Goldman Sachs names 4 ASX stocks to buy
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The Goldman Sachs team has reviewed the federal budget and delivered its verdict on how it expects consumer spending to be affected.
What did the broker say?
Goldman expects the budget to support consumer spending in years to come. However, he suspects spending may not be equal across the economy.
“Amid robust consumer spending (~6.7% FY22-24e), we expect more of it to go to services spending, with some catch-up on lifestyle services (travel, entertainment, etc. ., ~10.8% FY22-24e) post COVID, while essential services (~7.3% FY22-24e) and consumer staples (~4.4% FY22-24e) will remain a relatively stable spending. We expect discretionary retail goods (household goods, apparel), which have benefited the most during the COVID shutdowns, to experience challenging growth (~-2.4% FY22-24e).
With that in mind, the broker named four ASX stocks to buy:
Goldman Sachs is positive on this beverage company and has a conviction buy rating and $8.00 price target on its stock.
He explained why he is positive, saying, “For the breadth of its consumer assets and the depth of its loyalty as well as a more advanced digital transformation resulting in market share gain and faster growth in sales and margin expansion. F&B retailers are also more defensive of cost inflation and supply chain disruptions in China, given better bargaining power and a more localized supply chain.
Harvey Norman Holdings Limited (ASX: HVN)
The broker prefers Harvey Norman to his rival JB Hi-Fi Limited (ASX:JBH). He has a buy rating and a price target of $5.80 on the former’s stock, while he has a sell rating and a price target of $39.00 on the latter.
Goldman explained: “We are cautious on door-to-door retailers due to exposure to supply chain disruption in China and cost inflation risks, while competition from pureplayers in line such as Amazon is accelerating. Between JBH and HVN, we prefer HVN due to greater protection against online competition given higher regional and baby boomer exposure as well as lower valuation.
Goldman thinks this online travel agent could be well positioned for post-COVID growth. So much so that he has a buy rating and a price target of $6.90 on his stock.
The broker commented: “We expect WEB to benefit from the tailwind of the travel recovery, delivering structurally improved profitability and a strong outlook for the Bedbanks business, which should resume the strong growth path it has set. undertaken before COVID.”
Woolworths Group Ltd. (ASX: WOW)
Its analysts are also bullish on retail giant Woolworths for the same reason as Endeavour. The broker likes the company because of the breadth of its consumer assets and its far-reaching loyalty program.
Goldman has a buy rating and price target of $40.50 on the company’s stock.