According to Goldman, these stocks provide a sense of security during economic downturns and volatile market conditions.
Editor Thenews24.net
2 min read
Investor anxiety over a possible recession led to a global market downturn on Monday, but Goldman Sachs has identified a strategy to navigate a potential economic slump. After a disappointing jobs report for July, the S&P 500 and Dow Jones Industrial Average experienced their worst trading day in almost two years. Japan’s Nikkei 225 also had its worst performance since the 1987 “Black Monday.” Although global markets bounced back on Tuesday, investor apprehension persists. Goldman Sachs suggests a portfolio of stable growth stocks as a safeguard against U.S. economic slowdown concerns. These stocks could also thrive amid economic policy uncertainty. David Kostin, Goldman’s chief U.S. equity strategist, noted that investor attention will soon turn to the upcoming 2024 U.S. presidential election, which is just three months away. Historically, stable growth stocks have outperformed during periods of economic policy uncertainty. Goldman’s portfolio includes 50 companies from the Russell 1000 with the most consistent earnings growth over the past decade.
Among the sectors represented, information technology has the most entries, with 14 companies, though only five have posted gains this year. Notable tech firms like International Business Machines (IBM) and F5 Networks have seen their shares rise by over 14% and around 5%, respectively, in 2024. In the past month, IBM’s stock has increased by about 6%, and F5’s by more than 9%, following strong second-quarter earnings reports. Both companies have high 10-year EBITDA growth variability, with IBM at 15 percentage points and F5 at 16 percentage points. However, their projected growth for the year differs, with F5 expected to grow earnings per share by 12% and IBM by 5%.
In the consumer discretionary sector, Domino’s Pizza is highlighted. The company has a 10-year EBITDA growth variability of 7 percentage points and is projected to grow earnings per share by 10% and revenue by 7% for the full year. Domino’s shares have risen about 4% in 2024. CEO Russell Weiner recently told CNBC that the U.S. business is strong, with increased orders across all income segments for both delivery and carryout services.
On the other hand, communication services stock Sirius XM and healthcare company Zoetis have struggled this year. Zoetis shares have dropped over 6% in 2024, while Sirius XM has seen a nearly 44% decline.