A Look at Goldman Sachs’s Current Strategy and Stock Picks
Goldman Sachs’s new investment strategy
Goldman Sachs (GS) disclosed a new strategy that could be lucrative in the present investment scenario. The investment firm is now focusing on the companies that have a higher return on capital, are trying to maintain this higher return, and are working to increase this return.
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The investment firm believes that return on capital will also measure the company’s efficiency in regards to how quickly it’s converting capital into strong returns.
The investment firm wrote, “While maintaining our bedrock focus on competitive advantage, we prioritize growth and positive momentum in returns on capital – companies which won’t just maintain high returns but also expand them.” Companies that are changing their strategy according to economic condition (SPY) (QQQ) to get higher returns are in the limelight for Goldman Sachs.
Goldman Sachs selected the following stocks that it believes could provide a strong return on capital:
The investment firm estimated that between 2016 and 2019, these stocks could provide an annual sales growth rate of 31.9%, 21.5%, 15.6%, 14.3%, 13.3%, and 11.1%, respectively. Higher sales growth or revenue growth is expected to boost companies’ earnings.
In the next part of this series, we’ll analyze Goldman Sachs’s view on Facebook (FB).