Buy these ASX 200 shares for 50%+ returns: Goldman Sachs

If you’re looking for big potential returns, then look no further. Goldman Sachs has recently slapped buy ratings on the two ASX 200 shares listed below with price targets materially higher than current levels.

Here’s what the broker is saying about them:

Allkem Ltd (ASX: AKE)

The first ASX 200 share that Goldman Sachs has named as a buy is Allkem. It is one of the world’s largest lithium miners and the result of the merger between Galaxy Resources and Orocobre in 2021.

From its projects across Argentina, Australia, and North America, the company is aiming to grow its production in a way that allows it to maintain a 10% share of global lithium supply over the long term.

It is this production growth, as well as its downstream optionality, that makes Goldman a fan of Allkem even when it is bearish on lithium prices. It commented:

Allkem has one of the best production outlooks in our lithium coverage, with broad-based growth optionality, second only to Mineral Resources on an LCE basis when including downstream hydroxide production on an equity basis. This drives our forecast for the company’s equity LCE production growth of >4x by FY27E, supporting earnings rebounding to near current record levels despite the declining lithium price environment.

Goldman currently has a buy rating and $15.40 price target on its shares. Based on the current Allkem share price of $9.99, this implies potential upside of 54% for investors.

Life360 Inc (ASX: 360)

Another ASX 200 share that Goldman Sachs is bullish on is Life360. It is a growing location technology company that has close to 50 million global active users of its eponymous Life360 mobile app.

Its shares have been hammered over the last 12-18 months due to the market’s aversion to loss-making tech stocks. However, with the company on the verge of becoming profitable, Goldman appears to see now as a great time to pounce on its shares.

Particularly given its impressive performance and its strong growth potential, which it feels is underappreciated by the market. The broker commented:

Life360 is executing well on its pricing strategy as the company moves to a profitable growth model, and we believe management’s targets regarding underlying/statutory EBITDA margin expansion should help the market quantify the operating leverage we believe Life360 can generate in coming years. The company is well capitalised, will be cash flow positive from 2Q23, and stands to generate significant earnings growth in coming years; all of which look underappreciated by the market as implied by the current share price at ~2x NTM EV/sales.

Goldman has a buy rating and $7.85 price target on its shares. Based on the current Life360 share price of $5.05, this suggests potential upside of 55% over the next 12 months.

The post Buy these ASX 200 shares for 50%+ returns: Goldman Sachs appeared first on The Motley Fool Australia.

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More reading

• Investing in ASX 200 lithium shares? You’ll want to read this
• Why are ASX lithium shares sinking today?
• What was with ASX lithium shares today?
• Allkem share price can jump 45% even if lithium prices fall: Goldman Sachs
• These ASX lithium shares are a buy despite explosive supply forecast: UBS

Motley Fool contributor James Mickleboro has positions in Allkem and Life360. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Life360. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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