Goldman Sachs says three groups of stocks can thrive in today's market, and says a few stocks benefit from every trend.
have already booked most of the gains they're likely to make this year. But the firm says the right approach could help investors keep generating strong returns anyway.is roughly 3% away from the year-end target of 3,000 formulated by David Kostin, Goldman's chief US equity strategist. And while Kostin notes that high valuations and slowing economic growth could temper returns going forward, he still sees three groups of stocks as poised to do especially well.
But Kostin says they have wider profit margins and better returns on equity, and that makes them safer and more appealing when overall economic growth weakens. He adds that in price-to-earnings terms, those stocks are trading at a huge discount today compared to where they've been over the past decade.
This chart illustrates the appeal of those stocks. Kostin says they're likely to catch up with the 10-year rate of inflation, which has trended higher recently.Haver Analytics and Goldman Sachs Global Investment Research: Texas Instruments, Gilead Sciences, LyondellBassell Industries, Amphenol, VeriSign, Expeditors International, IPG Photonics, PulteGroup, AT&T, AES, Western Union, Foot Locker, Hanesbrands.
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