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Where you can find opportunity: Goldman's Kostin

Market valuations are stretched right now, but investors looking to make money can find opportunity in value-oriented stocks, the chief equity strategist for Goldman Sachs told CNBC on Tuesday.

Mixed economic data had investors hunting for growth, but now the economy is starting to look better, David Kostin said in an interview with "Squawk on the Street."

"When the economic data starts to get better is when you want to own value, and value over time tends to outperform," he said.

Goldman Sachs is expecting the economy to grow at a 3 percent rate this year.

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.

Names like AIG, General Motors and Delta Air Lines are examples of companies in different value sectors that also offer growth, Kostin said.

"Goldman Sachs research analysts who cover those stocks have a 'buy' rating with meaningful upsides greater than the upside than I have in the forecast for the overall market," he said.

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Kostin expects the overall market to rise roughly in line with earnings, with the S&P 500 hitting 2,100 by the end of the year.

In addition to value names, U.S. companies that are generating revenue domestically are a "critical" component of a portfolio, he said.

That's because the U.S. economy is growing much more rapidly than Europe's and Japan's, he said.

"If you are a company selling into those end markets, your volumes are just greater," Kostin said. "On a translation from a price perspective, competition exporting and translating those foreign earnings would make it better to own U.S. companies selling domestically."

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Disclosures: AIG, DAL, GM are clients of Goldman Sachs

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