Tags: Kostin | domestic | oriented | stocks

Goldman's Kostin: Stick to Domestic-Oriented Stocks

By    |   Tuesday, 07 October 2014 08:28 PM

Shortly before stocks began to plunge Tuesday, Goldman Sachs chief U.S. equity strategist David Kostin offered CNBC his views as to where investors in search of stocks should go.

He favors domestically-oriented companies that can benefit from a strengthening economy and a strengthening dollar.

"The U.S. economy is improving. It's improving at multiple levels," Kostin said. GDP expanded 4.6 percent in the second quarter. And Goldman predicts 3 percent growth for the third quarter, compared to just 1 percent in Europe.

As for the dollar, it hit a six-year high against the yen and a 2-year high against the euro last week. A rising dollar hurts exporters by making their products more expensive in foreign currency terms.

"This is an environment where, as a portfolio manager, you want to be owning stocks that sell domestically," Kostin said.

He cited Paychex and Discover Financial Services as stocks investors might look at now.

Morningstar analyst Brett Horn offers a mixed assessment of Paychex. "In our view, the company has reached a point of maturity in payroll processing that will limit its growth compared with years' past," he writes on Morningstar.com.

"Fortunately, the company has other factors working in its favor. Its growth in recent years has come mainly through cross-selling ancillary services centered around human resources, employee retirement plans, and insurance."

As for Discover, "We don't foresee exorbitant profitability or explosive growth, but we think shareholders can expect solid results and cash back in the form of repurchases and dividends," writes Morningstar analyst Jim Sinegal.

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Shortly before stocks began to plunge Tuesday, Goldman Sachs chief U.S. equity strategist David Kostin offered CNBC his views as to where investors in search of stocks should go.
Kostin, domestic, oriented, stocks
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2014-28-07
Tuesday, 07 October 2014 08:28 PM
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