In this piece, we will take a look at Goldman Sachs’s investment portfolio and the top 12 penny stock picks. If you want to skip our overview of one of the most well known investment banks in the world, its recent predictions, and the general U.S. stock market climate, then you can take a look at Goldman Sachs Penny Stocks: Top 5 Stock Picks.
The start of 2024 has been good for markets, in balance. The backbone of stock market performance is based on the U.S. economy, since if the economy is humming along, then businesses and consumers can have hope that their products will sell and they won’t end up losing their jobs. This translates into broader optimism for investors, as they become more comfortable piling their money into the stock market instead of safe haven assets such as the U.S. dollar and gold.
These days, one particular segment that has seen renewed interest is the money market. Money market funds typically involve cash based securities such as certificates of deposit. At the start of 2024 as January ended, data from the banking giant JPMorgan Chase & Co. (NYSE:JPM) showed that by January 25th, money market funds added $75 billion to their value. This came at a time when such funds typically see investors move their money out, and it reflected market expectations about interest rate cuts. The lower the interest rate is, the lower interest investors have in such funds, and given the recent surge in technology stock valuations on the back of artificial intelligence, it appears that the trend witnessed by JPMorgan might be starting to reverse.
This is because according to Bank of America Corporation (NYSE:BAC), in the week ending on Valentine’s Day, $27.7 billion flowed into stocks and bonds, while $18.4 billion moved out of cash. These billions of dollars of money sloshing around the system, which was the highest for the previous eight weeks, also led to the impressive rise in the technology sector. Artificial intelligence stubbornly remains the major theme for stocks in 2024, and it has seen the valuations of firms such as NVIDIA Corporation (NASDAQ:NVDA) rise significantly over the course of the past year. BofA’s data shows that the Magnificent 7 group of stocks, a list made of other big ticket and high profile technology stocks such as Microsoft Corporation (NASDAQ:MSFT) and Alphabet Inc. (NASDAQ:GOOG), have pocketed 140% in gains over the past 12 months – a level similar to the 150% gain that the Nifty 50 marked in the 1970s on the U.S. stock market.
So, as we talk about Goldman Sachs’s top penny stock picks, it’s important to note that when it comes to the stock market, the bank is resoundingly optimistic about the stock market’s performance in 2024. Its latest year end target for the flagship S&P 500 stock index sits at 5,200, a significant upgrade from an earlier target of 4,700 points. Mind you, the index has already reached these levels in 2024 as we exit February, and it pared back its gains only after multiple signals dented hopes of an early interest rate cut.
This bit is important even when we talk about penny stocks. After all, when we talk about the thousands of stocks that trade on markets such as the NASDAQ and the NYSE, penny stocks offer the highest odds of robust double and triple digit percentage returns. This means that broader market optimism at times when major indexes like the S&P 500 are rising also means that these stocks have the potential to be lifted by the rising wave too. For instance when we consider stocks that have delivered close to, or higher than triple digit percentage returns in 2024, the absolute majority turn out to be penny stocks. Some such penny stocks that have delivered strong price returns in 2024 are Beamr Imaging Ltd. (NASDAQ:BMR) and MicroCloud Hologram Inc. (NASDAQ:HOLO). The latter is a Chinese company developing holographic technology, and the former is an Israeli company that provides video encoding and other associated software products.
With these details in mind, let’s take a look at some of Goldman Sachs’s top penny stock picks. Within this list, a handful of top contenders are iQIYI, Inc. (NASDAQ:IQ), Ambev S.A. (NYSE:ABEV), and Banco Bradesco S.A. (NYSE:BBD).
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Our Methodology
To make our list of Goldman Sachs’s top penny stocks, we ranked all the stocks in the bank’s Q4 2023 investment portfolio by the average share price during the quarter. Then, the ones with an average share price less than $5 were re-ranked by the dollar value of Goldman’s position. Finally, the penny stocks with the greatest investment were chosen as Goldman Sachs’s top penny stock picks.
For these top Goldman Sachs penny stocks, we used hedge fund sentiment. Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here). That’s why we pay very close attention to this often-ignored indicator.
Goldman Sachs Penny Stocks: Top 12 Stock Picks
12. Gaotu Techedu Inc. (NYSE:GOTU)
Number of Hedge Fund Investors In Q4 2023: 12
Current Share Price: $4.88
Goldman Sachs’s Q4 2023 Investment: $25.3 million
Gaotu Techedu Inc. (NYSE:GOTU) is a Chinese firm that provides educational products and services. Ahead of its upcoming earnings release, investors will be on the lookout for the performance of its much hyped live stream e-commerce division.
During 2023’s December quarter, 12 out of the 933 hedge funds part of Insider Monkey’s database had invested in the firm. Gaotu Techedu Inc. (NYSE:GOTU)’s largest investor among these is D. E. Shaw’s D E Shaw through its $11.8 million investment.
