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Where Goldman Sachs' David Kostin is investing now

Investors should consider investing in shares of U.S. companies that do business domestically, especially as economic conditions improve and the U.S. dollar continues to gain strength, Goldman Sachs' chief U.S. equity strategist David Kostin told CNBC on Tuesday.


David Kostin, chief U.S. equity strategist at Goldman Sachs Group.
Scott Eells | Bloomberg | Getty Images
David Kostin, chief U.S. equity strategist at Goldman Sachs Group.

"The U.S. economy is improving. It's improving at multiple levels," Kostin said on "Squawk on the Street," pointing to a pickup in capital spending and Goldman Sachs' forecast for 3 percent growth in the United States' gross domestic product versus expectations for just 1 percent GDP growth in Europe. "This is an environment where, as a portfolio manager, you want to be owning stocks that sell domestically."

Looking forward, Goldman Sachs expects the Federal Reserve to finally raise interest rates at some point in 2015, Kostin said. In turn, he recommends investing not just in U.S. companies that do business in America, but specifically companies that boast a strong balance sheet.

That said, Kostin listed Paychex and Discover Financial Services as examples of stocks investors might consider now.

Finally, Kostin said the S&P 500 index could climb to 2,050 by year end. He thinks it could soar to 2,150 within the next 12 months.