Several stocks that have underperformed in 2024 may be poised for substantial gains in coming months, according to Goldman Sachs. The last trading month of 2024 has been off to a solid start, adding to the year-to-date gains across all three major stock market averages. On Wednesday, the S & P 500 and the Nasdaq Composite reached new closing records and the Dow Jones Industrial Average closed above 45,000 for the first time. Yet some stocks that have lagged this year could outperform in the first quarter of 2025, the investment bank said. Since Goldman began tracking data surrounding the “laggards” trade in 2002, the trend has been proven correct in 13 years. “Looking towards laggards of 2024, the YTD index-relative performance of this group (-39%) is similar to 2023 but worse than the -27% long-term average,” analyst Deep Mehta said in a Wednesday note. “From a sector composition perspective, Healthcare, Industrials, Tech, and Consumer feature prominently, and from a factor standpoint we note a tilt towards slow financial returns and high growth.” Taking into account the historically “mixed” performance of laggards, Mehta screened for this year’s laggards across key themes, including those that have differentiated buy ratings among analysts. In other words, those are buy-rated stocks where Goldman analysts are out-of-consensus while most of Wall Street is neutral or has a sell rating. Here, the analyst characterizes laggards as those that meet at least two of the following criteria: In the bottom-third for full-year share price performance (versus all S & P 500 constituents) In the bottom-third for full-year share price performance (versus Global Industry Classification Standard [GICS] level 1 sector peers) In the bottom-third for drawdown from annual high water mark (versus all S & P 500 constituents) Below are a few stocks where Goldman says it has differentiated bullish views versus the market consensus. Conagra Brands shares have tumbled in recent weeks in the aftermath of President-elect Donald Trump tapping Robert F. Kennedy Jr. for secretary of the Department of Health and Human Services when the new administration comes into office. Kennedy has advocated for sweeping reforms to the Food and Drug Administration – such as the removal of nutrition departments – sending processed food stocks lower amid fears of a crackdown. Goldman – who has a buy rating on Conagra and sees 30% upside ahead, as of Dec. 3 – noted that most of the Street is no more than neutral, with 72% of the 18 analysts covering it rating it no more than a hold, according to data from Goldman and FactSet. Only 17% of analysts rate it a buy, while 11% have it as a sell. Conagra has fallen about 5% in the past month and about 15% in the past three. Year to date, the stock has fallen more than 3%. CAG YTD mountain CAG, year-to-date TripAdvisor has fared far worse, sliding more than 33% this year. While the stock has risen nearly 3% in the past three months, it’s down more than 13% in the past month. Goldman joins the 20% of analysts covering the online travel company that have a buy rating, according to the bank and FactSet, and it sees 70% upside to its target from the close on Dec. 3. Meanwhile, 60% of the 20 analysts covering the stock rate it neutral, and the other 20% carry a sell. TRIP YTD mountain TRIP, year-to-date Pool Corporation is another stock that may be poised to recover, Goldman said. Although shares have rallied in recent months, they’re still down nearly 6% in 2024. The bank sees 20% upside based on its 12-month price target and the close on Dec. 3. Goldman is positive on Pool, standing among the 33% of analysts covering the stock who rate it the equivalent of a buy, the bank said. Of the 12 analysts who cover Pool on the Street, half rate it hold and 17% have a sell rating.
Goldman says these lagging stocks will turn around in 2025