Goldman Sachs is predicting zero earnings growth in 2023, with stocks ending the next year essentially flat. The firm is pegging 2023 S & P 500 earnings-per-share flat at $224 and the index ending next year at 4,000, just over 1% from Monday's close. The S & P will also have an unchanged price-to-earnings multiple of 17x, said David Kostin, Goldman's chief U.S. equity strategist. "We expect less pain but also no gain," he wrote in a note Monday.
In this environment, investors should also own stocks that are leveraged to decelerating inflation, Kostin said. He identified 39 stocks from industry groups that typically outperform when inflation is high. They also have a forward earnings yield for the next 12 months and trailing last-12-months free-cash-flow yield above those in their respective sectors and the aggregate index, Kostin said.
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