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The 'Rule of 10' can identify next stock market winners: Goldman Sachs

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The 'Rule of 10' can help investors identify the next big stock market winners, according to Goldman Sachs

over the past decade, more and more investors are on the hunt to find tomorrow's big stock market winners.analyzed the financial similarities behind today's winners and used that information to develop a screen that can help investors scout out the future growth engines of the stock market.

"We screen for S&P 500 stocks that grew sales by at least 10% during each of the previous two years and are expected to grow sales by at least 10% in the current year and each of the next two years," Goldman Sachs' David Kostin said."The seven mega-cap tech stocks grew sales at a 15% CAGR from 2013 to 2019, compared with 4% growth for the S&P 500.

While stocks that met this criteria have outperformed the S&P 500 considerably over the past decade, so to have stocks that experienced consistent profit growth of at least 10%. This screen is especially poignant after 2022, as investors shifted their focus from"growth at all costs" to sustainable growth in profits.

 

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