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A Goldman Sachs sign is seen on at the company's post on the floor of the New York Stock Exchange in this file photo taken January 18, 2012.Reuters

The S&P 500 crossed 1,700 for the first time last week and Goldman Sachs predicts that the bullish trend will continue for the rest of the year and into the next.

While Goldman and many other market commentators believe this market rally has legs, they are increasingly warning that not all stocks are created equal and it's time to get picky.

Investors that want to make money on the upswing should choose carefully when deciding on which stocks to buy and which to bypass.

The analysts at Goldman Sachs have compiled a list of what they think are the the 40 most undervalued stocks - and the 40 most overvalued - based on the U.S. bank's target prices relative to actual stock values on July 31.

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