Goldman Sachs Thinks These Are The Ten Highest Quality Stocks In The World

Goldman Sachs Thinks These Are The Ten Highest Quality Stocks In The World

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High market volatility, record correlation and slowing economic growth are just a few of the things that makes equity investing a more challenging endeavor.

Brian Peery, a portfolio manager at Hennessy Cornerstone Growth Fund, doesn't seem too concerned about the bears' doomsday predictions. "It's not about timing the market, it's about time in the market," he said in a recent interview.

"I've never been good at picking tops or bottoms. I'm going to invest for the long term, so I want to pick high-quality companies that are going to be around in five years and make sure I'm not paying too much for them."

His message: If you can separate the individual companies and their performance from the overall economy, there are plenty of good opportunities for long-term investors, regardless of the near-term market fluctuations.

But how can you find quality companies?

Luckily, Goldman Sachs' equity strategy team, led by David Kostin, has devised a "High Quality Stock Basket" which he recommends his clients buy into. He argues that the basket of 50 stocks ranks highly when it comes to balance sheets, sales growth stability, earnings growth reliability, and ROE. (Via Business Insider).

Furthermore, these names do not often experience high short-term selloffs. They majority of the stocks also have "high dividend yields, significant foreign sales, and premium valuations."

Interested? Business Insider pulled the top off the list that scored the highest based on the team's screening. We took the top ten and list them in detail below.

Without further ado, these are the highest quality stocks in the world, according to Goldman Sachs:

 

1. Ecolab Inc. (ECL, Earnings, Analysts, Financials): Market cap of $12.21B. Develops and markets products and services for the hospitality, foodservice, healthcare, and industrial markets primarily in the United States. Goldman gave this company a score of 94. Average ROE: 23%. 2012E Sales Growth: 6%. 2012E Earnings Growth: 13%. Percent US Sales: 52%. Dividend Yield: 1.3%. Current price at $52.31. The stock is a short squeeze candidate, with a short float at 10.43% (equivalent to 5.65 days of average volume). The stock has had a couple of great days, gaining 5.09% over the last week.

 

2. Cognizant Technology Solutions Corp. (CTSH, Earnings, Analysts, Financials): Market cap of $21.57B. Provides information technology consulting and technology services in North America, Europe, and Asia. Goldman gave this company a score of 93. Average ROE: 25%. 2012E Sales Growth: 22%. 2012E Earnings Growth: 20%. Percent US Sales: 78%. Dividend Yield: 0.0%. Current price at $72.01. The stock has had a couple of great days, gaining 7.67% over the last week.

 

3. St. Jude Medical Inc. (STJ, Earnings, Analysts, Financials): Market cap of $12.61B. Develops, manufactures, and distributes cardiovascular and implantable neurostimulation medical devices worldwide. Goldman gave this company a score of 89. Average ROE: 23%. 2012E Sales Growth: 7%. 2012E Earnings Growth: 11%. Percent US Sales: 51%. Dividend Yield: 2.2%. Current price at $38.39. The stock has performed poorly over the last month, losing 11.74%.

 

4. Pepsico, Inc. (PEP, Earnings, Analysts, Financials): Market cap of $98.69B. Engages in the manufacture, marketing, and sale of foods, snacks, and carbonated and non-carbonated beverages worldwide. Goldman gave this company a score of 89. Average ROE: 35%. 2012E Sales Growth: 3%. 2012E Earnings Growth: 8%. Percent US Sales: 53%. Dividend Yield: 3.4%. Current price at $62.05. The stock has lost 3.54% over the last year.

 

5. The TJX Companies, Inc. (TJX, Earnings, Analysts, Financials): Market cap of $21.91B. Operates as an off-price apparel and home fashions retailer in the United States and internationally. Goldman gave this company a score of 89. Average ROE: 43%. 2012E Sales Growth: 7%. 2012E Earnings Growth: 12%. Percent US Sales: 77%. Dividend Yield: 1.3%. Current price at $57.27. The stock has gained 30.89% over the last year.

 

6. Southern Company (SO, Earnings, Analysts, Financials): Market cap of $36.44B. Operates as a utility company that provides electric service in the southeastern United States. Goldman gave this company a score of 88. Average ROE: 15%. 2012E Sales Growth: 5%. 2012E Earnings Growth: 6%. Percent US Sales: 100%. Dividend Yield: 4.4%. Current price at $42.8. The stock has gained 18.75% over the last year.

 

7. CH Robinson Worldwide Inc. (CHRW, Earnings, Analysts, Financials): Market cap of $11.90B. Provides multimodal freight transportation services and logistics solutions to companies in various industries worldwide. Goldman gave this company a score of 88. Average ROE: 29%. 2012E Sales Growth: 12%. 2012E Earnings Growth: 16%. Percent US Sales: 89%. Dividend Yield: 1.6%. Current price at $73.34. The stock is a short squeeze candidate, with a short float at 5.55% (equivalent to 6.24 days of average volume). The stock has gained 1.81% over the last year.

 

8. Walgreen Co. (WAG, Earnings, Analysts, Financials): Market cap of $29.84B. Engages in the operation of a chain of drugstores in the United States. Goldman gave this company a score of 88. Average ROE: 17%. 2012E Sales Growth: 3%. 2012E Earnings Growth: 11%. Percent US Sales: 100%. Dividend Yield: 2.7%. Current price at $32.83. The stock has performed poorly over the last month, losing 10.07%.

 

9. Simon Property Group Inc. (SPG, Earnings, Analysts, Financials): Market cap of $33.26B. Engages in investment, ownership, and management of properties. Goldman gave this company a score of 87. Average ROE: 15%. 2012E Sales Growth: 3%. 2012E Earnings Growth: 6%. Percent US Sales: 100%. Dividend Yield: 2.8%. Current price at $115.13. The stock has gained 20.49% over the last year.

 

10. Coach Inc. (COH, Earnings, Analysts, Financials): Market cap of $17.59B. Engages in the design and marketing of accessories and gifts for men and women in the United States and internationally. Goldman gave this company a score of 87. Average ROE: 43%. 2012E Sales Growth: 12%. 2012E Earnings Growth: 15%. Percent US Sales: 70%. Dividend Yield: 1.5%. Current price at $61.31. The stock has had a couple of great days, gaining 6.73% over the last week.

 

(By Rebecca Lipman)

 

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5 Responses to “Goldman Sachs Thinks These Are The Ten Highest Quality Stocks In The World”

  1. Jim Gibbons says:

    SPG has outside US sales from its wholly owned subsidiary – Chelsea Property Group. I owned Chelsea before the acquisition and know it had stores in Japan and Mexico and has also expanded to Europe, I believe.

  2. dspade says:

    Haha Great advice buy American retailers and thus, so goes the dollar so goes these companies – hillarious, I bet GS is short EVERY one of these!

  3. Hedge Boss says:

    Always take GS recommendations as golden. They are in the business of helping investors whether GS profits or not. This is true because I heard their testimony before Congress. I can't recall why they were there. Perhaps Congress needed a reputable broker for a deal.

  4. gold says:

    excellent issues altogether, you just won a new reader. What would you suggest in regards to your put up that you just made a few days ago? Any certain?

  5. Market cap of $11.90B. Provides multimodal freight transportation services and logistics solutions to companies in various industries worldwide. Goldman gave this company a score of 88

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