Conviction list: Goldman Sachs says these ASX 200 stocks are strong buys

Goldman Sachs believes these are top options for investors this month.

| More on:
A fit man flexes his muscles, indicating a positive share price movement on the ASX market

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

A new month is here, so what better time to look at some new additions to your portfolio?

If you're on the lookout for some ASX 200 stocks to buy, then it could be worth listening to what Goldman Sachs is recommending.

Which ASX 200 stocks is Goldman recommending?

Goldman believes that investors should be buying Lifestyle Communities Ltd (ASX: LIC) shares.

It is a developer, owner and manager of affordable independent living residential land lease communities. At the last count, the company had 28 residential land lease communities under contract, in planning, in development, or under management.

Goldman recently reiterated its conviction buy rating and $27.95 price target on its shares. This implies potential upside of approximately 93% from current levels. The broker said:

The long-term outlook for LIC is very positive — we believe outperformance of the stock will be driven by: (1) a step up in the pace of land acquisitions, with industry build rates below demand from an ageing population; (2) structural growth in demand for land lease as the sector increases its penetration among retirees; (3) fundamental valuation support for cap rates. In our view, the next step for LIC is to expand its development pace to three communities p.a., which we believe will be a key catalyst for the stock, and we see LIC as well capitalised to fund a faster development pace through its capital recycling model. With LIC offering the highest 3-year AFFO CAGR relative to peers on at a slightly above median P/AFFO multiple, we remain Buy-rated (on CL).

Anything else?

Another ASX 200 stock that Goldman has on its conviction list is mining giant Rio Tinto Ltd (ASX: RIO).

The broker currently has a conviction buy rating and $136.10 price target on its shares. This implies potential upside of over 19% from current levels. There's also a healthy dividend yield of 6%+ expected in FY 2024.

Goldman believes the company is well-placed to grow its production and sees a lot of value in its shares at current levels. Particularly given Rio Tinto's free cash flow generation and big yield. It explains:

We are Buy rated (on CL) on RIO due to: (1) compelling relative valuation vs. peers, (2) Strong FCF and dividend yield with our bullish view on iron ore, aluminium and copper prices, (3) Strong production growth in 2023 & 2024, (4) Pilbara turnaround (~50% of group NAV), (5) Compelling high margin low emission aluminium exposure.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Broker Notes

Man holding out Australian dollar notes, symbolising dividends.
Broker Notes

The smartest Australian stocks to buy with $250 right now

$250 to invest? Check out these stocks that brokers rate as buys.

Read more »

A woman wearing dark clothing and sporting a few tattoos and piercings holds a phone and a takeaway coffee cup as she strolls under the Sydney Harbour Bridge which looms in the background.
Broker Notes

1 magnificent Aussie stock down 23% to buy and hold forever

Let's see why this could be a top share to buy while it is down.

Read more »

Three people in a corporate office pour over a tablet, ready to invest.
Broker Notes

Top brokers name 3 ASX shares to buy today

Here's what brokers are recommending as buys this week.

Read more »

A man has a surprised and relieved expression on his face. as he raises his hands up to his face in response to the high fluctuations in the Galileo share price today
Broker Notes

Bell Potter says this ASX 200 stock can rise 100%+

Let's see which stock the broker is tipping as a buy to clients.

Read more »

Man sitting in a plane looking through a window and working on a laptop.
Broker Notes

Macquarie tips 28% upside for this ASX All Ords tech stock

Let's see what the broker is saying about this growth stock.

Read more »

A man looking at his laptop and thinking.
Broker Notes

Up 17% in 2025, how much more upside does Macquarie tip for Metcash shares?

Following Tuesday’s merger and earnings news, Macquarie changed its rating for Metcash shares.

Read more »

Female ASX travel shares investor with surprised expression drinks a cup of tea while reading the newspaper at her desk
Broker Notes

Macquarie is tipping this top ASX 200 share to deliver a 35% return

The leading broker sees major upside potential for this growing company.

Read more »

Business man at desk looking out window with his arms behind his head at a view of the city and stock trends overlay.
Broker Notes

Leading brokers name 3 ASX shares to buy today

Here's why brokers believe that now could be the time to snap up these shares.

Read more »