Wanting a double-digit return on investment? Then check out these ASX 200 share in this article.
That's because Goldman Sachs is tipping this share as a buy right now.
What is the broker saying about this ASX 200 share?
The share is question is ALS Ltd (ASX: ALQ). It is a global leader in testing.
ALS notes that it provides comprehensive solutions to a wide range of industries around the world, with an innovative and data-driven approach backed by quality, service and technical excellence.
It also highlights that its global business supports diverse end-markets, services and customers, and is underpinned by long-term industry megatrends, strong market positions and disciplined capital allocation.
According to a note out of Goldman Sachs, its analysts have put a buy rating and improved price target of $17.75 on the ASX 200 share.
Based on its current share price of $15.96, this implies potential upside of 11.2% for investors over the next 12 months.
In addition, the broker is forecasting a dividend yield of 2.5% over the period, which boosts the total potential return to almost 14%.
Why is it bullish?
Goldman highlights that there are Life Sciences tailwinds that should be supportive of ALS' growth. It said:
ALQ's global peers reported solid FY24 results, with Environmental organic revenue growing ~HSD-DD and PFAS remaining a structural story driving investment. Federal regulatory uncertainty in the U.S. is not seen as necessarily negative, as state regulations remain strict. […] Minerals organic growth was ~LSD-MSD, though DD growth from critical minerals—and more technical testing— resulted in higher margins, highlighting structural trends.
The broker also feels that the mining cycle could be turning favourably for the ASX 200 share. It adds:
Our analysis of sub-US$20m mining capital raisings shows a return to growth in Jan25, a potential precursor to a sharp uptrend as seen in past cycles. While ALQ's Commodities business was previously volatile, cyclicality is reducing, green-mineral tailwinds are growing, and ALQ has achieved higher revenue and earnings per sample—and a higher margin floor—against the recently subdued Minerals backdrop.
Overall, the broker is positive on its outlook and sees value in its shares at current levels. It concludes:
With sustainably higher margins, faster last-5Y organic growth, and consensus forecasting higher growth, ALQ is still trading nearer the peer set median than the high. With the Minerals cycle potentially inflecting after ALQ's margins held up in a downturn, we believe it deserves to trade near the top of the set. Our forecasts are unchanged though we roll forward valuation and update our applied multiple to ALQ's 5-year average, given improved recent margin and revenue resilience. Our new 12-m TP of A$17.75 (+7% vs prior) implies ~12% upside to last close and an NTM EV/EBIT multiple ~17.6x, near the peer high.
