5G Investment News
  • Top News
  • Economy
  • Forex
  • Investing
  • Stock
  • Editor’s Pick
No Result
View All Result
5G Investment News
  • Top News
  • Economy
  • Forex
  • Investing
  • Stock
  • Editor’s Pick
No Result
View All Result
5G Investment News
No Result
View All Result
Home Economy

GOLDMAN SACHS: Buy these 21 stocks on track for years of market-beating growth that could make them future giants — even rivals to the FAANGs

by
September 20, 2020
in Economy, Top News
0 0
0
GOLDMAN SACHS: Buy these 21 stocks on track for years of market-beating growth that could make them future giants — even rivals to the FAANGs
0
SHARES
40
VIEWS
Share on FacebookShare on Twitter
  • David Kostin of Goldman Sachs is using his high-growth “Rule of Ten” method to help identify stocks that could lead the way Big Tech does today.
  • He names 21 companies that are posting much stronger revenue growth than the broader S&P 500 index and are expected to sustain that performance through 2022.
  • Kostin further narrows that down to five companies that could one day rival Apple, Amazon, Microsoft, Facebook, and Alphabet in size.
  • Visit Business Insider’s homepage for more stories.

These days it’s hard to picture a stock market that isn’t dominated by Big Tech. But two decades ago, who imagined a market where GE and Exxon were almost afterthoughts?

The amount of money invested in Apple, Amazon, Microsoft, Alphabet, and Facebook today is staggering, as Goldman Sachs Chief US Equity Strategist David Kostin says the stock market hasn’t been this top-heavy in 40 years. But it will change one day, and Kostin says people are hungry for the next big thing.

“Investors are increasingly searching for fast-growing firms beyond the ‘current five,'” he wrote.

Finding those potential replacements starts with a focus on the incredible growth that made those five companies so successful.

“The ability of these firms to grow sales rapidly regardless of the economic situation has been brought into focus by the corona crisis,” he said. “Growth is particularly important with interest rates at the lower bound. “

So Kostin and his team applied their “Rule of Ten” framework and sought companies that reported annual revenue growth of at least 10% in 2018 and 2019, and are expected to maintain that level in 2021 and 2022. They also have to maintain compound annual sales growth of at least 10% across the five-year period.

Past versions of the rule had an earnings component, but they’re omitting that this time around to focus on revenues. There are 21 S&P 500 stocks that meet Kostin’s guidelines, and their revenue and performance are much stronger than the index as a whole.

“The median stock has expected 2018-2022 annualized sales growth of 18% (vs. 4% for the S&P 500) … and has returned 21% YTD (vs. 0%),” he wrote in a note to clients.

That’s 18% figure is close to the collective 22% revenue growth expected for the FAAMG five over the same period.

A few themes emerge from the new list. Kostin names them as “computerization of healthcare,” “digital transformation of business,” “workflow automation,” and “e-commerce and digital payments.”

But if 21 still seems like a lot compared to just five Big Tech leaders, the Goldman group further narrows their list to what Kostin calls the “future five:” robotic surgery system maker Intuitive Surgical, design software company Autodesk, cloud-based business software maker ServiceNow, payments giant PayPal, and rare disease drugmaker Vertex Pharmaceuticals.

All five benefit from “Large total addressable markets and high barriers to entry,” he said.

Collectively they are projected to post 20% annual sales growth from 2018-22, which is even closer to FAAMG’s results. And they’ve offered similar returns as well: If the stocks are treated as an equal-weight group, they’ve returned 38% to investors this year, compared to 39% for Big Tech.

It’s far from a guarantee that those companies will join Apple and Amazon’s ranks; Wall Street currently values four of the five at less than $100 billion. PayPal is the biggest of the future five, and its market capitalization is just a third of Facebook’s and a little more than a tenth of Apple’s.

But Kostin says the trends that helped make the FAAMG stocks so gigantic will remain in force for years to come, and that at least opens the door for those five companies to become future leaders.

“We believe the market will continue to allocate an exceptionally large premium to growth stocks for the next several years,” he said. “In absolute terms, stocks are highly valued on both an aggregate and median basis. However, stocks are modestly undervalued on a relative basis vs. interest rates.”

Kostin’s 21 stocks are ranked from lowest to highest based on their expected compound annual revenue growth over the five years spanning 2018 to 2022.

Read more:

Previous Post

Live Oak Bank review: High rates on savings and CDs, and no monthly service fees

Next Post

Trump supporters staged a rally at a Virginia polling center during early voting, intimidating voters, election officials say

Next Post
Trump supporters staged a rally at a Virginia polling center during early voting, intimidating voters, election officials say

Trump supporters staged a rally at a Virginia polling center during early voting, intimidating voters, election officials say

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Get the daily email that makes reading the news actually enjoyable. Stay informed and entertained, for free.
Your information is secure and your privacy is protected. By opting in you agree to receive emails from us and our affiliates. Remember that you can opt-out any time, we hate spam too!

Recommended

Former police chief given post in President’s office

Former police chief given post in President’s office

February 24, 2021
FDI pledges slump to three-year low

FDI pledges slump to three-year low

February 24, 2021
2020 approved foreign investment pledges lowest in three years

2020 approved foreign investment pledges lowest in three years

February 24, 2021
PHL underperforms in innovation adoption

PHL underperforms in innovation adoption

February 24, 2021

Disclaimer: 5GInvestmentNews.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice.
The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

  • About Us
  • Privacy Policy
  • Terms & Conditions
  • Contact Us
  • Email Whitelisting

Copyright © 2021 5GInvestmentNews. All Rights Reserved.

No Result
View All Result
  • About Us
  • Contact Us
  • Email Whitelisting
  • Home
  • Privacy Policy
  • Terms & Conditions
  • Thank You

© 2021 JNews - Premium WordPress news & magazine theme by Jegtheme.

Login to your account below

Forgotten Password?

Fill the forms bellow to register

All fields are required. Log In

Retrieve your password

Please enter your username or email address to reset your password.

Log In

Get the daily email that makes reading the news actually enjoyable. Stay informed and entertained, for free.



Your information is secure and your privacy is protected. By opting in you agree to receive emails from us and our affiliates. Remember that you can opt-out any time, we hate spam too!