Along with iQIYI, Inc. (NASDAQ:IQ), Ambev S.A. (NYSE:ABEV), and Banco Bradesco S.A. (NYSE:BBD), is a top Goldman Sachs’s penny stock pick.
11. Grab Holdings Limited (NASDAQ:GRAB)
Number of Hedge Fund Investors In Q4 2023: 37
Current Share Price: $3.53
Goldman Sachs’s Q4 2023 Investment: $27.6 million
Grab Holdings Limited (NASDAQ:GRAB) is a Singaporean software company that offers an app to allow users to deliver items, make payments, and conduct other tasks. The firm has been a focus of news coverage lately, after rumors surfaced that it was seeking to acquire an Indonesian ride hailing company – which the latter has denied.
As of Q4 2023 end, 37 out of the 933 hedge funds covered by Insider Monkey’s research had held a stake in Grab Holdings Limited (NASDAQ:GRAB). Chase Coleman and Feroze Dewan’s Tiger Global Management LLC was the firm’s biggest shareholder as it owned $172 million worth of shares.
10. Lucid Group, Inc. (NASDAQ:LCID)
Number of Hedge Fund Investors In Q4 2023: 12
Current Share Price: $3.51
Goldman Sachs’s Q4 2023 Investment: $27.6 million
Lucid Group, Inc. (NASDAQ:LCID) is an American electric vehicle company headquartered in Newark, California. Its shares have struggled as the EV industry struggles to find footing, and to stimulate demand, Lucid Group, Inc. (NASDAQ:LCID) announced a 10% price to its Air sedan in February 2024.
Insider Monkey scoured through 933 hedge funds for their December quarter of 2023 shareholdings to discover three Lucid Group, Inc. (NASDAQ:LCID) shareholders.
9. Kaltura, Inc. (NASDAQ:KLTR)
Number of Hedge Fund Investors In Q4 2023: 3
Current Share Price: $1.59
Goldman Sachs’s Q4 2023 Investment: $28.1 million
Kaltura, Inc. (NASDAQ:KLTR) is an American software company that offers a platform to enable users to access training and educational materials. Ahead of its latest earnings release in late February, the firm is undergoing a management transition and will see a new chief financial officer take charge soon.
By the end of last year’s fourth quarter, three out of the 933 hedge funds profiled by Insider Monkey were the firm’s investors. Kaltura, Inc. (NASDAQ:KLTR)’s largest hedge fund investor is Jim Simons’s Renaissance Technologies due to its $684,000 investment.
8. Nordic American Tankers Limited (NYSE:NAT)
Number of Hedge Fund Investors In Q4 2023: 16
Current Share Price: $4.22
Goldman Sachs’s Q4 2023 Investment: $31.6 million
Nordic American Tankers Limited (NYSE:NAT) is a Bermuda based ocean logistics firm that operates crude oil tankers. The shares have held up well on the market over the past twelve months, as despite turmoil in the stock market, they are up by 14.81% over the past 12 months.
After scouring through 933 hedge funds for their fourth quarter of 2023 investments, Insider Monkey found that 16 had bought and owned Nordic American Tankers Limited (NYSE:NAT)’s shares. John Overdeck And David Siegel’s Two Sigma Advisors was the biggest hedge fund stakeholder through its $14 million stake.
7. Perfect Corp. (NYSE:PERF)
Number of Hedge Fund Investors In Q4 2023: 10
Current Share Price: $2.42
Goldman Sachs’s Q4 2023 Investment: $33.1 million
Perfect Corp. (NYSE:PERF) is a small Taiwanese technology company that offers unique solutions that enable shoppers to virtually try on make up. Amidst the current artificial intelligence wave, the firm has been busy leveraging niche by introducing AI based technologies such as skin simulation.
As of December 2023 end, ten out of the 933 hedge funds tracked by Insider Monkey were Perfect Corp. (NYSE:PERF)’s shareholders.
6. Mizuho Financial Group, Inc. (NYSE:MFG)
Number of Hedge Fund Investors In Q4 2023: 7
Current Share Price: $3.68
Goldman Sachs’s Q4 2023 Investment: $42.9 million
Mizuho Financial Group, Inc. (NYSE:MFG) is a Japanese bank that is one of the biggest of its kind in the country. As investors sour on China and turn their sights on India, the firm made a big move in 2024 when it invested $144 million in an Indian credit card company.
After digging through 933 hedge funds for their December quarter of 2023 shareholdings, Insider Monkey found that seven were the firm’s investors. Out of these, Mizuho Financial Group, Inc. (NYSE:MFG)’s biggest shareholder is Jim Simons’s Renaissance Technologies as it owns 2 million shares that are worth $6.9 million.
iQIYI, Inc. (NASDAQ:IQ), Mizuho Financial Group, Inc. (NYSE:MFG), Ambev S.A. (NYSE:ABEV), and Banco Bradesco S.A. (NYSE:BBD) are some top Goldman Sachs’s penny stocks.
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Disclosure: None. Goldman Sachs Penny Stocks: Top 12 Stock Picks is originally published on Insider Monkey.