Goldman says sell-off is a buying opportunity for these stocks with healthy balance sheets

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The Wall Street investment bank recommends those underperforming cyclical stocks that offer strong fundamentals.

The recent sharp drawdown in stocks presents a buying opportunity for those stocks that are positioned to withstand a double whammy of higher interest rates and an economic slowdown, according to Goldman Sachs. "Although we expect headwinds to discount rates and balance sheets to persist, we would view a substantial further downgrade to the growth outlook as a buying opportunity," David Kostin, Goldman's chief U.S. equity strategist, said in a note to clients.

The firm's economists forecast real GDP growth slows to 2% in 2024, better than an average forecast of 1% on Wall Street. Therefore, Goldman believes that many cyclical stocks, or those with a high sensitivity to the economy, shouldn't suffer. In fact, the firm is recommending certain of them that have underperformed the rest of the market yet offer strong fundamentals.

 

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