PepsiCo, Home Depot and Domino's Pizza headline Goldman Sachs' best defensive picks list
metamorworks/iStock via Getty Images

Goldman Sachs is attracting attention by calling out 35% odds for a recession in the U.S. over the next two years amid a tougher macroeconomic backdrop that includes higher interest rates and inflation risk.
Despite the gloomy forecast, the investment firm has identified a group of stable stocks that feature low volatility and consistent earnings, which is a mix that typically outperforms during a slowing growth period. Goldman also screened for low realized and implied price volatility that can signal the confidence in continued fundamental stability. The firm also crunched numbers on stocks with consistent EBITDA growth going back ten years.
The "Stable Growth basket" from Goldman Sachs includes PepsiCo (PEP
+0.8%), Home Depot (HD
+2.1%) and Domino's Pizza (DPZ
+4.2%) out of the consumer sector.
Consumer staples are seen as classic defensive plays due to their steady earnings and typically strong dividend payouts. Investors have been catching on with the spread between the return on the Consumer Staples Select Sector SPDR ETF (NYSEARCA:XLP) and S&P 500 Index as wide as it has been all year.