GOLDMAN SACHS: Here’s where to put your money as trade tensions worsen
Trade disputes between the US and its partners pose a risk to the stock market.
Goldman Sachs has reiterated four strategies that should keep investors on track for healthy returns.
Trade-related headlines put the stock market at risk of more volatility.
To help its clients navigate these swings, Goldman Sachs has reiterated four of its top strategies that should keep investors on track for strong returns this year.
The recommendations are not hedges against specific risks that trade disputes create for certain companies and industries. Instead, David Kostin, the chief US equity strategist, is reiterating some of his top ideas at a time when markets are vulnerable to swings based on trade-related headlines.
These strategies are supported by an expectation that earnings growth will extend the nine-year-old bull market’s lifespan. Goldman forecasts that the S&P 500 will rise 5% to 2850 by the end of this year.
The four strategies are:
High sales growth
“Stocks with the fastest revenue growth will outperform in a decelerating economy and also offer value relative to history,” Kostin said. He anticipates that sales will drive profits, which would then drive stocks.
Goldman’s basket of stocks with high sales growth has outperformed the S&P 500 by six percentage points this year. Companies with the highest estimates for sales growth next year include Netflix, Amazon, Campbell Soup, and Salesforce.com.
As interest rates rise, banks should earn the difference between the lower rates at which they borrow and the higher rates at which they lend. Goldman also expects bank stocks to benefit as they repurchase more shares after passing the Federal Reserve’s stress tests.
Companies with strong balance sheets
They are another play on rising interest rates: as borrowing costs increase, firms with the most cash and minimal debt are best positioned.
Source:: Business Insider