Goldman Sachs has this year added a number of stocks to its conviction list — buy-rated stocks it expects to outperform — giving them further share price upside. Rio Tinto Its most recent addition was Australian miner Rio Tinto on March 3. It comes as Goldman Sachs turns bullish on commodities such as iron ore on the back of an expected recovery in China. The bank’s analysts said in the March 3 note that it recently increased its iron ore price forecasts to $120 per metric ton, from $100, on an expected recovery in Chinese steel volumes, among other factors. They also noted the recent ongoing recovery in property sales in China. “Generally property sales lead starts which drives higher steel demand,” the analysts wrote. “Furthermore, these dynamics are playing out while iron ore inventories at Chinese steel mills are at their lowest levels since 2016 with mills starting to restock in recent weeks.” Goldman said that it added Rio Tinto to its conviction list due to its “compelling” relative valuation versus its peers, strong free cash flow, dividend yield, and given the bank’s “bullish view” on iron ore, aluminum and copper prices. It gave Rio Tinto a price target of $140, or upside of 10% from the Friday close. Rio Tinto posted 2022 earnings last week that showed a 38% drop in annual profit, as iron ore prices weakened on slowing demand from China and higher labor costs. However, it said the outlook for China is set to brighten, with consumption in the country showing signs of rebounding as it reopens. Sea Another stock that Goldman added to its conviction list recently was Southeast Asian tech giant Sea. The bank raised its 12-month price target on the stock to $132, representing upside of more than 100% from the New York-listed stock’s Thursday close. Goldman reiterated its buy rating for the firm in a Feb. 16 note, saying it believes the stock will outperform on profitability this year, and demonstrate a return to growth. The company’s online shopping platform Shopee and gaming arm Garena are two of its main money-making divisions. Goldman analysts said they see a “visible path towards sustained share price recovery” as earnings are set to turn positive, together with attractive valuations. In its bull case scenario, the banks see the company’s share price reaching $219 — giving it more than 240% potential upside. “Our bull-bear scenario analysis below suggests an attractive risk-reward outlook, with 242% potential upside if we were to assume valuation multiple recovery to where Sea’s segments used to trade at on improving sentiment/outlook,” the bank said. Alibaba The above conviction list additions come after Goldman added Chinese tech giant Alibaba in January this year. The outlook for Alibaba has improved in 2023 as China reopens, and the stock is the best way to play a rebound in the China internet sector, Goldman said. “We see further earnings upside and expect more room to go for China internet sector performance on China’s faster-than-expected reopening, macro recovery from 2Q and normalizing internet regulations,” the bank said in a January 9 note. Goldman also raised the price target for Alibaba to $138, giving it over 50% potential upside from its US-listed stock’s Thursday close. — CNBC’s Michael Bloom contributed to this report.