Goldman: A bullish force is back. 5 ways to play

Published Mon, Apr 27 20151:25 PM EDTUpdated Tue, Apr 28 20158:08 AM EDT

There's a big bullish force for this stock market about to resume in just one week, according to Goldman Sachs. Here's how it is telling clients to profit from it. In one week's time, most companies in the S & P 500 will be able once again to buy back their own shares as a purchasing blackout instituted around earnings season ends, according to the investment bank. This buyback tour de force, the primary reason behind the six-year bull market, will reach $900 billion this year, a record. (This is in terms of authorizations, not actual buying.) "Corporate activity in early 2015 supports our view that the S & P 500 will return more than $1 trillion of cash to investors this year. We forecast an 18 percent surge in corporate buybacks and a 7 percent increase in dividends in 2015," wrote Goldman equity strategist David Kostin. Read More 10 stocks that almost always beat earnings The firm compiled a basket of stocks for clients to purchase in order to ride this trend. The 'Total Cash Return' portfolio is up 6 percent this year, double the returns of the S & P 500. In 20 years, the basket is up 16 percent annually, compared with a 10 percent annual return for the S & P 500. It contains the 50 stocks in the S & P 500 returning the most cash back to shareholders relative to their market value, in the form of buybacks and dividends or both. The money play: Here are five stocks from that basket, along with annual buybacks and annual dividends totals relative to market cap: To be sure, Goldman warns that corporations should find better ways to use their capital now. This could be especially true given the history of buybacks. The current buyback record holding year is 2007, which saw $863 billion in buyback announcements, according to Goldman. That gluttonous buying activity marked the start of the financial crisis and preceded a 50 percent drop in the S & P 500. Writes Goldman: "From a strategic perspective, managements would in many cases better serve shareholders by pursuing acquisitions. Others have argued for more capital spending. However, capacity utilization is just below the 40-year average of 80 percent and many industries do not need additional capacity." But for now, the firm recommends keep riding the buyback tidal wave.

Traders work on the floor of the New York Stock Exchange.

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There's a big bullish force for this stock market about to resume in just one week, according to Goldman Sachs.

Here's how it is telling clients to profit from it.