Alibaba Group Holding Ltd (BABA)

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Market Alert: Goldman Sachs is betting on these five 'Conviction Buy' stocks to buy for big growth
By: InvestorPlace | October 18, 2018

The market is looking undeniably choppy right now but Goldman Sachs is staying upbeat about stocks to buy. “We see limited further downside,” David Kostin, chief U.S. equity strategist, said in a note on Oct. 15.

“Despite the recent selloff, equity fundamentals are strong and we remain constructive on the path of the S&P 500.” Indeed, the firm has a year-end S&P 500 price target of 2,850. Right now the market is at just 2,809.

With this bullish outlook in mind, which stocks stand out from the crowd? Here I dive into five stocks highlighted by the firm as “Conviction Buys.” I also include each stock’s price target, so you can get an idea of the kind of upside anticipated by the firm. Let’s take a closer at Goldman’s top stocks to buy now:

Alibaba (BABA)

Alibaba Group Holding Ltd (NYSE:BABA) may be down 14% year-to-date, but the fact remains this is a killer stock. And the long-term picture is firmly intact.

“We remain impressed with Alibaba’s overall leverage to China consumption growth given its strategy, positioning, ability to build new businesses (such as new retail) and its execution,” Goldman Sachs’ Piyush Mubayi (Track Record & Rating) told clients. “We expect Alibaba to continue to invest for future growth on multiple fronts.”

These investments cover everything from retailing and digital advertising to local services and entertainment. As a result, Mubayi expects BABA is looking at a total addressable market (TAM) of ~RMB 80 trillion by 2020E. He reiterated his BABA buy rating earlier in the month, while ramping up his price target from $241 to $247. From current levels that means massive upside potential of 67%.

Already, Alibaba’s cloud business market share in China jumped to 46% last year, up from 30% in 2015. Meanwhile, Alibaba’s Ant Financial now boasts 640 million customers using at least two of its services.

“In our view, the continuous investment in cloud technology demonstrates Alibaba’s determination to solidify its leading position in the industry and take up more market share in the future,” he said. “We believe Ant Financial will continue to be the “enabler” of Alibaba’s New Retail strategy and help the company navigate the globalization road map.” Interested in BABA stock? Get a free BABA Stock Research Report.

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