Goldman Sachs analysts have ranked 50 stocks in their “strong balance sheet” basket, outperforming weak balance sheet stocks by 5 percentage points year-to-date at 6%.
Goldman analysts, led by David J. Kostin, suggest that mega-cap tech stocks like Apple, Amazon, Alphabet, Meta Platforms, Microsoft, Nvidia, and Tesla outperform the S&P 500 due to strong balance sheets and high returns.
The Altman z-score predicts a business’s bankruptcy likelihood using five ratios: working capital/assets, retained earnings/assets, EBIT/assets, market cap/liabilities, and sales/assets, ranking the strongest in S&P sectors.
Communication services (XLC)
Alphabet Inc. (GOOGL) – Altman z-score: 11.8
Meta Platforms Inc. (META) – Altman z-score: 10.1
Netflix Inc. (NFLX) – Altman z-score: 7.2
Electronic Arts (EA) – Altman z-score: 5.3
Take-Two Interactive Software (TTWO) – Altman z-score: 2.3
Walt Disney (DIS) – Altman z-score: 2.1
Consumer discretionary (XLY)
Deckers Outdoor (DECK) – Altman z-score: 15.9
Lululemon Althetica Inc. (LULU) – Altman z-score: 14.7
Chipotle Mexican Grill (CMG) – Altman z-score: 13.4
Garmin Ltd. (GRMN) – Altman z-score: 12.8
Tesla Inc. (TSLA) – Altman z-score: 9.4
Home Depot Inc. (HD) – Altman z-score: 7.2
Consumer staples (XLP)
Monster Beverage (MNST) – Altman z-score: 25.8
Costco Wholesale (COST) – Altman z-score: 8.6
Colgate-Palmolive (CL) – Altman z-score: 6.6
Sysco Corp. (SYY) – Altman z-score: 5.6
Energy (XLE)
EOG Resources Inc. (EOG) – Altman z-score: 5.2
Valero Energy Corp. (VLO) – Altman z-score: 4.8
Exxon Mobil Corp. (XOM) – Altman z-score: 4.7
Materials (XLB)
Stell Dynamics Inc. (STLD) – Altman z-score: 5.8
Nucor Corp. (NUE) – Altman z-score: 5
Health care (XLV)
Intuitive Surgical (ISRG) – Altman z-score: 40.3
West Pharmaceutical Services (WST) – Altman z-score: 20.1
IDEXX Laboratories (IDXX) – Altman z-score: 17.8
Edwards Lifesciences (EW) – Altman z-score: 14.9
Vertex Pharmaceuticals (VRTX) – Altman z-score: 14.8
Regeneron Pharmaceuticals (REGN) – Altman z-score: 10.8
Eli Lilly & Co. (LLY) – Altman z-score: 10.3
Industrials (XLI)
Copart Inc. (CPRT) – Altman z-score: 42.1
Fastenal Co. (FAST) – Altman z-score: 25
Old Dominion Freight Line (ODFL) – Altman z-score: 24.3
Cintas Corp. (CTAS) – Altman z-score: 12.2
Rollins Inc. (ROL) – Altman z-score: 11.2
Information technology (XLK)
Nvidia Corp. (NVDA) – Altman z-score: 61.4
Monolithic Power Systems (MPWR) – Altman z-score: 50.3
Arista Networks (ANET) – Altman z-score: 23.1
Cadence Design Systems (CDNS) – Altman z-score: 22.9
Super Micro Computer (SMCI) – Altman z-score: 19.1
Synopsys Inc. (SNPS) – Altman z-score: 14.1
Fair Isaac Corp. (FICO) – Altman z-score: 13.1
Adobe Inc. (ADBE) – Altman z-score: 12.8
Teradyne Inc. (TER) – Altman z-score: 12.8
EPAM Systems Inc. (EPAM) – Altman z-score: 12.4
Advanced Micro Devices (AMD) – Altman z-score: 12.4
ServiceNow Inc. (NOW) – Altman z-score: 11.1
Intuit Inc. (INTU) – Altman z-score: 10.8
Applied Materials (AMAT) – Altman z-score: 10.8
Lam Research Corp. (LRCX) – Altman z-score: 10.5
Texas Instruments (TXN) – Altman z-score: 9.9
Microsoft Corp. (MSFT) – Altman z-score: 9.8
Stable growth stocks
Goldman Sachs has published a basket of “stable growth” stocks, including the top 50 Russell 1000 stocks with the most stable EBITDA growth in the past decade. The analysts predict earnings growth to lift the S&P 500 Index by 3% to their year-end target.
Goldman’s stable growers have lagred the S&P 500 by 2% year-to-date and underperformed in other quality-related factors, according to analyst David J. Kostin.
