Unofficial Start to Summer Boosts Consumer Confidence
The unofficial start to summer has brought a surge in consumer confidence, with the latest Consumer Confidence index showing a sharp spike in May. The index jumped more than 12 points to a reading of 98.0, marking a strong turnaround from April’s low point in nearly 14 years.
This increase in consumer confidence comes on the heels of recent economic data that showed slowing inflation and improvements in the jobs market. According to Goldman Sachs, the US economy "remains resilient," pointing to an upbeat outlook for the current situation.
Goldman’s stock analysts are taking a bullish approach, recommending two stocks to buy for the summertime. Array Technologies (ARRY) and Sotera Health (SHC) have both caught the attention of investors, with Goldman Sachs analyst Brian Lee and Matthew Sykes weighing in on their potential for growth.
Array Technologies: A Leader in Solar Energy
We’ll start by looking at Array Technologies, a solar energy industry tech firm that has been around for 30 years. With offices and markets in the US, Brazil, the UK, Spain, South Africa, and Australia, Array boasts a strong presence globally.
The company specializes in developing solar tracking technology, particularly at the utility scale. Solar tracking systems allow photovoltaic arrays to follow the sun’s path across the sky, maintaining maximum efficiency while generating energy. Array’s products include its flagship DuraTrack, which is designed for large, multi-row photovoltaic power arrays, as well as the STI H250 dual-row system for solar sites with fragmented installations.
Array also offers products for effective sky tracking and hail protection, ensuring that utility-scale energy producers have greater flexibility in choosing locations for new solar arrays. The company’s latest innovation is its Hail XP system, designed to provide industry-leading hail and wind event protection in conjunction with the DuraTrack platform.
In the first quarter of this year, Array brought in revenues of $302.4 million, representing an impressive 97% year-over-year growth and beating the forecast by $38 million. At the bottom line, the company’s non-GAAP EPS was 13 cents, which is 4 cents per share better than expected.
Goldman Sachs analyst Brian Lee sees Array’s sound business model as a key factor in its potential for continued success, even if input prices climb. Lee notes that increases in steel prices could drive incremental upside to the top line as these higher inputs costs are typically passed along 1:1 to customers, resulting in flat margins but upside to gross profit dollars.
Lee gives Array shares a Buy rating and a $11 price target that suggests a robust one-year upside potential of 67%. The Street’s wisdom also gives both stocks a ‘Buy’ rating, with the consensus rating coming from 17 recent analyst reviews, including 6 Buys and 11 Holds.
Sotera Health: A Leader in Healthcare
Next up is Sotera Health, a company that works in the healthcare industry, providing mission-critical services such as end-to-end sterilization solutions and lab testing. With operations in three distinct business segments—Sterigenics, Nordion, and Nelson Labs—Sotera provides direct services to more than 5,000 customers across 50 countries.
The company employs approximately 3,000 people and boasts that its customers include 9 of the top 10 pharmaceutical firms. Sotera’s services are used in several important fields, aside from the pharmaceutical industry, including medical device companies and the food industry for quality control to prevent pathogens from reaching consumers.
In March of this year, Nelson Labs announced product-sterility testing through rapid microbiological methods (RMMs), providing a versatile solution in the field of rapid sterility testing. The company’s most recent testing advance has been seen as a significant step forward in ensuring the safety and efficacy of medical devices and pharmaceuticals.
Goldman Sachs analyst Matthew Sykes sees Sotera Health as a defensive growth option within its universe, without a meaningful impact from tariffs and no Academic & Government exposure. Sykes notes that the company’s inherent pricing power could see an acceleration given the expected inflationary environment due to the macro backdrop potentially adding to the top-line growth rate as the year progresses.
Sykes gives Sotera shares a Buy rating and a $17 price target that suggests a 12-month upside potential of 39.5%. The Street’s wisdom also gives both stocks a ‘Buy’ rating, with the consensus rating coming from 3 recent reviews, including 2 Buys and 1 Hold.
Conclusion
The unofficial start to summer has brought a surge in consumer confidence, with Goldman Sachs recommending two stocks to buy for the summertime. Array Technologies (ARRY) and Sotera Health (SHC) have both caught the attention of investors, with Goldman Sachs analyst Brian Lee and Matthew Sykes weighing in on their potential for growth.
Array’s sound business model and potential for continued success make it an attractive option, while Sotera Health’s defensive growth position and inherent pricing power make it a strong candidate for investment. With a robust one-year upside potential of 67% for Array and 39.5% for Sotera, these stocks are definitely worth considering for the summertime.