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Goldman: Buy shares of companies insulated from rising inflation pressures

  • Goldman's chief U.S. equity strategist highlighted more than two dozen stocks that have lagged peers during the recent sell-off.
  • Cyclical names and companies with relatively low labor costs may be some of the best bets, according to Goldman's David Kostin.
  • "Rising inflation and interest rates should benefit cyclical sectors, such as financials," Kostin said. "Firms with low labor costs should be most insulated."
A UPS worker checks an Amazon box to be delivered in New York.
Eduardo Munoz | Reuters
A UPS worker checks an Amazon box to be delivered in New York.

Last week's big sell-off in U.S. equities sent traders reeling, but Goldman Sachs believes a number of stocks are oversold.

"The typical correction took 70 trading days to trough and 88 days to recover," David Kostin, Goldman's chief U.S. equity strategist, told clients Monday. "However, an investor who bought the S&P 500 10 percent below its peak without waiting for a bottom would have experienced positive three-, six-, and 12-month returns in 75 percent of corrections."

Goldman's analysts highlighted more than two dozen stocks that have lagged peers during the recent sell-off and noted characteristics that investors should look for when seeking cheaper buying opportunities. Cyclical names and companies with relatively low labor costs may be some of the best bets, according to Kostin.

"These strategies have dislocated from their fundamental drivers as they underperformed during the market decline. Rising inflation and interest rates should benefit cyclical sectors, such as Financials, relative to bond proxies," Kostin added. "Firms with low labor costs should be most insulated from accelerating wages, a trend that our economists expect will persist in 2018."

Here is a selection of stocks Goldman Sachs believes may be resistant to rising wage pressure.