The S&P 500 may be trading near record highs, but Goldman Sachs Group Inc. is telling its rich clients that U.S. stocks still reign supreme among assets.
“The main returns in our view still come from having an overweight to U.S. equities,” Silvia Ardagna, managing director in the investment strategy group within Goldman Sachs Private Wealth Management, told Bloomberg. “The U.S. has the prominence over others.”
The reason is simple, according to the Goldman unit, which manages about $500 billion. With global growth slowing and Germany slipping into a technical recession, the U.S. economy is looking more robust in the medium-term compared to other countries. And this may just be the case as U.S. payrolls recently showed surprising resilience in October, validating the Federal Reserve’s signal to pause rate cuts.
Ardagna favors U.S. stocks, but he is careful to hedge his recommendation. “The de-escalation of trade tensions between the U.S. and China has triggered the question whether investors have been too negative and there could be some positive surprises,” Ardagna was quoted as saying by TipRanks.
“The main returns in our view still come from having an overweight to U.S. equities.”
Here are 3 recommendations that have come from Goldman’s financial research team in recent days, according to TipRanks:
- Oneok (OKE), a $12 billion dollar-a-year midstream pipeline company for the natural gas industry in the American West. Oneok netted $305.5 million in income in 2018.
- Vir Biotechnology (VIR), founded in 2016 as a clinical-stage immunology company focusing on the eradication of infectious diseases, had its IPO last month. Since then, it is up 12% in the markets; in its first few weeks of trading, volumes have been modest, and the stock has been volatile.
- Tal Education Group (TAL), based in Beijing, describes itself as “a leading education and technology enterprise.” TAL trades on the NYSE, where it has shown a 61% year-to-date gain, nearly triple the S&P gain of 22%.
To be sure, a bullish attitude can easily be found on Wall Street.
U.S. equities should rise into year-end amid stabilizing economic growth and increased chances for a tariff rollback, Bloomberg cited Evercore ISI as predicting.
Valuations are likely to remain near current levels as financial conditions will probably remain easy, and given earnings estimates for the S&P 500 Index into 2020, the gauge should be biased higher into year-end toward the 3,150 level, Evercore strategists including Dennis DeBusschere wrote in a note Nov. 10.
Strategists have become increasingly bullish about the end of 2019, as more evidence emerges that a soft patch in U.S. economic performance may be over, U.S.-China trade tensions appear to have ebbed somewhat, and this time of year tends to be seasonally good for equities.
JPMorgan Chase & Co. and Citigroup Inc. also have moved away from bets on gold in their asset allocations as risk-on mode takes hold.
The Evercore strategists screened for stocks that may have been caught in the recent outflow from momentum funds despite having attractive risk profiles.
They included Chipotle Mexican Grill Inc., Walmart Inc., United Parcel Service Inc. and AutoNation Inc. in a list of about 30 components of the S&P 1500 Index that had high price momentum at the start of the quarter, underperformed recently and are seen as attractive, they said.
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