Goldman Sachs Beats the Drum on These 2 ‘Strong Buy' Stocks

Business Insider

18 hours ago

After a volatile start to the year, the stock market appears to be regaining its footing. While the first four months were marked by sharp swings rather than prolonged losses, sentiment began to shift as the markets bottomed out in April. Since then, the S&P 500 has rebounded impressively, up 25% from its April low, and if history is any guide, that momentum could well carry through July.
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Driving this renewed optimism are several positive developments. President Trump's tariff policy appears to be bearing fruit, leading to new trade deals, while the one-and-done strike on Iran's nuclear program has helped ease tensions in the Middle East. Investors are also starting to discount the risk of a recession and are instead focusing on the prospect of additional interest-rate cuts in the second half of 2025. In this environment, strategists at Goldman Sachs see further room for the rally to continue, at least until August.
'We think this rally will continue for the next couple weeks but lose steam into August… We are entering the strongest month for the S&P historically July brings an average return of 1.67% looking back to 1928… In the recent rally, the ability to transfer risk quickly lends itself to healthier trading,' the Goldman strategists wrote.
Against this backdrop, Goldman's equity analysts are highlighting stocks they see as particularly well-positioned to benefit. Their latest focus is on two companies with very different profiles, each set to capitalize on the current bullish environment. This positive outlook is echoed by the broader market, as both names, according to TipRanks' database, also earn 'Strong Buy' ratings from the analyst consensus.
Goldman Sachs' latest stock picks include Ovintiv, an energy company operating across North America's key hydrocarbon basins. As an independent exploration and production (E&P) operator, Ovintiv manages a diverse portfolio of assets and plays an active role in the development of crude oil, natural gas, and natural gas liquids.
Ovintiv's main operations are located in three oil and gas basins, each well known in the North American energy industry. The firm's chief plays are in the rich Permian Basin of Texas, one of the largest oil deposits in the United States. The Permian is composed of multiple geological formations; Ovintiv's operations are focused on the Spraberry and Wolfcamp formations of the Midland Basin. One state over, Ovintiv is also working the Anadarko Basin in west-central Oklahoma, where the company's holdings target the SCOOP and STACK black oil windows. Finally, Ovintiv also works in the Canadian Rockies, in the Montney formation along the Alberta–British Columbia border. This is an unconventional oil and gas deposit and one of the largest on the continent. Ovintiv has a proven cube development approach that is particularly appropriate for extraction operations here.
We should note here that the Montney assets are a recent acquisition to Ovintiv's portfolio. The company closed on the purchase in January of this year, paying $2.3 billion in US currency for the new position. Ovintiv's purchase of Montney was conducted at the same time as its sale of its Uinta assets in northeastern Utah, for $2 billion in cash.
Ovintiv has a standing commitment to returning capital to its shareholders. The company has been generating positive free cash flow each year since 2018 and has returned an aggregate $2 billion to its shareholders. The capital returns are made through both dividends and share repurchases, although the share repurchase program was paused in 4Q24 and 1Q25 while the company balanced the costs of its Montney acquisition and Uinta divestiture. In 2Q25, Ovintiv resumed repurchases to the tune of approximately $146 million.
On the dividend, Ovintiv last declared the common share payment on May 6 and paid it out at a rate of 30 cents per share on June 30. At this rate, the dividend gives an annualized payment of $1.20 per common share and a forward yield of 3%.
During the first quarter of this year, the last period reported, Ovintiv reported a net loss of $159 million, which came to 61 cents per share. The company included a non-cash ceiling test impairment of $557 million, after taxes, in that figure. During the quarter, Ovintiv also generated a non-GAAP cash flow of $1.004 billion. After deducting $617 million in capital investments, the company had a non-GAAP free cash flow for the quarter of $387 million.
For Goldman analyst Neil Mehta, the key points here are Ovintiv's quality when compared to its peers and its recent streamlining of operations in shedding Uinta and adding Montney. In addition, the 5-star analyst goes on to point out Ovintiv's profitable exposure to natural gas.
