How are energy investors positioned?
On Thursday, Goldman Sachs updated its US May Directors’ Cut Conviction List, a curated selection of stocks the firm believes hold strong investment potential. The latest revision saw the addition of investment banking firm Houlihan Lokey (NYSE:HLI) and healthcare giant Johnson & Johnson (NYSE:JNJ). Concurrently, the home construction company Meritage Homes Corporation (NYSE:MTH) was removed from the list.
This Conviction List is closely watched by investors as it reflects Goldman Sachs’ assessment of stocks that may outperform. The inclusion of Houlihan Lokey and Johnson & Johnson suggests a favorable outlook from Goldman Sachs on these companies’ prospects. Conversely, the removal of Meritage Homes Corporation indicates a shift in the firm’s view of the company’s relative investment appeal.
It is important for investors to note that Goldman Sachs has clarified the nature of this list. The firm stated, "Finally, inclusion on this list is not a stock rating and addition to or removal from this list does not necessarily represent a change in the analyst’s investment rating for such stock." This distinction is crucial as it separates the Conviction List from the firm’s official stock ratings, which are separate evaluations of a company’s performance and potential. For deeper insights, InvestingPro offers comprehensive analysis with 10+ additional ProTips and a detailed Pro Research Report, helping investors make more informed decisions.
The Conviction List is part of Goldman Sachs’ broader investment research and is intended to guide investors toward opportunities that the firm’s research suggests may be promising. The addition of Houlihan Lokey and Johnson & Johnson is likely based on thorough analysis by Goldman Sachs, which has identified factors that could drive performance for these stocks.
Investors often look to such lists for insights into potential stock picks, but it is recommended that they consider these in conjunction with broader research and analysis. The Conviction List is one of many tools that can be used to inform investment decisions.
In other recent news, Houlihan Lokey has announced the appointment of Billy Goldstein as a Managing Director in its Technology Group, focusing on digital infrastructure. Goldstein brings extensive experience from his previous roles at CDX Advisors, Goldman Sachs, and Macquarie Capital, having facilitated significant M&A transactions and client financing. In another development, Morgan Stanley (NYSE:MS) upgraded Houlihan Lokey’s stock rating from Underweight to Overweight, while reducing the price target to $190. Analyst Ryan Kenny cites Houlihan Lokey’s stable compensation ratio and diversified revenue streams as factors for the upgrade. The firm is recognized for its effective cost management strategies and resilience in managing earnings volatility. Additionally, Houlihan Lokey has been engaged by Kraft Heinz (NASDAQ:KHC) to facilitate the sale of its Italian baby food brand, Plasmon. This follows a previous attempt by Kraft Heinz to sell the brand in 2019. Binding offers for Plasmon are expected to be received by March.
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