Companies that are spending big internally to grow their businesses should start outperforming if the economy remains on strong footing, according to Goldman Sachs. The Wall Street bank is advising clients consider buying companies with a high level of capital expenditure and research and development expenses. Those companies have outperformed those returning cash to shareholders via buybacks and dividends this year by 2 percentage points, Goldman said.
equity strategy, said in a note. Goldman pointed to global manufacturing data that bottomed last year and is in the process of rebounding. "Both managements and investors have become increasingly confident that growth will remain strong," the firm said. In this environment, investors typically reward companies investing for growth when economic growth is accelerating, if history is any guide, Goldman said.