Need to Know: Here are 30 stocks that Goldman Sachs likes when the economy stutters and markets gyrate

Where to invest against such a volatile backdrop? Our call of the day from Goldman Sachs strategists offer up a group of equities they say can hold their in these uncertain times.

“Stable stocks –- those with low share price and earnings growth volatility -– typically outperform in environments of slowing economic growth and tightening financial conditions,” say a team led by Ben Snider and David Kostin in a note from late Monday.

After lagging dramatically against a strong global economic backdrop for the past two years, their stable stocks basket has outperformed the S&P 500
SPX,
+0.84%
by 5 percentage points over the past six months, with more “room to run,” they say.

Those stocks remain cheap, trading at a price/earnings premium of around 8% versus a 35-year average of 15%. During a similar batch of slowing growth and Fed tightening in 2018, the premium hovered at 20% for that group, they note.

“Despite recent outperformance, stable stocks do not appear to be pricing the slowdown suggested by recent industry rotations or our economists’ GDP forecasts,” said Goldman.

As for the stock names, their stable basket consists of 50 Russell 1000
RUI,
+0.50%
stocks with the most stable EBITDA growth over the past 10 years. Excluded are those whose biggest year-over-year earning fall in the past five years ranked in the bottom 10% of their sector. Stocks in the bottom 10% of their sector based on consensus 2023 EPS expectations are also excluded.

Below are roughly 30 of the 50 stocks Goldman listed:

Financials names include Marsh & McLennan
MMC,
+0.46%,
Bank of New York
BK,
+0.97%,
Nasdaq
NDAQ,
+0.63%
and Northern Trust
NTRS,
+1.06%,
while Sonoco Products
SON,
+0.95%
is the sole materials stock. ResMed
RMD,
+1.64%,
Amgen
AMGN,
+0.81%,
Johnson & Johnson
JNJ,
+3.79%
and Cerner
CERN,
+0.02%
are among the healthcare names, Verisk Analytics
VRSK,
+1.23%
and Waste Management
WM,
+0.91%
for the industrials names and AmDocs
DOX,
+0.46%,
CDW
CDW,
+0.49%,
Oracle
ORCL,
+1.34%,
Western Union
WU,
+0.74%,
Paychex
PAYX,
+0.55%
and VeriSign
VRSN,
+0.45%
are within a huge batch of IT names.

Finally, the bank named American Tower
AMT,
+1.14%
for real estate and Xcel Energy
XEL,
+0.81%
for utilities.

The buzz

Netflix
NFLX,
+1.16%
is in the earnings spotlight, with investors looking for a rebound from the streaming giant’s results, due after the market close. Ahead of that, Johnson & Johnson
JNJ,
+3.79%
stock is down on disappointing results and Hasbro
HAS,
+2.91%
also falling on earnings news. IBM
IBM,
+0.84%
is also reporting late.

Plug Power
PLUG,
+5.99%
shares are climbing on a liquid green hydrogen delivery deal with Walmart
WMT,
+0.86%.

American Campus stock
ACC,
+12.73%
is jumping on a WSJ report that Blackstone is close to a $12.8 billion deal for the biggest developer and owner of student housing in the U.S.

United
UAL,
+2.65%,
Southwest , American
AAL,
+3.03%
 , Alaska Air
ALK,
+2.15%,
Delta
DAL,
+2.47%
and JetBlue
JBLU,
+2.49%
 are creeping higher after a judge in Florida struck down the national mask mandates for the transportation sector and those companies dropped mask mandates. There was cheering and jeering on some flights:

St. Louis Fed President James Bullard said he wouldn’t rule out a 75-basis point rate hike, with Chicago Fed President Charles Evans and Minneapolis’s Neel Kashkari due to speak Tuesday. Ahead of that, data showed a rise in housing starts.

As G20 finance ministers and central bankers meet in Washington, the International Monetary Fund, followed up the World Bank’s warning that the Ukraine war will take a toll on the global economy.

Russia has issued a new ultimatum to Ukrainian holdouts in Mariupol, as its forces launched a fresh attack on the eastern front of the country in what many see as a new phase of the war.

The markets

Stock futures
YM00,
+0.77%

ES00,
+0.64%

NQ00,
+0.39%
were steady, while bond yields
TMUBMUSD10Y,
2.917%

TMUBMUSD02Y,
2.460%
hold steady. Oil
CL00,
-3.74%

BRN00,
-3.57%
and natural-gas prices
NG00,
-8.61%
are down. Europe stocks
SXXP,
-1.09%
are falling and Asia was mixed, with a 2% tumble for the Hang Seng
HSI,
-2.28%,
led by tech despite a supportive move by China’s central bank. Elsewhere, the Japanese yen
USDJPY,
+1.30%
keeps sliding and cryptos are bouncing back with bitcoin
BTCUSD,
+2.06%
back over $40,000.

The chart

“While the close proximity in the timing between the first [Fed] hike and curve inversion perhaps points to a more truncated late-cycle period this time, the current cross-market setup does not point to a return to the correlation between curve flattening and subsequent bearish equity performance that existed during the late-1960s and through most of the 1970s,” said a JPMorgan team led by Jason Hunter.

They see a likely floor for the index at 4,100 to 4,300, and “view the current price action as a consolidation related to the initial removal of accommodative monetary policy.”

The tickers

These were the most-searched tickers on MarketWatch as of 6 a.m. Eastern Time:

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