Goldman Sachs is still projecting solid economic growth in 2023 and 2024. The firm expects continued declines in inflation and strength in the labor market. Here are 51 inexpensive stocks to buy that have lagged but are still high quality. The US economy seems to be running on fumes after last quarter’s anemic GDP report, but Goldman Sachs still believes that there won’t be a recession in the next year.
Below-trend growth for corporate earnings and economic activity hasn’t shaken the firm’s long-held conviction that the US will narrowly dodge a downturn. Falling inflation, a stable growth outlook, and a remarkably resilient labor market are among their reasons for confidence.
David Kostin, the chief US equity strategist at Goldman Sachs, noted in a recent report that inflation is steadily slowing. His firm thinks core Personal Consumption Expenditures (PCE), a common gauge of price growth, should return to near the Federal Reserve’s 2% target by 2025.
Rapidly falling goods inflation is dragging down the core PCE Index while services inflation stays sticky. Goldman Sachs A recent report, however, shows that inflation isn’t going to simply vanish into thin air. On Friday the US Department of Commerce announced that the personal consumption expenditures price index rose 0.4% month-over-month, which was higher than anticipated.
Lower inflation is crucial if the economic expansion is to continue. Goldman Sachs is relatively optimistic about growth and anticipates that GDP will stay positive for at least the next seven quarters, while its peers call for an economic contraction in the back half of the year.
Goldman Sachs has a higher GDP forecast than the consensus in the next 12 months. Goldman Sachs Perhaps most perplexing about the economic landscape is how the unemployment rate has stayed historically low despite waves of layoffs and lackluster GDP growth. In fact, the labor market is so hot that the Fed seems to be hoping for job losses if it means wage inflation slows. Regardless, Goldman Sachs is betting that there won’t be a big spike in jobless claims this year.
Goldman Sachs 51 cheap quality stocks to buy nowIf there is a so-called “soft landing,” Goldman Sachs recommends that investors position their portfolios accordingly by buying stocks with cheap valuations and robust balance sheets.
If the US economy continues to expand, the S&P 500 should stay afloat, in Goldman Sachs’ view. Goldman Sachs The firm put together a portfolio of stocks in the Russell 3000 index that are high quality yet are trading at inexpensive levels since they’ve underperformed their industry peers in recent years.
Below are 51 stocks that have trailed their industry by at least 10 percentage points since 2021 but have strong balance sheets and palatable valuations, according to Goldman Sachs. Along with each is its ticker, market capitalization, price-to-earnings (P/E) ratio, industry, and return compared to its industry in the last two and a half years. Prices below reflect closing prices on Wednesday afternoon.