The equity team at Goldman Sachs led by David Kostin has a problem. See, they think the stock market is heading higher–they think the S&P 500 will hit 2,100 in 2015. They also think the market looks, if not expensive, at least fully priced. They explain why that’s a problem:
Agence France-Presse/Getty Images The combination of improving growth, elevated equity valuation, and low bond yields creates a conundrum for investors. Higher growth and low yields favor a shift into pro-cyclical equities but sticker shock following a prolonged rally makes the decision less clear. We remain positive on Cyclicals outperforming Defensives and believe tight valuation dispersion means different growth is being assigned similar prices.
Top Logistics Companies For 2015
Kostin’s advice: Look for stocks in each sector that have lower valuations, higher growth rates and higher yields than their peers. He found 15 stocks fitting the bill including Eaton (ETN), Whirlpool (WHR), GameStop (GME), Freeport-McMoRan Copper & Gold (FCX) and Dow Chemical (DOW).
Eaton has gained 2.4% to $79.42 at 12:58 p.m. today, while Whirlpool has risen 1.2% to $140.47, GameStop has advanced 0.7% to $40.37, Freeport-McMoRan has jumped 3% to $35.89 and Dow Chemical is up 0.8% at $52.91.
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