Goldman Sachs has unveiled a list of stable growth stocks for investors to consider amidst mounting concerns over economic uncertainty. The firm, worried about the stock market and the broader economy, has advised clients on strategies to withstand potential turbulence. Among the few tech companies highlighted is Alphabet Inc., which Goldman forecasts will experience an 11% increase in sales and earnings per share by 2025.
Despite a nearly 13% decline in Alphabet shares year to date, the tech giant has seen a modest 2% uptick in 2025. Recent weeks have brought heightened uncertainty around Alphabet, spurred by the appointment of Robert F. Kennedy Jr. as Health and Human Services Secretary. Kennedy's vocal criticism of major food companies under his "Make America Healthy Again" platform has added to the volatility.
Goldman Sachs is focused on identifying stocks that have demonstrated reliable cash flow growth with minimal variance over the past decade. This approach aims to help clients navigate a possible recession, as historically, the S&P 500 has declined by a median of 24% from peak to trough during such periods. Notably, over half of this downturn has been driven by a 14% decline in "Magnificent Seven" stocks.
David Kostin, a key figure at Goldman Sachs, emphasized the primary concern, stating:
"The key market risk going forward is a major further deterioration in the economic outlook."
In addition to Alphabet, Goldman also predicts a 5% increase in sales and earnings per share for Domino's Pizza by 2025. This aligns with their strategy of focusing on companies with consistent cash flow growth.
As part of its cautious outlook, Goldman Sachs adjusted its year-end target for the S&P 500, reducing it from 6,500 to 6,200 in a recent research note. This revision reflects the firm's assessment of ongoing economic challenges and potential market volatility.