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Pro Analysis

Goldman: S&P to fall into year-end; buy this

A trader works on the floor of the New York Stock Exchange.
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A trader works on the floor of the New York Stock Exchange.

Goldman Sachs predicts the S&P 500 index could end the year on a sour note, down about 4 percent from current levels to 2,100, weighed on by factors like a soft economy, high valuations and uncertainty over the coming U.S. election.

As a result, the investment firm advised clients to instead allocate assets in a strategy that historically paid off when similar conditions arose.

That strategy is called the "Rule of Ten" and is used by Goldman to identify future secular growth stocks based on metrics such as:

  • Companies that increased sales by at least 10 percent in each of the last two years.
  • Estimates from Goldman Sachs' analysts show the potential for these companies to grow sales by at least 10 percent in the next two years.
  • The Street's long-term earnings growth consensus points to growth of at least 10 percent.

The companies that meet those criteria and trade at reasonable valuations, according to Goldman are: