27 stocks to buy for big earnings beats in 2023: Goldman Sachs

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Goldman Sachs: Buy these 27 stocks that will beat earnings estimates by at least 10% in a year when many companies will see their profits shrink

Earnings forecasts will continue to come down in 2023, according to Goldman Sachs.Here are 27 stocks that Goldman Sachs expects to beat earnings estimates by at least 10%.

And while the rest of the market sees earnings rising 3% in 2023, Goldman Sachs believes that last year's downbeat earnings momentum will persist. The firm's base case isthis year as the US avoids a recession, though earnings could shrink by 11% if the economy contracts. Goldman's glass-half-empty view on earnings stems from its conviction that profit margins will come under pressure as consumer demand weakens and taxes from the Inflation Reduction Act are implemented. Softer consumer spending could lead companies to cut prices in order to boost sales, Kostin wrote, adding that the new taxes on share buybacks and corporate book income will shave about 2% to 3% off of S&P 500 earnings.

However, Kostin wrote that some of his firm's clients think companies are purposefully being pessimistic about Q4 and their 2023 outlooks in an attempt to underpromise and overdeliver. The three-month trend of earnings revisions is the most negative since 2008 and 2020, Kostin noted, adding that firms have preannounced earnings at the highest rate since early 2020.

 

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