Goldman Sachs named pharmaceutical giant Johnson & Johnson to its “U.S. Conviction List – Directors’ Cut” of the most recommended stocks for May. One other stock was added to the list at the same time one was removed from the monthly assemblage. The Wall Street investment bank released the May update to its conviction list on Thursday. In total, the list now features 22 stocks, ranging across the consumer, financial and telecommunications industries, including AT & T , Bank of America and Uber Technologies. Meritage Homes was deleted from the Goldman select list, even as the bank continues to rate it a buy. The updates come amid what Goldman predicts will be a difficult period for the stock market. President Donald Trump’s policies are hurting growth and will likely keep upward pressure on inflation, according to analyst Steven Kron. “The combination — lower growth and higher inflation — is not a good combination for stocks and a confusing combination (at best) for bonds,” Kron wrote. New additions For Johnson & Johnson, Goldman forecasts about 10% more upside for shares, while the bank’s earnings estimates are roughly in line with the rest of Wall Street. “The drug and MedTech conglomerate is a stable, defensive grower with the industry’s strongest balance sheet,” Goldman said in its Thursday note. High-return investments in its innovative medicines segment will boost revenue growth, according to Goldman analyst Asad Haider. This, “when combined with a strong pipeline of drugs in the trial stage, should allow the company to offset a patent cliff on a key drug — Stelera,” Goldman wrote. Stelera is the company’s treatment for autoimmune conditions including Crohn’s disease and psoriatic arthritis. Investment bank Houlihan Lokey is another new stock on Goldman’s high-conviction list. According to Goldman, Houlihan “offers best-in-class protection from an economic slowdown through its restructuring business, its skew to the healthier mid-cap and sponsor M & A businesses, and margin stability, as well as possessing underappreciated growth potential.” The bank’s lead analyst on Houlihan is James Yaro. — CNBC’s Michael Bloom contributed to this report.
