Goldman adds Walmart to September ‘conviction list.’ Here’s who else made the cut

Goldman Sachs updated its September "Conviction List - Directors' Cut," adding McDonald's, Walmart, Cadence Design Systems, and Valero Energy. The firm highlights Walmart's strategic positioning for recessionary resilience and Valero's benefit from a refining structural upcycle, projecting significant upside for both. This 22-stock list, spanning diverse sectors, reflects Goldman's view that despite macroeconomic headwinds like inflation and labor market concerns, a prevailing "wall of worry" could underpin further equity market gains.

Analysis

Goldman Sachs has updated its September "Conviction List - Directors' Cut," adding McDonald's, Walmart (WMT), Cadence Design Systems, and Valero Energy (VLO), while removing Viper Energy and Insmed. The analysis provides specific rationales for WMT and VLO. For Walmart, Goldman projects 18% upside to a $114 price target, citing its "everyday low prices" strategy as a key advantage for gaining market share amidst tariff-driven cost pressures. The firm highlights WMT's defensive positioning due to its high exposure to resilient food and off-price apparel categories, making it attractive in potential recessionary scenarios. For Valero Energy, which has already gained approximately 25% year-to-date and offers a 3% yield, Goldman sees an additional 7% upside. This outlook is based on the expectation that VLO will benefit from a "refining structural upcycle," supported by increased OPEC supply and the company's commitment to cash flow generation. This strategic update occurs within a broader market context where Goldman acknowledges headwinds such as inflation and labor market health, but suggests that prevailing investor sentiment, a "wall of worry," could paradoxically fuel further equity gains.

Key Decisions for Investors

• Investors seeking defensive growth should consider Walmart (WMT), given Goldman's thesis that its value proposition and resilient product mix position it to gain share in the current economic environment, supported by an 18% projected upside.
• For exposure to the energy sector, Valero Energy (VLO) is highlighted as a tactical play on a favorable refining cycle and strong cash flow, although investors should note the more modest 7% upside projected by Goldman.
• The inclusion of both consumer defensive and cyclical energy stocks suggests a balanced but opportunistic strategy; investors should monitor the key macroeconomic indicators of inflation and labor market health, which Goldman identifies as critical to the market's trajectory.
• Note that the removal of Viper Energy and Insmed from the conviction list should not be viewed as an automatic sell signal, as the report clarifies that such changes do not always reflect a shift in the firm's fundamental investment rating.