GOLDMAN SACHS: Buy these 45 'global-facing' stocks set to benefit from the worldwide growth boom as the pace in the US begins to slow
- GS says US GDP growth will likely peak this quarter and decelerate for the rest of the year.
- It sees growth remaining above consensus estimates and trend, which can delay a shift to defensives.
- Meantime, global growth continues accelerating, which benefits stocks that follow economic trends.
- See more stories on Insider’s business page.
US GDP growth is likely to peak this quarter and decelerate throughout the rest of the year as fiscal stimulus and economic reopening tailwinds reach their maximum impact and begin to dwindle away, according to Ben Snider, a strategist at Goldman Sachs.
While many nations in the world suffered heavy economic losses and struggled to kick-start activity after the coronavirus triggered a global economic downturn, the US was able to grow robustly from the beatdown. In the third quarter of 2020, US GDP grew at an annualized rate of 33.1% thanks in large part to businesses reopening and an increase in consumer spending.
“Although our economists believe the pace of US economic growth will peak in the next month or two, their 2Q forecasts for economic growth remain substantially above consensus estimates,” Snider wrote in a note to clients on Wednesday.
“In addition, they expect core PCE inflation will temporarily surge above the Fed’s 2% target. Both of these catalysts should benefit cyclical stocks.
The bank’s economists expect US growth to come in at 10.5% in the second quarter, which is the second-fastest quarterly growth rate since 1978. On top of that, their 7% GDP growth forecast for the second half of the year would still be above trend and consensus estimates, Snider said.
Usually, in an environment that has positive and accelerating economic growth, the cyclical areas of the market do the best as they tend to follow economic trends. But afterward, when growth first starts to peak and decelerate, more defensive industries tend to outperform, he added.
Still, the rotation from cyclicals to defensives might be delayed this time around. That’s because of strong growth expectations despite broad deceleration, economic data releases in coming weeks, and the conviction that global economic growth still hasn’t reached its peak, he said.
“Rapid vaccine distribution and exceptional fiscal stimulus have helped the US economy accelerate more quickly than most other economies around the world. Our economists expect non-US global growth will peak in 3Q 2021, coinciding with the peak growth rates in Europe, Japan, and EM ex. China, among other economies,” he added.
That bodes well for many cyclical pockets of the market, as many cyclical US equity industries follow both US and non-US economic trends. That means that the headwind of growth deceleration in the US could partly be canceled out by the acceleration of global growth, he added.
Furthermore, some industries within information technology, financials, communications services, and consumer discretionary outperformed the S&P 500 in periods where US economic growth was likely declining and non-US global growth was accelerating since 1998, he said.
He noted that in the past few weeks, “global-facing” cyclical stocks have started to outperform their US-facing counterparts, and that’s something that he expects will continue for months.
That being said, Snider named 45 S&P 500 stocks from cyclical industry groups with the highest foreign exposures to revenue. They are listed below in no particular order. We have included their corresponding tickers, market caps, industry groups, and the percentage of their revenues that did not come from the US as of 2019.
