Goldman Sachs told clients the recent rally in cyclical stocks will continue even after last week's election surge due to Donald Trump's economic policies.
The Industrial Select Sector SPDR Fund ETF is up 5 percent from Tuesday's close through Friday, while the Financial Select Sector SPDR Fund ETF rose 8 percent.
"Looking forward, cyclicals outperformance should persist," strategist David Kostin wrote in the note to clients Friday.
"Tax and trade reform appear to be high priorities for President elect Trump. Cyclical stocks that should benefit most will have high domestic sales, sizeable profits held overseas that may be repatriated, and/or high corporate tax rates."
Kostin said that during the campaign, Trump proposed $1 trillion in fiscal spending over the next decade. More fiscal spending will "lift nominal GDP growth and lead to higher sales and earnings," according to the strategist. He cited how Goldman's basket of cyclical names already outperformed the firm's defensives basket by more than 10 percentage points in the last six months.
Here are five cyclical stocks Goldman recommends with large international earnings repatriation potential.
