Goldman says buy this ASX 200 share for a 14% annual return

This overlooked stock could be a good option for investors according to the broker.

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If you're on the lookout for some new portfolio additions, then it could be worth considering Qube Holdings Ltd (ASX: QUB).

That's the view of analysts at Goldman Sachs, which see a lot of value in the often overlooked ASX 200 share.

Why is Qube an ASX 200 share to buy?

Firstly, if you're not familiar with the company, Qube is Australia's largest integrated provider of import and export logistics services.

It operates over 160 locations across Australia, New Zealand, and South East Asia. This includes its 50% interest in Patrick Terminals, which is Australia's leading container terminal operator.

Goldman Sachs notes that Qube has successfully evolved into one of the country's premier logistics businesses. It said:

Over the past ~17 years, Qube has evolved—organically and through numerous acquisitions—into one of Australia's premier logistics businesses. Its holistic, national suite of supply-chain services is largely unrivalled; its network has increased revenue opportunities with existing and new customers, and should promote organic wallet share growth.

Big returns

Goldman is tipping big returns from this ASX 200 share over the next 12 months.

It has initiated coverage on the company's shares with a buy rating and a $3.70 price target. Based on the current Qube share price of $3.30, this implies a potential upside of 12% for investors between now and this time next year.

In addition, the broker is forecasting fully franked dividends per share of 7.5 cents in FY 2024 and 7.65 cents in FY 2025. This equates to dividend yields of approximately 2.3% for investors across both years.

In total, this means that investors would receive a total return of approximately 14% for investors over the next 12 months if Goldman is on the money with its recommendation.

The broker believes that now is the time to buy this ASX 200 share due to its positive outlook and the historically low multiples it trades on. Goldman concludes:

Strong expectations, yet multiple below historic lows. Net-net, we expect LT GDP+ earnings growth and improving ROACE. Yet, QUB is trading below trough valuations relative to the market / peers. The post-covid multiple justifiably lowered as earnings grew to expectations, though valuation is now supportive with re-rate potential. Our 100% DCF method derives a 12-m TP of A$3.70 (~14% upside). Risks include weakening commodity demand, a slow Moorebank ramp and adverse industrial action. Initiate Buy.

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 positions in and has recommended Goldman Sachs Group. 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.

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