Goldman Sachs' 2 Favorite Under-the-Radar Stocks

Goldman Sachs highlighted two under-the-radar stocks: MiniMed Group, a recently public diabetes-device company positioned for sustained high-single-digit sales growth and EBITDA margin expansion from about 16% to the mid-20s, and Smurfit Westrock, a packaging leader trading at $41 with a 4.39% dividend yield and a $49 price target. Goldman’s buy call on SW implies 18.45% upside, while both companies are framed as beneficiaries of expanding end markets and improving fundamentals. The article is positive overall, but it is primarily analyst commentary rather than a direct company catalyst.

Analysis

SW is the cleaner expression of the setup here: a structurally improving pricing environment layered on top of a post-merger footprint that should let management take cost out faster than smaller regional players can match. The key second-order effect is that large-scale corrugated capacity becomes a weapon in a weak-growth world — if industrial demand stays soft, the winners are the operators that can defend margins through mix, procurement, and logistics rather than just volume. That makes this less a pure GDP trade and more a relative-share and execution trade.

The market may still be underappreciating the leverage to packaging rate discipline. When demand tightens even modestly, smaller converters tend to chase share by discounting, but a scaled platform with geographic breadth can let low-margin volume leave and still preserve EBITDA. The biggest upside catalyst is not just higher order volumes; it is a better-than-feared integration path that converts headline revenue synergies into visible free-cash-flow expansion over the next 2-3 quarters.

The main risk is that investors are extrapolating a cyclical upturn into a straight-line rerating before the integration proof point arrives. If pulp, energy, or freight costs reaccelerate, the dividend can temporarily mask weakening underlying economics, but that would likely cap multiple expansion rather than break the thesis outright. The contrarian view is that the move may be underdone because the market is still valuing SW like a mature packaging utility, while the combined asset base and pricing power can support a higher quality-of-earnings narrative if management delivers even modest margin conversion.

For MiniMed, the more important lens is competitive adoption speed: the risk is not whether the end market grows, but whether reimbursement and switching friction let incumbents maintain share longer than bulls assume. That makes the stock a longer-dated compounding story rather than a near-term catalyst play, with upside more likely to emerge from margin expansion and continued device adoption than from a single product cycle. In other words, the better trade is selective exposure to the diabetes ecosystem, not blind beta to every medtech name.

Key Decisions for Investors

• Long SW for 3-6 months on pullbacks toward support: target the re-rating from integration progress and margin stabilization; risk/reward is attractive if downside is capped by the dividend while upside comes from multiple expansion and cash-flow delivery.
• Pair trade: long SW / short a smaller packaging peer basket over 1-2 quarters to express consolidation and scale advantages; the thesis is that large-cap procurement and route density should protect margins better in a cost-volatile environment.
• Sell covered calls against an SW long if implied volatility rises into earnings; use the dividend to enhance carry while limiting upside forgone in a name likely to grind rather than gap.
• For longer-duration healthcare exposure, favor a staggered entry into MiniMed over 6-12 months rather than chasing momentum; the payoff is from durable adoption and operating leverage, not a near-term rerating catalyst.
• Avoid aggressive shorting of the packaging complex; instead, wait for evidence that input costs or integration issues are worsening before fading the move, since the better near-term risk/reward is on the long side of scale winners.