How do you find good bargains in a stock market that’s already the most expensive since the dotcom bubble? Goldman Sachs has some ideas.
The bank says the key is to find companies that not only offer compelling cases for future gains, but are also under-owned by fund managers and generally underappreciated by the investment population.
In order to single out the stocks with the most upside potential, the equity strategy team at Goldman picked companies meeting the following three qualifications:
- Active share across large-cap mutual funds that’s below the S&P 500 median of 7 basis points
- Active share that’s at or below its five-year average of 7 basis points
- A buy rating with Goldman equity analysts
The resulting group of stocks has higher expected sales and earnings growth than the median S&P 500 company, while also boasting a lower price-earnings multiple.
Here’s a list of the 14 stocks identified by Goldman, as of March 31, arranged in descending order of active mutual fund share:
14. L3 Technologies
Sector: Industrials
Upside to Goldman target price: 13%
Large-cap mutual fund active share: 4 bp
Source: Goldman Sachs
13. NetApp
Sector: Information technology
Upside to Goldman target price: 16%
Large-cap mutual fund active share: 4 bp
Source: Goldman Sachs
12. Juniper Networks
Sector: Information technology
Upside to Goldman target price: 23%
Large-cap mutual fund active share: 4 bp
Source: Goldman Sachs
See the rest of the story at Business Insider
June 01, 2017 at 03:35PM
from Joe Ciolli
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