Now the US stock market is inhibited, and the correlation between stock exchanges is approaching a record level. Goldman Sachs Investment Bank Found 14 Stocks That Have Great Growth Potential.
Stock prices in the US market are increasingly becoming herd-like, which creates a big dilemma for those investors who try to carefully and conscientiously select companies for investments.
Goldman Sachs believes stock correlations in benchmark S&P 500 rose to the 95th percentile since 1980. In addition, the average three-month correlations since January increased by 43 percentage points – this is the fastest and largest growth after the crash of the market in 1987.
Simply put, this tells us that the United States stock market is in a state of inhibition, when almost all of its participants are stuck in the general direction. Because of this, it becomes extremely difficult to make a profit, since all movements in the market are very wide, and individual stocks are rarely chosen from the general trend. Therefore, such a correlation is not liked by shareholders.
So how did we all find ourselves in this position? Firstly, the rapid growth of exchange-traded funds and passive investing led traders to immediately buy and sell large segments of the market, leaving little room for stock fluctuations. Goldman Sachs notes that large pullbacks in stocks were largely driven by valuation considerations rather than individual earnings.
The investment bank understands that the environment has become very complex, but is ready to help. Goldman Sachs Chief Capital Officer for American Capital, David Costin, calculated the so-called variance for each company S&P 500, for which he takes into account:
• Share of profit due to specific factors of the company;
• Goldman’s forecast for volatility associated with the share of profits attributable to these micro-factors.
“Potential stocks with high dispersion are more likely to be more sensitive to specific news. They represent the best opportunities for generating investment opportunities, ”David Costin recently wrote..
Goldman Sachs then goes one step further in the analysis and identifies companies within the high dispersion group with the highest potential for price increases..
Without further ado, we suggest you familiarize yourself with a list of 14 stocks with high dispersion and the best growth potential to the current trading level.
Potential stocks are presented in increasing order of potential..
[Note: Stock prices and indicators in the article are indicated at the time of publication.]