Goldman analysts rank stocks with stable growth best alongside decelerating economic growth, with low year-on-year EBITDA growth variability over 10 years indicating more stability.
Communication services (XLC)
Sirius XM Holdings Inc. (SIRI) – 10-year EBITDA growth variability: 7
Comcast (CMCSA) – 10-year EBITDA growth variability: 8
Iridium Communications Inc. (IRDM) – 10-year EBITDA growth variability: 8
Omnicom Group Inc. (OMC) – 10-year EBITDA growth variability: 13
Cable One Inc. (CABO) – 10-year EBITDA growth variability: 18
Consumer discretionary (XLY)
Domino’s Pizza Inc. (DPZ) – 10-year EBITDA growth variability: 7
AutoZone Inc. (AZO) – 10-year EBITDA growth variability: 8
Home Depot Inc. (HD) – 10-year EBITDA growth variability: 11
O’Reilly Automotive Inc. (ORLY) – 10-year EBITDA growth variability: 12
Genuine Parts Company (GPC) – 10-year EBITDA growth variability: 12
Consumer staples (XLP)
PepsiCo Inc. (PEP) – 10-year EBITDA growth variability: 6
Colgate-Palmolive Co. (CL) – 10-year EBITDA growth variability: 6
Altria Group Inc. (MO) – 10-year EBITDA growth variability: 7
Energy (XLE)
Kinder Morgan Inc. Class P (KMI) – 10-year EBITDA growth variability: 15
ONEOK Inc. (OKE) – 10-year EBITDA growth variability: 17
Financials (XLF)
Marsh & McLennan Companies Inc. (MMC) – 10-year EBITDA growth variability: 7
Bank of New York Mellon Corp. (BK) – 10-year EBITDA growth variability: 8
Jack Henry & Associates Inc. (JKHY) – 10-year EBITDA growth variability: 8
MSCI Inc. (MSCI) – 10-year EBITDA growth variability: 8
S&P Global Inc. (SPGI) – 10-year EBITDA growth variability: 9
Primerica Inc. (PRI) – 10-year EBITDA growth variability: 9
Nasdaq Inc. (NDAQ) – 10-year EBITDA growth variability: 9
Materials (XLB)
AptarGroup Inc. (ATR) – 10-year EBITDA growth variability: 8
Health care (XLV)
ResMed Inc. (RMD) – 10-year EBITDA growth variability: 8
Zoetis Inc. (ZTS) – 10-year EBITDA growth variability: 9
Amgen Inc. (AMGN) – 10-year EBITDA growth variability: 10
Mettler-Toledo International Inc. (MTD) – 10-year EBITDA growth variability: 11
McKesson (MCK) – 10-year EBITDA growth variability: 11
Charles River Laboratories International Inc. (CRL) – 10-year EBITDA growth variability: 12
Industrials (XLI)
Waste Management Inc. (WM) – 10-year EBITDA growth variability: 6
Fastenal Company (FAST) – 10-year EBITDA growth variability: 6
Rollins Inc. (ROL) – 10-year EBITDA growth variability: 7
Verisk Analytics Inc. (VRSK) – 10-year EBITDA growth variability: 8
Paychex Inc. (PAYX) – 10-year EBITDA growth variability: 9
Information technology (XLK)
VeriSign Inc. (VRSN) – 10-year EBITDA growth variability: 4
Amdocs Limited (DOX) – 10-year EBITDA growth variability: 5
Oracle (ORCL) – 10-year EBITDA growth variability: 7
Accenture plc (ACN) – 10-year EBITDA growth variability: 7
CDW (CDW) – 10-year EBITDA growth variability: 7
Cisco Systems Inc. (CSCO) – 10-year EBITDA growth variability: 10
Cognizant Technology Solutions (CTSH) – 10-year EBITDA growth variability: 11
Akamai Technologies Inc. (AKAM) – 10-year EBITDA growth variability: 11
Roper Technologies Inc. (ROP) – 10-year EBITDA growth variability: 12
Amphenol (APH) – 10-year EBITDA growth variability: 13
International Business Machines (IBM) – 10-year EBITDA growth variability: 15
F5 Inc. (FFIV) – 10-year EBITDA growth variability: 16
Cadence Design Systems Inc. (CDNS) – 10-year EBITDA growth variability: 16
Motorola Solutions Inc. (MSI) – 10-year EBITDA growth variability: 16
Real estate (XLRE)
SBA Communications Corp. (SBAC) – 10-year EBITDA growth variability: 6
Utilities (XLU)
American Water Works Company Inc. (AWK) – 10-year EBITDA growth variability: 6
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