1. Newmont
Ticker: NEM
Market cap: $53 billion
Industry group: Materials
Non-US revenues: 99%
Source: Goldman Sachs
2. Monolithic Power Systems
Ticker: MPWR
Market cap: $17 billion
Industry group: Semiconductors
Non-US revenues: 97%
Source: Goldman Sachs
3. Lam Research
Ticker: LRCX
Market cap: $88 billion
Industry group: Semiconductors
Non-US revenues: 92%
Source: Goldman Sachs
4. Nvidia
Ticker: NVDA
Market cap: $376 billion
Industry group: Semiconductors
Non-US revenues: 92%
Source: Goldman Sachs
5. Maxim Integrated
Ticker: MXIM
Market cap: $25 billion
Industry group: Semiconductors
Non-US revenues: 89%
Source: Goldman Sachs
6. Qualcomm
Ticker: QCOM
Market cap: $152 billion
Industry group: Semiconductors
Non-US revenues: 89%
Source: Goldman Sachs
7. Texas Instruments
Ticker: TXN
Market cap: $170 billion
Industry group: Semiconductors
Non-US revenues: 87%
Source: Goldman Sachs
8. Applied Materials
Ticker: AMAT
Market cap: $118 billion
Industry group: Semiconductors
Non-US revenues: 87%
Source: Goldman Sachs
9. KLA
Ticker: KLAC
Market cap: $49 billion
Industry group: Semiconductors
Non-US revenues: 87%
Source: Goldman Sachs
10. Teradyne
Ticker: TER
Market cap: $21 billion
Industry group: Semiconductors
Non-US revenues: 85%
Source: Goldman Sachs
11. Broadcom Inc.
Ticker: AVGO
Market cap: $187 billion
Industry group: Semiconductors
Non-US revenues: 81%
Source: Goldman Sachs
12. International Flavors & Fragrances
Ticker: IFF
Market cap: $35 billion
Industry group: Materials
Non-US revenues: 80%
Source: Goldman Sachs
13. Intel
Ticker: INTC
Market cap: $255 billion
Industry group: Semiconductors
Non-US revenues: 78%
Source: Goldman Sachs
14. Microchip Technology
Ticker: MCHP
Market cap: $40 billion
Industry group: Semiconductors
Non-US revenues: 78%
Source: Goldman Sachs
15. FMC
Ticker FMC
Market cap: $15 billion
Industry group: Materials
Non-US revenues: 77%
Source: Goldman Sachs
16. BorgWarner
Ticker: BWA
Market cap: $11 billion
Industry group: Automobiles & Components
Non-US revenues: 77%
Source: Goldman Sachs
17. Albemarle
Ticker: ALB
Market cap: $17 billion
Industry group: Materials
Non-US revenues: 76%
Source: Goldman Sachs
18. Xilinx
Ticker: XLNX
Market cap: $30 billion
Industry group: Semiconductors
Non-US revenues: 74%
Source: Goldman Sachs
19. Baker Hughes
Ticker: BKR
Market cap: $14 billion
Industry group: Energy
Non-US revenues: 74%
Source: Goldman Sachs
20. Mosaic Company
Ticker: MOS
Market cap: $12 billion
Industry group: Materials
Non-US revenues: 74%
Source: Goldman Sachs
21. Advanced Micro Devices
Ticker: AMD
Market cap: $96 billion
Industry group: Semiconductors
Non-US revenues: 74%
Source: Goldman Sachs
22. Schlumberger
Ticker: SLB
Market cap: $35 billion
Industry group: Energy
Non-US revenues: 72%
Source: Goldman Sachs
23. Linde plc
Ticker: LIN
Market cap: $149 billion
Industry group: Materials
Non-US revenues: 70%
Source: Goldman Sachs
24. DuPont
Ticker: DD
Market cap: $40 billion
Industry group: Materials
Non-US revenues: 69%
Source: Goldman Sachs
25. Analog Devices
Ticker: ADI
Market cap: $59 billion
Industry group: Semiconductors
Non-US revenues: 66%
Source: Goldman Sachs
26. Freeport-McMoRan
Ticker: FCX
Market cap: $52 billion
Industry group: Materials
Non-US revenues: 65%
Source: Goldman Sachs
27. NOV
Ticker: NOV
Market cap: $5 billion
Industry group: Energy
Non-US revenues: 63%
Source: Goldman Sachs
28. Aptiv
Ticker: APTV
Market cap: $36 billion
Industry group: Automobiles & Components
Non-US revenues: 63%
Source: Goldman Sachs
29. Air Products & Chemicals
Ticker: APD
Market cap: $63 billion
Industry group: Materials
Non-US revenues: 62%
Source: Goldman Sachs
30. Ingersoll Rand
Ticker: IR
Market cap: $21 billion
Industry group: Capital Goods
Non-US revenues: 59%
Source: Goldman Sachs
31. NIKE
Ticker: NKE
Market cap: $162 billion
Industry group: Consumer Durables & Apparel
Non-US revenues: 59%
Source: Goldman Sachs
32. Westinghouse Air Brake Technologies
Ticker: WAB
Market cap: $15 billion
Industry group: Capital Goods
Non-US revenues: 59%
Source: Goldman Sachs
33. General Electric
Ticker: GE
Market cap: $115 billion
Industry group: Capital Goods
Non-US revenues: 59%
Source: Goldman Sachs
34. Facebook
Ticker: FB
Market cap: $728 billion
Industry group: Media & Entertainment
Non-US revenues: 57%
Source: Goldman Sachs
35. PVH
Ticker: PVH
Market cap: $7 billion
Industry group: Consumer Durables & Apparel
Non-US revenues: 57%
Source: Goldman Sachs
36. MSCI
Ticker: MSCI
Market cap: $39 billion
Industry group: Diversified Financials
Non-US revenues: 55%
Source: Goldman Sachs
37. Corteva
Ticker: CTVA
Market cap: $35 billion
Industry group: Materials
Non-US revenues: 55%
Source: Goldman Sachs
38. Qorvo
Ticker: QRVO
Market cap: $21 billion
Industry group: Semiconductors
Non-US revenues: 55%
Source: Goldman Sachs
39. Citigroup
Ticker: C
Market cap: $146 billion
Industry group: Banks
Non-US revenues: 54%
Source: Goldman Sachs
40. Emerson Electric
Ticker: EMR
Market cap: $55 billion
Industry group: Capital Goods
Non-US revenues: 54%
Source: Goldman Sachs
41. Alphabet
Ticker: GOOGL
Market cap: $1,432 billion
Industry group: Media & Entertainment
Non-US revenues: 54%
Source: Goldman Sachs
42. Netflix
Ticker: NFLX
Market cap: $243 billion
Industry group: Media & Entertainment
Non-US revenues: 53%
Source: Goldman Sachs
43. Willis Towers Watson
Ticker: WLTW
Market cap: $31 billion
Industry group: Insurance
Non-US revenues: 52%
Source: Goldman Sachs
44. Garmin
Ticker: GRMN
Market cap: $26 billion
Industry group: Consumer Durables & Apparel
Non-US revenues: 52%
Source: Goldman Sachs
45. Xylem
Ticker: XYL
Market cap: $19 billion
Industry group: Capital Goods
Non-US revenues: 51%
Source: Goldman Sachs
Source: Read Full Article