'We believe the risk/reward to shares from current levels screens attractively relative to the larger cap diversified E&P peer group (EOG, OXY, DVN, CTRA, APA). Following OVV's divestiture of the higher-cost Uinta assets and the acquisition of deeper, more capital efficient Montney inventory, we believe that OVV's FCF generation trades at a meaningful discount relative to larger cap diversified E&P peers. As inventory quality and duration remain a key area of focus for E&P investors, we believe the Montney/Uinta transactions present a positive shift in the company's inventory position. In addition, we believe that the company's exposure to an inflection in natural gas prices remains underappreciated alongside our estimate of more upside relative to downside risk to Henry Hub commodity prices in the next 12-18 months as LNG export capacity ramps,' Mehta opined.
These bullish comments back up the analyst's Buy rating on OVV, while his $51 price target implies a one-year upside potential of ~28%. (To watch Mehta's track record, click here)
Overall, the Strong Buy consensus rating on Ovintiv is based on 16 recent analyst recommendations, which include 13 Buys and 3 Holds. The shares are priced at $39.92, and their $50.93 average target price is just below Goldman's estimate. (See OVV stock forecast)
Omada Health (OMDA)
The second stock on our list of Goldman Sachs picks, Omada Health, went public through an IPO just last month. Omada Health focuses on the care and control of chronic conditions, such as obesity, using online networking to connect patients with a monitoring team – including a personal health coach and a clinical specialist – to develop and carry out personalized care plans. The company's approach is centered on helping patients to make 'small and steady' health choices, which, taken together, will add up to large changes in lifestyle and overall health. Everything revolves around care plans that are tailored to individual patients and aim at managing or controlling conditions such as diabetes, obesity, high blood pressure, and chronic pain.
Omada has been at the forefront of virtual care in general health since 2011. The company's goal is to move patients past simply trying a new care program and help them to stick with it. Omada's solutions to this common problem in care and maintenance are evidence-based and have proven track records of success in helping patients to manage their chronic conditions and improve overall health.
As of this past March, Omada claims more than 1 million total all-time members enrolled in its programs, with over 679,000 currently enrolled. The company boasts that it has received customer satisfaction and customer retention rates of approximately 90%. In June of this year, the company announced that its GLP-1 companion program, used to promote patient compliance with GLP-1 weight-loss medications, had significantly improved persistence rates among patients, resulting in better weight-loss outcomes at both 12 and 24 weeks.
Stock in Omada, as noted above, hit the public markets in June of this year. The company priced its IPO at $19 per share, with trading in OMDA starting on June 6 and some 7.9 million shares being made available. The offering closed on June 9 and raised approximately $150 million in gross proceeds. OMDA shares closed at $23 on June 6, and the stock has declined by 23% since then.
Despite this initial pullback, Omada continues to attract the attention of analysts. David Roman covers this new stock for Goldman, and he is impressed by Omada's revenue growth in the past year, as well as by the company's potential for profitability in the near future.
'From 1H 2024 to 2H 2024, the company accelerated revenue growth from ~33% to ~43%, with 57% growth in 1Q 2025. The growth acceleration has been driven by underlying base growth, plus increase contribution from EncircleRx and GLP-1 program traction. Looking forward, we model the growth contribution of each of these moderating but momentum offers support for potential upside… We expect the company to reach break-even EBITDA in 3Q 2026 and profitability ($2 million) in 4Q 2026. This near-term path to profitability is largely supported by revenue scale, modest gross profit improvement and more material operating leverage (inclusive of incremental public company costs)… At current levels — considering the growth trajectory of the business, near-term path to profitability, and below peer valuation — we see OMDA offering compelling risk/reward,' Roman stated.
Quantifying his bullish stance, Roman sets a Buy rating on OMDA shares, along with a $29 price target that points to a ~56% potential gain in the year ahead. (To watch Roman's track record, click here)
What does the rest of the Street have to say? 7 Buys and no Holds or Sells add up to a Strong Buy consensus rating. The shares are trading for $18.63, and their $23.71 average price target indicates the stock may gain 27% by this time next year. (See OMDA stock forecast)
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