We are still only halfway through the year, and a lot can happen between now and December, but let’s see how Goldman Sachs Group, Inc.'s 2016 stock picks have performed so far year to date.
At the end of November, Goldman Sachs made a call that the market would tread water in 2016. After a horrific January, and aside from a nasty one day trouncing after Brexit, the market has outperformed almost everyone’s expectations. Goldman Sachs called for a 2016 total return of 3%. That’s still possible, but year to date, the S&P 500’s total return is 5.76%. (For more, see: Goldman Sachs Analysts Predict Weak Earnings Season for Q2.)
Goldman believed that companies with high domestic sales would outperform companies with high international sales, which related to the anticipation of Federal Reserve rate hikes and a stronger U.S. dollar. Despite those higher interest rates not coming to fruition, Goldman's picks have still performed well. The investment bank selected 35 stocks for 2016. In order for a stock to have made this coveted list, the company must have met at least two of the following criteria:
1. Strong balance sheet.
2. High U.S. sales.
3. Goldman Sachs analysts’ projections of at least 50 basis points of margin expansion in 2016 and 2017, and revenue growth greater than nominal U.S. gross domestic product (GDP) growth (roughly 4%).
4. Part of the S&P 100.
Let’s see what stocks made the list, as well as how they have performed year to date.
Stock Picks for 2016
Remember that these stock picks were made at the end of last November. The chart below will include year to date performance, current dividend yield and what criteria has been met. For example, if a company had a strong balance sheet and high U.S. sales at the end of last November, then you will find 1,2. This matches the first and second criterion listed above. (For more, see: Goldman Sachs Flip Flops on Gold.)
|
YTD Performance |
Dividend Yield |
Criteria Met |
|
|
8.81% |
N/A |
3,5 |
|
|
-15.63% |
N/A |
1,2 |
|
|
7.40% |
1.71% |
2,4 |
|
|
4.36% |
N/A |
3,4 |
|
|
-4.36% |
1.39% |
1,3,4 |
|
|
-19.93% |
N/A |
1,3 |
|
|
21.52% |
2.05% |
3,4 |
|
|
7.20% |
1.27% |
1,3 |
|
|
-8.27% |
1.60% |
1,2 |
|
|
8.49% |
N/A |
1,3 |
|
|
19.24% |
3.26% |
2,4 |
|
|
-1.01% |
1.63% |
1,2 |
|
|
-29.49% |
3.50% |
1,2 |
|
|
13.76% |
2.52% |
1,4 |
|
|
-1.83% |
2.43% |
2,4 |
|
|
-12.23% |
3.19% |
2,4 |
|
|
0.59% |
2.45% |
3,4 |
|
|
-15.03% |
N/A |
1,4 |
|
|
10.48% |
2.00% |
3,4 |
|
|
-14.12% |
N/A |
1,4 |
|
|
-14.35% |
2.17% |
1,4 |
|
|
20.45% |
2.45% |
1,4 |
|
|
8.16% |
2.58% |
2,4 |
|
|
4.14% |
N/A |
1,3 |
|
|
8.78% |
N/A |
1,2 |
|
|
-3.77% |
N/A |
1,2 |
|
|
11.66% |
N/A |
1,4 |
|
|
-5.45% |
N/A |
1,3 |
|
|
19.15% |
1.04% |
1,2 |
|
|
-6.60% |
0.84% |
1,4 |
|
|
7.98% |
N/A |
3,4 |
|
|
18.32% |
2.34% |
1,4 |
|
|
0.97% |
0.72% |
1,3,4 |
|
|
31.41% |
0.64% |
2,3 |
|
|
20.81% |
4.05% |
1,2,4 |
For those of you who are keeping score at home, that is a 101.60% return excluding dividends. Despite having anticipated higher interest rates and a stronger U.S. dollar, Goldman Sachs has been as close as you can get to being right on the money. Ironically, a dovish Federal Reserve has played a big role helping drive most stock prices higher due to a low interest rate environment. This allows for debt fueled growth.
The Bottom Line
Goldman Sachs has made winning stock picks for 2016. It is only mid-July, so this could change. So far so good. (For more, see: 5 Times Goldman Sachs Got It Wrong in 2015.)
Dan Moskowitz does not have positions in any of the stocks mentioned above.
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