Goldman Sachs’ top stock pick heading into the new year is an investment bank with very little buzz. CNBC Pro obtained the lists of top stock picks that the major firms, such as Goldman Sachs, are giving clients, and looked for the names where analysts see the most upside. For Goldman Sachs, the stock with the highest potential upside is Houlihan Lokey . Houlihan Lokey, a $12-billion investment bank headquartered in Los Angeles that went public 10 years ago, is unchanged this year, as of Monday afternoon’s close. Goldman Sachs’ price target of $237 implies potential upside of 36% from the last price of $173.70. HLI also pays a dividend yield of 1.37%. HLI YTD mountain HLI YTD chart Goldman analyst James Yaro believes the macroeconomic backdrop offers Houlihan Lokey an opportunity to outperform. For instance, the company currently derives around 22% of revenue from providing restructuring advice — a segment that should see outsized growth in the event of an economic downturn, Yaro wrote. He also applauded Houlihan’s strong expense discipline that support its profit margins, and pointed to potential bolt-on acquisition opportunities as added tailwinds. “HLI offers best-in-class protection from an economic slowdown through its restructuring business (~22% of [trailing 12-month] revenue), its skew to the healthier mid-cap and sponsor M & A businesses, and margin stability, as well as possessing underappreciated growth potential, as the new CEO is more focused on acquisitions than on capital returns,” Yaro said. “In a more challenging Investment Banking backdrop, HLI should be able to undertake an increasing number of bolt-on deals at better prices than it would see at a market peak.” Led by CEO Scott Joseph Adelson, Houlihan Lokey typically makes as many as three acquisitions annually. Goldman’s Yaro expects upcoming deals to be “received well by the market, if the company continues its proven track record of synergistic and product-enhancing transactions.”
