Two Stocks With High Potential to Beat the Market According to Goldman Sachs
Goldman Sachs Chief Strategist Says Investors Looking to Broaden Their Portfolios Beyond the "Magnificent Seven" Can Start Looking at Alternative Investments
Wall Street is looking for opportunities beyond the large-cap technology stocks that have driven broad market gains, amid concerns that major benchmarks could run out of steam following their respective rallies.
Goldman Sachs predicts the S&P 500 will reach 5,200 by the end of the year, not too far off from where it is currently trading. The S&P 500 has already gained more than 6%, hitting fresh all-time highs just two months into 2024 and surpassing the 5,100 mark for the first time ever last week.
According to David Kostin, Goldman Sachs' chief U.S. equity strategist, the "common favorites" could offer better opportunities. These are stocks that are liked by both mutual funds and hedge funds, which can sometimes have significantly different positions in stocks. The strategist noted that hedge funds are more likely to overweight the "Magnificent Seven" names, while mutual funds tend to underweight their exposure to these names.
"It's the shared favorites that you should own as a portfolio manager because statistically they tend to outperform by about three percentage points a year," Kostin said.
2 Stocks With High Potential to Beat the Market According to Goldman Sachs
KKR & Co LP (NYSE:KKR), an alternative asset manager, is seen benefiting from "growth optionality" in its nascent credit capital markets platforms. KKR's shares are up over 10% this year.
Workday Inc (NASDAQ:WDAY), a cloud-based enterprise management software company, is liked by several banks that have overweight ratings on the stock. Workday's shares have gained over 8% this year.
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