Don't count on a crash: Goldman Sachs expects 'record highs' to keep rolling, with these 3 stocks leading the way

·4 min read
Don't count on a crash: Goldman Sachs expects 'record highs' to keep rolling, with these 3 stocks leading the way
Don't count on a crash: Goldman Sachs expects 'record highs' to keep rolling, with these 3 stocks leading the way

As inflation spikes and interest rates rise, many Wall Street firms believe a major correction could be on the horizon.

Not Goldman Sachs. The bank expects the S&P 500 to hit 5,100 by the end of next year, roughly 9% above where the index is today.

“Counter to the intuition of many investors, the stellar 26% YTD return is not a good reason in itself to expect a weak return in 2022,” says David Kostin, chief U.S. equities strategist at Goldman Sachs, in a note to investors this week.

“Real rates, while rising, will remain negative, and investor equity allocations will continue to establish record highs.”

Of course, not every stock benefits in a bull market. Here’s a look at three companies Goldman Sachs is bullish on — one might be worth following with some of your extra cash.

Amazon (AMZN)

Amazon logo on package sits on table
Paul Swansen / flickr

Amazon is already a titanic company, commanding $1.8 trillion in market cap. Goldman Sachs believes it can get even bigger.

In fact, the bank calls the e-commerce giant its top Internet stock pick for 2022.

“AMZN is exposed to a multitude of broader secular growth themes, including e-commerce, advertising, cloud computing, media consumption and consumer subscription adoption,” says Goldman analyst Eric Sheridan.

In Q3, Amazon brought in $110.8 billion in net sales, representing a 15% increase year-over-year. For the current quarter, management expects sales to come in between $130 billion and $140 billion.

Today, Amazon trades at over $3,500 per share. Goldman sees plenty more upside, as it has a Buy rating and a $4,100 price target on the stock.

If the current price tag is too steep, you can always get a piece of Amazon using a popular app that allows you to buy fractions of shares with as much money as you are willing to spend.

Coinbase (COIN)

Coinbase logo covered in bitcoins
24K-Production / Shutterstock

Bitcoin may have recently dipped below $60,000 apiece, but this cryptocurrency exchange platform continues to be a hot commodity. Since the beginning of October, Coinbase shares have surged more than 50%.

As the largest crypto exchange in the U.S., Coinbase makes money whenever people buy and sell on its platform. In Q3, the company had 7.4 million users buying or selling at least once a month, with the total number of verified users growing to 73 million.

“While COIN remains a difficult to predict financial model with broader adoption trends and the development of the crypto ecosystem driving shares on a day-to-day basis, we continue to believe COIN represents one of the best ways to get exposure to the expansion of the crypto ecosystem,” Goldman analysts say in a recent report.

Goldman’s price target on Coinbase is $387, about 13% higher than where shares stand today.

Home Depot (HD)

Home Depot Storefront
Mike Mozart / flickr

As a decades-old brick-and-mortar retailer, Home Depot doesn’t seem nearly as exciting as Amazon and Coinbase — but if you held on to some shares, you’d be smiling.

Trading at around $399 per share, Home Depot has returned more than 50% in 2021. Over the past five years, the stock has more than tripled.

Goldman sees yet more returns on the horizon for the home improvement retailer, recently raising its price target on the company to $428.

There are good reasons to be bullish. In the third quarter, total sales increased 9.8% year-over-year to $36.8 billion, and earnings per share surged 23.3% to $3.92.

Both top and bottom line numbers handsomely beat Wall Street’s expectations. On average, analysts were projecting earnings of $3.40 per share on $35 billion of revenue.

Think outside the stocks

Banksy artwork on wall
Dunk / flickr

Keep in mind that even the best Wall Street analysts don’t always get it right. Plenty of big names are predicting a substantial stock market crash in the near future.

If you want to invest in something that’s not subject to the whims of the stock market, you may want to consider an overlooked asset: fine art.

Contemporary artwork has outperformed the S&P 500 by a commanding 174% over the past 25 years, according to the Citi Global Art Market chart.

Investing in art by the likes of Banksy and Andy Warhol used to be an option only for the ultra rich. But with a new investing platform, you can invest in iconic artworks, too, just like Jeff Bezos and Bill Gates do.

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

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