Earnings season has kicked off, and all eyes are on company profits. Goldman Sachs chose 41 stocks expected to see higher EPS growth than the S&P 500 by year-end 2024. The firm forecasts that Intel will see earnings-per-share growth of 345% by year-end. With the first half of the year in the books and second-quarter earnings season in full swing, investors are hunting high and low for any indications of what might happen next in markets.
Considering how unpredictable the stock market and the economy have been in 2023, it’s easy to see why they’re searching for hints of what’s to come. Calls for a recession have been replaced by calls for a soft landing, a tech industry that spent 2021 and 2022 in the dumps has grown resurgent, and professional investors are positioning for a pullback while retail investors are pouring money into markets.d
Luckily, in a recent note to clients, Goldman Sachs Chief US Equity Strategist David Kostin reviewed the first half of 2023 while placing his bets on what the rest of this year and next year will bring.
41 stocks with strong profit growth aheadKostin, like the rest of Wall Street, has been aiming at a moving target this year.
At the beginning of 2022, Goldman Sachs set its price target for the S&P 500 to 4,000 by the end of 2023. But the market shot up higher and faster than the firm predicted, with the index rising above 4,000 in March and staying there.
Now, Goldman Sachs is calling for the S&P 500 to land around 4,500 by the end of the year. The index is already above that target, implying a bit of a pullback through the final five months of 2023.
As for the economy, back in January, Goldman Sachs predicted there was a 35% chance of recession this year. That has since fallen to 25% June, and in July chief economist Jan Hatzius announced that the possibility of a recession had fallen even further to 20%.
Clearly this year has been anything but predictable. That’s why, rather than focusing on the short-term with all its inherent volatility, investors might want to set their sights a little further ahead — perhaps even all the way to the end of next year.
According to Kostin, the S&P 500 should see its EPS decline by 1% before the end of this year. However, the firm is predicting a strong comeback next year, with the index expected to increase EPS by 11% before the end of 2024.
But Kostin thinks certain stocks will do better than that — in some cases, a lot better.
The following 41 stocks are ranked in descending order of 2024 estimated EPS growth. Twenty-nine of them are expected to enjoy stronger EPS growth than the S&P 500 this year, and all of them are forecast to outpace the index’s EPS growth in 2024.
Along with each stock is its ticker, 2023 estimated EPS growth, and 2024 estimated EPS growth. All prices are as of market close on Thursday.