Here’s a list of stocks coming out of earnings this week that are too attractive to ignore, say analysts at Goldman Sachs. Of the 250 companies in the S&P 500 that reported earnings for the fourth quarter, only 69.6% reported exceeding analysts’ expectations, according to Refinitiv. CNBC Pro combed through Goldman Sachs’ research to find the firm’s top ideas for companies exiting the quarterly report. These include Tractor Supply, Charter Communications, Exxon Mobil, General Motors and Caterpillar. The tractor supply farm supply retailer continues to impress, according to Goldman analyst Kate McShane. The firm turned even more positive on the name after Tractor Supply’s strong earnings report in late January. “TSCO reported strong 4Q22 results with both the top and bottom line exceeding GS/consensus estimates,” McShane said. He said that the strong tractor supply inventory, upbeat 2023 guide and traffic volatility are some of the reasons why investors should buy the stock now. Its Neighbor Club rewards program is also gaining traction, McShane wrote, and store remodels are continuing apace. Nevertheless, the analyst said there is still opportunity for share gains as competitors are not as strong in their niche, while Tractor Supply is a defensive name. “We remain Buy rated because we think TSCO is insulated from a difficult macro environment based on their <15% discretionary risk exposure, but also, and more importantly, the markets in which they operate, How fragmented he is." The company's shares are up 1.6% this year. Charter Communications The cable company is coming off a mixed quarterly report in late January, but Goldman said the shares are very attractive. Analyst Brett Feldman highlighted one important conclusion from Charter's latest quarterly results. "The cable operator is seeing a gradual recovery in the trend of its broadband customers," he wrote. The firm said a key catalyst is that Charter is beginning to see the fruits of expanding its presence in smaller markets, even if it means increasing capital expenditure in the short term. Furthermore, the cable behemoth is expected to increase its share buybacks in the coming years, which should please investors, the firm said. Feldman wrote, "We estimate that CHTR will repurchase approximately $40bn of stock over the next 5 years, representing approximately 60% of its market cap." The analyst, who raised his price target to $450 per share from $422, said Charter's potential for growth is undervalued. "At a high level, we believe that CHTR's successful implementation of price increases, despite high competition, indicates that the broadband market remains healthy and that providers of gigabit-capable services, such as CHTR, retain pricing power," They said. The stock is up nearly 20% this year. The Exxon Mobil oil and gas behemoth unveiled its fourth-quarter results earlier this week, missing analysts' estimates for revenue but beating expectations for earnings per share, according to FactSet. Still, analyst Neil Mehta said it qualified as a "strongly executed quarter." Mehta wrote that the company's results "highlight XOM's attractive capital return potential as well as Exxon Mobil's expectations for free-cash flow to come in the short term." The firm is bullish on the company's under-appreciated product pipeline in areas such as the Permian in West Texas and New Mexico, as well as its offshore project in Guyana. Shares are up 40% over the past year. However, Mehta said the valuation of the stock is still attractive as it is best positioned among major oil and gas producers. General Motors "While our new 2023 EPS estimate is below the mid-point of guidance, that reflects our expectation that pricing and mix will be in the opposite direction this year and near the high end of what we believe is implied in the guidance , we maintain our buy rating. The stock reflects GM's long-term opportunities in both EVs and AV (where we see Cruise as a technology leader, and growing this business profitably will be a debate for investors. Charter Communications "Our key takeaway from CHTR's 4Q22 results is that the cable operator is witnessing a gradual recovery in its broadband subscriber growth. … We estimate that over the next 5 years CHTR will repurchase approximately $40bn of stock representing approximately 60% of its market cap … At a high level, we believe that CHTR is valued for growth despite high competition Successful implementation indicates that the broadband market remains healthy and that providers of gigabit-capable services, such as CHTR, retain pricing power. Tractor Supply" TSCO reported strong 4Q22 results, with a topline and bottom line above GS/consensus estimates. ... We remain Buy rated as we think TSCO based on its <15% discretionary risk exposure insulated from a tough macro environment but also, more importantly, how fragmented the market they operate in is. ... Tractor Supply's inventory position looks healthy. ... TSCO's Neighbor Club Regarding, the company earned more than 28 million members and the program accounted for approximately 75% of TSCO's sales. " Caterpillar "Solid margins balanced by strong supply-demand balance. We maintain our Buy rating on CAT relative to our machinery coverage as we believe CAT is positioned to drive mid to high single digit unit profitability growth through the cycle driven by increasing autonomous product features and the value of dealer network uptime amid ongoing manufacturing labor inflation." Exxon Mobil "Strong Execution Quarter; Continued Buy and Trade Changes on Convenient Upstream Project Queue. We update our estimates for ExxonMobil following 4Q22 results, where the company came in strong versus GS estimates with both E&P and Refining results earnings beat. ... We continue to highlight XOM's attractive capital return potential, while also expecting XOM's FCF breakeven to decrease over time."
Goldman Sachs says these stocks have a big upside after earnings
