GOLDMAN: Here Are The 18 Most Overpriced Stocks In The Market

Goldman Sachs’ David Kostin has tame expectations for the stock market. He sees the S&P 500 climbing to 2,100, returning just 4% from current levels.

And in this modest rally, some stocks will be worth selling off before they decline. 

In his latest quarterly chartbook, Kostin includes a list of stocks offering the most downside relative to Goldman Sachs analysts’ price targets. We highlight 18 stocks with the most downside.

Pinnacle West Capital

Ticker: PNW

Price as of Dec. 31: $US68.31

Downside to target: 19.5%

Comment: Pinnacle West reported net income of $US244 million, or $US2.20 per diluted share for the third quarter, compared to $US226.2 million, or $US2.04 per share, in the same period a year ago.

Source: Goldman Sachs

Campbell Soup

Ticker: CPB

Price as of Dec. 31: $US44.00

Downside to target: 20.5%

Comment: Campbell Soup's shares surged Wednesday after a report said it might be acquired by 3G Capital Partners, the Brazilian firm that previously bought H.J. Heinz Co. and Tim Hortons Inc.

Source: Goldman Sachs

Xerox Corp.

Ticker: XRX

Price as of Dec. 31: $US13.86

Downside to target: 20.6%

Comment: Xerox will sell its IT Outsourcing business to French tech company Atos for $US1.05 billion

Source: Goldman Sachs

Legg Mason Inc.

Ticker: LM

Price as of Dec. 31: $US53.37

Downside to target: 21.3%

Comment: Legg Mason reported a 1.7% month-on-month decline in assets under management as of November 30. Its assets totaled $US707.4 billion.

Source: Goldman Sachs

Ameren Corp.

Ticker: AEE

Price as of Dec. 31: $US46.13

Downside to target: 22.0%

Comment: Ameren expects '7% to 10% compound annual EPS growth rate from 2013 through 2018 driven by ~6% compound annual rate base growth, strategic capital allocation, and reduction of parent company and other costs,' it said in an investors' presentation. This would be 'above expected average of regulated utility peers.'

Source: Goldman Sachs

Deere & Co.

Ticker: DE

Price as of Dec. 31: $US88.47

Downside to target: 22.0%

Comment: In December, Deere CEO Sam Allen requested a 25% bonus cut as the company's shared weakened and the farm equipment market struggled.

Source: Goldman Sachs

Staples

A Staples storefront.

Ticker: SPLS

Price as of Dec. 31: $US18.12

Downside to target: 22.7%

Comment: Staples was the target of a massive data breach in December. One million credit cards were compromised.

Source: Goldman Sachs

Scana Corp.

Ticker: SCG

Price as of Dec. 31: $US60.40

Downside to target: 23.8%

Comment: Scana sold its interstate natural gas pipeline in southeast Georgia and South Carolina to Dominion Resources Inc. for $US492.2 million.

Source: Goldman Sachs

NASDAQ OMX Group

Ticker: NDAQ

Price as of Dec. 31: $US47.96

Downside to target: 24.9%

Comment: Third quarter net revenues fell 2% in the third quarter, from $US497 million to $US506 million year-on-year, partly because of fluctuating foreign currency rates.

Source: Goldman Sachs

Coach Inc.

A woman walks by a Coach store in New York City.

Ticker: COH

Price as of Dec. 31: $US37.56

Downside to target: 25.5%

Comment: Coach is entering the market for luxury women's shoes with its acquisition of Stuart Weitzman Holdings LLC, the company announced Tuesday.

Source: Goldman Sachs

Western Digital

Ticker: WDC

Price as of Dec. 31: $US110.70

Downside to target: 27.7%

Comment: 'We recently shipped our one millionth WD Purple hard drive architected to address the high growth space of security surveillance video applications,' said CEO Steve Milligan during the first quarter earnings call. 'Governments' and other large organisations' increasing use of video and digital networked cameras is driving a huge need for high resolution recording.'

Source: Goldman Sachs

Sigma-Aldrich Corp.

Ticker: SIAL

Price as of Dec. 31: $US137.27

Downside to target: 27.9%

Comment: Sigma executives sold over $US14.4 million worth of the company's stock in December.

Source: Goldman Sachs

Transocean

Ticker: RIG

Price as of Dec. 31: $US18.33

Downside to target: 29.1%

Comment: Transocean was the worst performer on the S&P 500 last year, and its $US9.1 billion in debt may soon be lowered to a junk rating.

Source: Goldman Sachs

KLA-Tencor Corp.

Ticker: KLAC

Price as of Dec. 31: $US70.32

Downside to target: 31.7%

Comment: 'Turning now to our outlook for the second quarter of fiscal 2015, the December quarter booking profile represents a meaningful pick up in order activity, largely driven by the leading-edge foundries as they move to prepare FinFET production capacity ahead of anticipated end customer demand in 2015,' CEO Richard Wallace said during the first quarter earnings call.

Source: Goldman Sachs

Intel Corp.

Ticker: INTC

Price as of Dec. 31: $US36.29

Downside to target: 39.4%

Comment: On Wednesday, Intel unveiled the Compute Stick, a thumb-drived computer described as the world's smallest, that can plug into any computer or monitor.

Source: Goldman Sachs

Diamond Offshore Drilling

Ticker: DO

Price as of Dec. 31: $US36.71

Downside to target: 40.1%

Comment: 'By operating all of our new-build drillships in the U.S. Gulf, we are positioned to enjoy meaningfully lower operating costs than in other ultra-deepwater markets,' said CEO Marc Edwards in the third quarter earnings statement.

Source: Goldman Sachs

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