Certain individual stocks can keep reaping returns in a post-pandemic world even as the economy slows from its rapid comeback, according to Goldman Sachs. Investors just have to find the right ones.
Expectations for the recovering economy have already boosted whole sectors of the stock market and the majority of companies are topping earnings expectations, making it hard to for investors to find stocks separating themselves from the pack. So it's a good time to pick specific stocks that don't rely as much on greater economic trends, the Goldman analysts recommend.
"Against this backdrop of potentially peaking growth, rising volatility, normalizing earnings results — and following the strong run in recovery stocks we have already seen — the time may be ripe for identifying stocks with idiosyncratic fundamental earnings drivers, less dependent on macroeconomic tailwinds to drive outperformance," lead analyst Chris Hussey said in the report this week.
The S&P 500 is up 11% this year, driven by gains in stocks leveraged to the economic comeback like banks and energy. The benchmark is up 86% from its pandemic closing low in March 2020.
Goldman Sachs analysts identified individual stocks to consider from here in three categories:
- Well-positioned for growth with unique earnings drivers
- In cyclical sectors, but stand out from peers
- Vulnerable to risk of higher rates and inflation on growth stocks
Here are some of the stocks the Goldman is telling clients to buy which fit that criteria: