Goldman’s favorite trades for the upcoming earnings season

With Goldman Sachs labeling 2024 as “the year of the stock picker,” the firm is highlighting equities that the options market is signaling could be poised for sharp moves after the release of quarterly reports. “Options prices have risen in reaction to geopolitical events and in anticipation of seasonally high earnings volatility, the US election, and the November FOMC meeting,” John Marshall, head of derivatives research at Goldman wrote on Thursday. “This rise in nervousness has increased the potential for relief rallies for stocks on their respective earnings events.” Reports from JPMorgan Chase and Wells Fargo marked the beginning of the third-quarter earnings season on an upbeat note, with the two stocks up around 5% each. On the back of the results, the S & P 500 rose marginally on Friday morning, with all three major indexes on pace for a winning week. Analysts expect an earnings growth rate for the S & P 500 of 4.2% in the third quarter, per FactSet data, which would represent a fifth-straight period of year-over-year growth. Here’s a look at some of Goldman’s top trade ideas heading into earnings season. All stocks on the list are buy rated by the firm. Shares of retailer Gap have ticked down roughly 1% in 2024. Analyst Brooke Roach forecasts 55% upside for Gap stock, largely driven by market share growth and improvement in both its merchandise margins and profitability over the next year. Moreover, the analyst’s earnings forecast is 2% higher than consensus outlooks on Wall Street. Gap is coming off of a second-quarter earnings beat . With strength at its Old Navy brand, the company boosted its forecast for the year. GAP YTD mountain Gap stock. Goldman is recommending buying calls on Gap stock with a $21 strike for the December term. Call buyers risk losing the premium they pay if the stock slips blow the strike price when the contract expires. Nvidia also made the list, with analyst Toshiya Hari forecasting roughly 6% upside for shares of the artificial intelligence darling thanks to continued robust data center demand. Hari expressed confidence in Nvidia holding on to its status as setting the industry’s standard “for the foreseeable future given its competitive moat, string of new product launches and the urgency with which customers are developing and deploying increasingly complex AI models.” NVDA YTD mountain Nvidia stock. Hari estimates fiscal third-quarter earnings will be 7% higher than Wall Street consensus forecasts. With this in mind, Goldman suggests investors purchase calls on Nvidia with a $135 strike for the December term. Other stocks that Goldman is watching include chipmaker Broadcom and medical device manufacturer Boston Scientific .