Looking for ASX 200 shares to buy? Then you might want to check out the two shares listed below that are currently on the coveted conviction list of Goldman Sachs.
These are the ASX 200 shares that Goldman rates incredibly highly and is tipping big returns from. Here's why the brokers thinks they could be top options for investors right now:
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Lifestyle Communities Limited (ASX: LIC)
The first ASX 200 share that Goldman Sachs is tipping as a conviction buy is Lifestyle Communities.
It builds, owns, and operates land lease communities which provide affordable housing options to Australians over 50.
Goldman Sachs is very positive on the company due to strengthening demand for land lease options, which is being driven by Australians increasingly looking to enhance retirement by releasing equity from the family home. It commented:
Lifestyle Communities (LIC) is a developer and manager of residential land lease communities in Australia. 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.
Goldman Sachs has a conviction buy rating and $26.00 price target on the company's shares. This suggests potential upside of 33% for investors from current levels.
Xero Limited (ASX: XRO)
Another ASX 200 share that has been named as a conviction buy is Xero.
It is a provider of a cloud-based accounting solution used by millions of small businesses globally.
Although it has been growing strongly for years, Xero could still grow materially in the future. That's because it only has 3.3 million subscribers out of a total addressable market of 100 million according to Goldman Sachs. This provides it with a huge growth runway over the next decade or two. Goldman commented:
We see Xero as very well-placed to take advantage of the digitisation of SMBs globally, driven by compelling efficiency benefits and regulatory tailwinds, with >100mn SMBs worldwide representing a >NZ$76bn TAM. Following the recent underperformance (absolute/relative), we see an attractive entry point into a compelling global growth story and our preferred large-cap technology name in ANZ, and are Buy rated (on CL).
Goldman Sachs has a conviction buy rating and $109.00 price target on its shares. This implies potential upside of almost 35% for investors based on the current Xero share price.
