Goldman says interest rate expense is biggest threat to profitability, but these stocks are immune

The higher-for-longer interest rate regime poses a direct threat to company profitability, but some stocks are a lot less vulnerable to higher borrow costs, according to Goldman Sachs. "Increased interest expense was the primary headwind to aggregate ROE and was also a headwind across every sector this year," David Kostin, head of U.S. equity strategy at Goldman, said in a note to clients.

"If rates continue to rise or stay higher for longer, increased borrow costs would disincentivize companies to take on greater amounts of leverage," Kostin said. Goldman said it expects investors to reward stocks which are more immune to rising rates as they offer stability amid the uncertainty around the economy. The Wall Street firm screened the S & P 500 for stocks with low leverage, high interest coverage and low EBITDA growth variability.

Nigeria Nigeria Latest News, Nigeria Nigeria Headlines

Similar News:You can also read news stories similar to this one that we have collected from other news sources.

Magnificent Seven tech stocks haven't been this cheap in six years, Goldman Sachs strategists sayThe top megacap stocks haven't been this cheap in six years.
Source: MarketWatch - 🏆 3. / 97 Read more »

Goldman Sachs names 6 global stocks to play the energy transition — giving one over 90% upsideGoldman Sachs says one sector is the 'largest source of renewable energy in the world.' Here are some of its top stock picks.
Source: CNBC - 🏆 12. / 72 Read more »