Goldman Sachs says buy these 21 stocks poised to deliver the strongest possible sales growth through year-end

  • Goldman Sachs' chief equity strategist David Kostin had introduced high-sales-growth stocks as an investment strategy even before the coronavirus pandemic. 
  • Kostin's portfolio strategy research team screened the S&P 500 index to identify the 100 largest stocks ranked by expected sales growth through year-end. 
  • Business Insider narrowed the list down to 21 names with above 15% expected sales growth. 
  • Visit Business Insider's homepage for more stories.

It is no coincidence that sales revenues are the top line of a company's income statement. 

Compared to many other fundamental variables, sales are a more meaningful and stable metric that allows analysts and investors to compare a company's performance from quarter to quarter.

Sales are not as volatile or easy-to-manipulate as earnings, which can swing wildly from quarter to quarter and are subject to management's accounting choice. And they are useful in valuing mature, cyclical, and even startup firms with negative earnings or no free cash flow. 

As such, companies with the highest sales growth often command higher valuations and returns. 

David Kostin, the chief equity strategist at Goldman Sachs, has pointed to high-sales-growth stocks as an investment strategy before. 

This year, using data from FactSet, Kostin's portfolio strategy research team screened the S&P 500 index for the 100 largest stocks ranked by their expected sales growth in 2020. They excluded stocks in the financials, real estate, and utilities sectors.

Other sectors such as the information technology and communications sectors are expected to generate 6% overall sales growth by year-end. The healthcare sector is expected to grow sales by 5% while the consumer staples sector is anticipated to finish the year with 4% sales growth. 

Sales for the S&P 500 overall are expected to fall by 3%, and similar declines in growth are expected in the consumer discretionary (-3%), materials (-8%), industrials (-14%), and energy (-31%) sectors. 

Indeed, the companies that are forecasted to generate strong sales despite the myriad of COVID, election, and economic uncertainties are heavily concentrated in the tech and healthcare sectors. And those included in the list are expected to grow their sales by at least 16% and above by year-end based on Goldman's estimates. 

The 21 stocks are ranked below from lowest to highest based on their expected sales growth through year-end. 

21. Humana

Ticker: HUM

Sector: Healthcare

Market cap: $54.01 billion

Year-to-date performance: 13.42%

Expected sales growth: 16%

Source: Goldman Sachs

20. Qualcomm

Ticker: QCOM

Sector: Technology

Market cap: $130.27 billion

Year-to-date performance: 35.38%

Expected sales growth: 16%

Source: Goldman Sachs

19. Adobe

Ticker: ADBE

Sector: Technology

Market cap: $229.76 billion

Year-to-date performance: 45.45%

Expected sales growth: 16%

Source: Goldman Sachs

18. Lowe's Companies

Ticker: LOW

Sector: Consumer Cyclical

Market cap: $125.81 billion 

Year-to-date performance: 37.65%

Expected sales growth: 16%

Source: Goldman Sachs

17. Dollar General

Ticker: DG

Sector: Consumer Defensive

Market cap: $52.67 billion 

Year-to-date performance: 34.92%

Expected sales growth: 18%

Source: Goldman Sachs

16. Newmont

Ticker: NEM

Sector: Basic materials

Market cap: $50.02 billion 

Year-to-date performance: 39.02%

Expected sales growth: 19%

Source: Goldman Sachs

15. Salesforce.com

Ticker: CRM

Sector: Technology

Market cap: $225.52 billion 

Year-to-date performance: 53.99% 

Expected sales growth: 20%

Source: Goldman Sachs

14. PayPal Holdings

Ticker: PYPL

Sector: Financial services

Market cap: $225.15 billion 

Year-to-date performance: 77.51%

Expected sales growth: 20%

Source: Goldman Sachs

13. Fidelity National Information Services

Ticker: FIS

Sector: Technology

Market cap: $89.93 billion 

Year-to-date performance: 4.16% 

Expected sales growth: 22%

Source: Goldman Sachs

12. Netflix

Ticker: NFLX

Sector: Communication services

Market cap: $221.84 billion 

Year-to-date performance: 56.47%

Expected sales growth: 23%

Source: Goldman Sachs

11. Activision Blizzard

Ticker: ATVI

Sector: Communication service

Market cap: $60.43 billion 

Year-to-date performance: 32.98%

Expected sales growth: 23%

Source: Goldman Sachs

10. ServiceNow

Ticker: NOW

Sector: Technology

Market cap: $94.58 billion 

Year-to-date performance: 73.81%

Expected sales growth: 28%

Source: Goldman Sachs

9. Global Payments

Ticker: GPN

Sector: Industrials

Market cap: $53.39 billion 

Year-to-date performance: -3.55%

Expected sales growth: 29%

Source: Goldman Sachs

8. Amazon

Ticker: AMZN

Sector: Consumer Cyclical

Market cap: $1.565 trillion 

Year-to-date performance: 67.85%

Expected sales growth: 31%

Source: Goldman Sachs

7. Advanced Micro Devices

Ticker: AMD

Sector: Technology

Market cap: $96.03 billion 

Year-to-date performance: 85.59%

Expected sales growth: 33%

Source: Goldman Sachs

6. Fiserv

Ticker: FISV

Sector: Technology

Market cap: $68.06 billion 

Year-to-date performance: -11.35%

Expected sales growth: 36%

Source: Goldman Sachs

5. AbbVie

Ticker: ABBV

Sector: Healthcare

Market cap: $151.97 billion 

Year-to-date performance: -2.97%

Expected sales growth: 37%

Source: Goldman Sachs

4. NVIDIA

Ticker: NVDA

Sector: Technology

Market cap: $322.72 billion 

Year-to-date performance: 136.51%

Expected sales growth: 41%

Source: Goldman Sachs

3. T-Mobile

Ticker: TMUS

Sector: Communication services

Market cap: $140.37 billion 

Year-to-date performance: 44.29%

Expected sales growth: 47%

Source: Goldman Sachs

2. Vertex Pharmaceuticals

Ticker: VRTX

Sector: Healthcare

Market cap: $67.92 billion 

Year-to-date performance: 19.19%

Expected sales growth: 49%

Source: Goldman Sachs

1. Bristol-Myers Squibb

Ticker: BMY

Sector: Healthcare

Market cap: $132.34 billion 

Year-to-date performance: -9.4%

Expected sales growth: 61%

Source: Goldman Sachs

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