Goldman Sachs is eyeing stocks that can best navigate a high interest rate environment. The benchmark 10-year Treasury yield surpassed the 5% level on Thursday for the first time since July 2007. The 10-year has been surging so far in October, climbing roughly 50 basis points from the start of the month.
in its most simple form encapsulates a company's cash flow generated from holdings or assets that produce income. meanwhile, captures the cost a company pays to finance its assets. Goldman said viewing stocks through this lens is apt for the current higher interest rate environment and serves as "the hurdle rate investors should use to gauge shareholder value creation." The firm expects
for stocks on its list to grow by at least 75 basis points year-over-year in 2024 thanks to strong balance sheets. All the stocks that made the cut have a buy rating from Goldman Sachs. Here is a sample of the names that cleared these hurdles. Tech behemoth and iPhone maker Apple stock has climbed nearly 34% from the start of the year.
mountain Apple stock. Analyst Michael Ng said Apple's services segment will "drive the majority of gross profit growth over the next 5-years," while the company builds upon its installed base to drive revenue growth into the future. Ng expects this to happen even if product demand weakens as competition levels off and replacement cycles for devices lengthens. Software firm Adobe stock has climbed more than 61% from the start of 2023.