GOLDMAN SACHS: Buy these 18 high-quality stocks right now to avoid a growth slowdown that will cripple markets in 2019

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  • Firms across Wall Street are forecasting an economic slowdown
    and diminishing equity returns in 2019, both of which will make
    life difficult for stock pickers.
  • Goldman Sachs says investors would be advised to seek out
    high-quality companies, since they’re best equipped to withstand
    these types of headwinds.
  • The firm has identified the 18 highest-quality companies it
    says are poised to outperform when the going gets tough in
    2019.

When the going gets tough, the cream rises to the top.

This is allegedly true in all aspects of life, and Goldman
Sachs
says it unequivocally applies to the
stock market
as it stands right now.

And some reassurance is surely needed at the moment as firms
across Wall Street warn of an impending economic slowdown and
evaporating stock market returns as soon as next year.

Fear not, says Goldman, which has a strategy tailor-made for
such conditions: buy high-quality companies early and often.

While buying shares of good companies may seem glaringly
obvious, it hasn’t actually been the most effective strategy
through much of the nearly
10-year bull market
. During the prolonged stretch where
interest rates were near zero — which allowed even companies with
the weakest balance sheets to tap capital markets — low-quality
firms were actually the more enticing prospect.

Now that interest rates are rising, siphoning off the easy
supply of capital so many companies used to their advantage,
quality is back in vogue. This is especially true since economic
growth is also expected to slow, and the market as a whole will be
at increased risk of sudden shocks, says Goldman.

With that established, what actually qualifies as a high-quality
company? Goldman narrows it down to five key factors: (1) strong
balance sheets, (2) stable sales growth, (3) low deviation in
operating income (EBIT), (4) low stock drawdown risk, and (5)
return-on-equity that exceeds peers.

Goldman combines all of these into a so-called quality score.
Here are the 18 stocks screened by the firm that have the highest
ratings. Goldman’s scale goes from 0 to 100, and the firms are
listed in increasing order of quality.

18. Universal Health Services

Ticker: UHS

Industry: Healthcare

Market cap: $11 billion

Quality score: 85

Source: Goldman Sachs

17. American Tower

Ticker: AMT

Industry: Real estate

Market cap: $72 billion

Quality score: 85

Source: Goldman Sachs

16. Comcast

Ticker: CMCSA

Industry: Communication services

Market cap: $176 billion

Quality score: 89

Source: Goldman Sachs


See the rest of the story at Business Insider

Source: FS – All – Economy – News
GOLDMAN SACHS: Buy these 18 high-quality stocks right now to avoid a growth slowdown that will cripple markets in 2019