Business Insider
Published Oct 24, 2017 09:24AM ET
Updated Oct 24, 2017 09:59AM ET
The global stock market is scorching hot right now, but that may not be enough for longer-term investors looking for opportunities that will remain fruitful well into the future.
That's why it's important to identify companies with strong growth profiles — ones that will stay attractive on a fundamental basis in the event of a downturn. After all, when the market is struggling, companies that can stand on their own two feet are often the most appealing to traders flailing for returns.
Fear not, Goldman Sachs has you covered. Using a framework it calls the "Rule of Ten," the firm has identified 50 global stocks poised to perform the best in the environment ahead.
What kind of environment is that? According to Goldman's economics team, it will be one characterized by the type of slow, grinding expansion that's perfect for a certain subset of stocks: those that can bootstrap their way to organic growth, with limited external assistance.
"Growth stocks typically outperform in periods of solid but unspectacular economic activity," a group led by Goldman chief US equity strategist David Kostin wrote in a client note.
Before we unveil the 50-stock list, here's a peek under the hood of Goldman's "Rule of Ten" methodology for the selection of the best possible growth stocks around the world. Each company must have:
Goldman's screen excludes companies below $2 billion in market cap and those with average daily trading volume less than $10 million. It also removes stocks in the top 20% of their region's enterprise value-to-sales rankings, with the thinking being that their already-lofty valuation will limit upside.
Here's a visual representation of how Goldman whittles its list down from a universe of 2,300 companies:
The analysis returns some stocks that won't be too shocking to equity enthusiasts. Headlining the group are popular tech stocks Amazon (NASDAQ:AMZN), Tesla (NASDAQ:TSLA) and Alphabet (NASDAQ:GOOGL).
Without further ado, here are the full components of Goldman's global secular growth list:
Written By: Business Insider
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