“Low risk-adjusted returns, high correlation, slowing economic growth and rising macroeconomic and policy uncertainty have made equity investing challenging,” says Goldman Sachs’ equity strategy team.
In a new note to clients, the team, led by David Kostin, recommends buying their High Quality Stock Basket instead of the S&P 500. The basket consists of 50 stocks that rank highly when it comes to balance sheet strength, sales growth stability, earnings growth reliability, and ROE. They also don’t experience major short-term sell-offs often.
These stocks tend to have high dividend yields, significant foreign sales, and premium valuations.
Goldman recommends buying the whole basket of 50 stocks. But we pulled the 18 stocks that scored the highest based on the team’s screening methodology.