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October is set to be a particularly volatile month for the market. That’s because this is a critical period for many investors and companies that manage performance to calendar year-end. So how can you best take advantage of the current investing climate? One option is to turn to value stocks. Luckily Goldman Sachs has released a report revealing its top value stocks right now. According to the firm, these are stocks that "have the potential for continued asymmetric upside."
"While fundamentals will also determine the long-term trajectory of stocks, we use signals from options and credit markets to identify 20 value stocks from among those where our analysts' estimates show strong value scores," the firm’s Vishal Vivek told clients recently. These are stocks that sold off over the last year, but are now showing strong rebound potential.
Here we ran the 20 stocks recommended by the firm through our database to find the 5 stocks on the list with the most Street support. Indeed, as you will see below, all five stocks covered below show a ‘Strong Buy’ or ‘Moderate Buy’ consensus from Wall Street. This is based on all the ratings received by each stock over the last three months- and means analysts believe now is a compelling time to buy into these names. Let’s take a closer look:
1. Marathon Petroleum
Based in Ohio, Marathon Petroleum (MPC – Get Report) is a leading downstream energy company. The company operates the US’s largest refining system 3 million + barrels per day of crude oil capacity across 16 refineries. Five out of six analysts covering Marathon are bullish on the stock’s outlook. And the average analyst price target works out at $68 (23% upside potential). Encouragingly, MPC’s 2Q19 results came in strong across the board. Plus synergies from its Andeavor acquisition are starting to come through more rapidly. Achieving a $1.4 billion synergy target would be a major catalyst says RBC Capital’s Brad Heffern.
He is also a fan of Marathon’s retail business, Speedway. This “is the most attractive retail franchise in our coverage universe, and the extension of the Speedway model to the acquired ANDV stores could provide meaningful upside” stated the analyst. Even though the stock is trading down 7% year-to-date, shares have rallied 12% since the start of September.
2. Morgan Stanley
All four analysts covering Morgan Stanley (MS – Get Report) rate the stock a buy right now. On average these analysts see shares climbing 37% from current levels. Most tellingly, Citigroup’s Keith Horowitz recently upgraded MS from Hold to Buy while boosting his price target from $48 to $52. He advised investors to use weakness as an opportunity to increase exposure to a high-quality franchise with limited rates exposure.