Displaying items by tag: GARP

(New York)

So which stock will lead the way in 2020. Many are of two minds about this question. One the one hand, growth stocks look so pricey that value seems to have a good chance of taking the lead; but on the other, growth has been dominating for so long that it is hard to imagine such stocks not leading. Goldman Sachs say the middle road, or GARP (growth at a reasonable price) stocks, will be the big winners, as they have characteristics of both groups. “During periods of very strong or accelerating growth, investors embrace the risk of low valuation stocks because even lower quality stocks can successfully generate [earnings] growth in rapid GDP growth environments”, says David Kostin, chief US equity strategist at Goldman. Take Google for instance, which trades at 26x earnings, which is only in the 56th percentile for the communications sector, but has strong earnings growth characteristics. Other names to look at include Estee Lauder, MGM Resorts, and Lockheed Martin.

FINSUM: Interesting thesis and we like it in principal. Our issue is that investors just don’t seem to care about price right now.