If stocks continue their decline, should investors buy or sell?
Goldman Sachs strategists, led by Peter Oppenheimer, take the bullish approach.
“Any further significant weakness at the index level should be seen as a buying opportunity, … albeit with moderate upside through the year as a whole,” they wrote in a commentary Wednesday.
“We believe we are in a correction within a bull market cycle,” the strategists said. “We remain in the early part of the growth phase. Returns will likely be low from here, but the bull market should continue (so long as economies grow).”
The transition of monetary policy to tight from easy and the shift to inflation from deflation “should support further re-rating of selected value assets from here,” the strategists said.
“Continued under-valuation, improving profit fundamentals, de-carbonization and growing capex [capital expenditures] all support these trends.”
The strategists cite a slew of stocks that have buy ratings from Goldman, have dropped at least 20% from their highs and can be classified as “innovators, disruptors, enablers and adaptors.”
Among stocks that have dropped 20% to 25%, Goldman lists Amazon (AMZN), Tesla (TSLA), Starbucks (SBUX) and Fedex (FDX).
Among stocks that have slid 25% to 30%, Goldman cites Salesforce (CRM), Advanced Micro Devices (AMD) and Chipotle Mexican Grill (CMG).
Among stocks that have lost 30% to 35%, Goldman tabs Disney (DIS) and Lululemon Athletica (LULU).
Among stocks that have lost 35% to 40%, Goldman selected Yeti (YETI). Among stocks that have lost 40% to 45%, Goldman chose Lyft (LYFT).
