Goldman Sachs says buy these stocks
After a big rebound for corporate earnings and Wall Street from the pandemic lockdowns, margins and pricing power will be a bigger focus going forward as inflation spikes, according to Goldman Sachs.
Concern about higher costs throughout businesses will make it harder for many companies to maintain or grow their margins, while those who succeed could see their stocks benefit, Goldman said in a note to clients this week.
Goldman analysts expect the companies to see the margins for earnings before interest and taxes — a common measure of adjust profitability — to be above 2019 levels by the end of this year and expand by at least 1 percentage point in 2022. Goldman is also more bullish on the margin expansion for these names than consensus, signaling potential upside for the stocks.
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