Goldman leans to growth picks in either recession scenario
Michael M. Santiago
Goldman Sachs is sticking with its S&P 500 (SP500) (NYSEARCA:SPY) target of little change by year end as valuations and earnings face headwinds near term, its equity team said.
"Our Long Duration basket has outperformed the Short Duration basket by 6 pp YTD (2% vs. 8%)," strategist David Kostin wrote in a note. "This has created an asymmetry that supports our recommendation ... to own high-margin growth stocks vs. low-margin growth stocks."
"If the economy avoids recession, real yields are likely to rise and pose a headwind to low-margin growth stocks," Kostin said. "If the economy enters recession investors will likely rotate toward stocks with 'quality' attributes, including high profit margins."
Goldman selected high-margin growth stocks from the Russell 3000 (IWV) excluding Biotech, Financials, Real Estate and Energy with market cap above $1B and revenue of $100M.
The stocks by sector are:
Communications Services 
Take-Two (TTWO), second twelve months sales growth consensus 25%, net margin consensus 17%
Consumer Discretionary 

Las Vegas Sands (LVS), 24%, 21%
Churchill Downs (CHDN), 15%, 19%
Airbnb (ABNB), 15%, 24%

Healthcare

Amylyx (AMLX), 64%, 37%
Harmony Biosciences (HRMY), 25%, 32%
Cytek Biosciences (CTKB), 23%, 15%
Definitive Healthcare (DH), 19%, 16%
Eli Lilly (LLY), 18%, 30%
Shockwave Medical (SWAV), 23%, 21%
Veeva Systems (VEEV), 18%, 31%
Doximity (DOCS), 20%, 26%
Repligen (RGEN), 20%, 21%
DexCom (DXCM), 19%, 15%

Industrials

GrafTech (EAF), 28%, 19%
Vicor (VICR), 21%, 18%
Shoals Technologies (SHLS), 40%, 22%
Energy Recovery (ERII), 37%, 19%
Air Lease (AL), 16%, 23%
CoStar Group (CSGP), 17%, 16%

Materials

Piedmont Lithium (PLL), 133%, 72%
Livent (LTHM), 22%, 37%
MP Materials (MP), 44%, 48%

Info Tech

Marathon Digital (MARA), 25%, 17%
Qorvo (QRVO), 18%, 19%
Credo Technology (CRDO), 56%, 18%
Unity Software (U), 18%, 16%
First Solar (FSLR), 29%, 31%
Silicon Labs (SLAB), 17% 16%
Five9 (FIVN), 19%, 16%
Cvent Holding (CVT), 18%, 19%
Teradyne (TER), 20%, 24%
DigitalOcean (DOCN), 20%, 28%
Palantir (PLTR), 19%, 22%
AMD (AMD), 15%, 24%
Workday (WDAY), 18%, 20%
Marvell (MRVL), 17%, 30%
Zscaler (ZS), 27%, 17%
Power Integrations (POWI), 19%, 21%
Palo Alto Networks (PANW), 20%, 19%
Paylocity Holding (PCTY), 20%, 22%
Enphase Energy (ENPH), 26%, 19%
Datadog (DDOG), 30%, 20%
Dynatrace (DT), 20%, 22%
CrowdStrike (CRWD), 28%, 19%
Fortinet (FTNT), 19%, 21%
ServiceNow (NOW), 22%, 22%
Paycom Software (PAYC), 21%, 26%
SiTime (SITM), 32%, 25%
Universal Display (OLED), 19%, 34%
Monolithic Power (MPWR), 16%, 34%
Nvidia (NVDA), 24%, 31%

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