S&P 500 will rise just 5% to 4300 by year-end. That could make finding names that have the potential to skyrocket higher a challenging task.

Nevertheless, Kostin and his team laid out 40 stocks they believe can rise substantially — and all of them have more than 20% upside. They are listed below in descending order of upside, and we have included their corresponding tickers, prices as of March 31, and upsides to Goldman's price targets.

Ticker: REGN

Price: $473

Upside to GS target: 68%

Source: Goldman Sachs 

Ticker: INCY

Price: $81.3

Upside to GS target: 67.3%

Source: Goldman Sachs 

Ticker: VIAC

Price: $45

Upside to GS target: 66.3%

Source: Goldman Sachs 

Ticker: ENPH

Price: $162.2

Upside to GS target: 62.8%

Source: Goldman Sachs 

Ticker: VRTX

Price: $214.9

Upside to GS target: 58.2%

Source: Goldman Sachs 

See Also:

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• Goldman Sachs handpicks 40 stocks that will enjoy bigger earnings growth than Wall Street expects in 2021
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