If you're on the lookout for some market-beating returns, then it could be worth listening to what Goldman Sachs is saying about the following ASX 200 shares.
That's because the broker has buy ratings on their shares and is forecasting returns of 20% to 50% over the next 12 months.
Here's what it is recommending:
NextDC Ltd (ASX: NXT)
Goldman Sachs sees NextDC as an ASX 200 share to buy right now.
The broker believes that the data centre operator is well-positioned for growth thanks to the structural shift to the cloud. It explains:
We are particularly positive on NXT and are Buy rated given the rapid growth in cloud adoption, which has been supported by the continued evolution of the enterprise telecommunications market, and the significant demand by both public and private investors for digital infrastructure assets. We believe the company has a compelling growth profile and a proven and profitable business model, noting it trades on a growth-adjusted discount vs. peers, which we view as unjustified.
Goldman Sachs currently has a buy rating and a $15.80 price target on NextDC's shares. This suggests a potential upside of ~20% for investors over the next 12 months.
Qantas Airways Limited (ASX: QAN)
Another ASX 200 share that could have major upside potential according to Goldman Sachs is Qantas.
The broker believes that the market is seriously undervaluing the airline operator's shares. Particularly given how it has increased its earnings capacity materially compared to pre-COVID levels. It commented:
Notwithstanding a decline in unit revenues (and group capacity still at 95% of pre-COVID) our estimated FY24e EPS sits ~70% above pre-COVID levels. Despite this, QAN's market capitalisation and EV are 17% and 24% lower than pre-COVID levels. We acknowledge broader macro uncertainty at this point in the cycle, but believe the current share price does not reflect the group's improved earnings capacity. […] We believe the stock is not even pricing in a 'generic' recovery, let alone improved earnings capacity
Goldman has a conviction buy rating and a $8.25 price target on its shares. This implies a potential upside of 54% for investors.
Xero Limited (ASX: XRO)
Finally, Goldman Sachs continues to rate this cloud accounting platform provider as an ASX 200 share to buy.
This is due largely to its significant growth opportunity from a market estimated to be over 100 million small to medium-sized businesses globally. It said:
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.
Goldman has a buy rating and a $141 price target on its shares. This suggests a potential upside of 39% from current levels.