US Weekly Kickstart Delayed Fed cuts constrain P_E expansion and explain “quality” outperformancepdf
US Weekly Kickstart Delayed Fed cuts constrain P_E expansion and explain “quality” outperformancepdf
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  1. byercr\home\Desktop\BCB_0-SA_MAIN\BCB_2020-NOV-20\REPOST-USKickstart\Kickstart2020-11-20T22_44_20Z2020-11-20T23_19_23Z.pptxDavid J. Kostin(212) 902-6781 |david.kostin@gs.comGoldman Sachs & Co. LLC Ben Snider(212) 357-1744 | ben.snider@gs.comGoldman Sachs & Co. LLCRyan Hammond(212) 902-5625 | ryan.hammond@gs.comGoldman Sachs & Co. LLCCormac Conners(212) 357-6308 | cormac.x.conners@gs.comGoldman Sachs & Co. LLCJenny Ma(212) 357-5775 | jenny.ma@gs.comGoldman Sachs & Co. LLCDaniel Chavez(212) 357-7657 | daniel.chavez@gs.comGoldman Sachs & Co. LLCUS Weekly KickstartSource: I/B/E/S, FirstCall, Goldman Sachs Investment ResearchS&P 500 earnings and valuationDelayed Fed cuts constrain P/E expansion and explain “quality” outperformance; EPS will drive returnsTable of ContentsNeed access to view our baskets on GS Marquee?Email us.26 April 2024| 4:56PM EDTMarkets and money flow17Market performance18Sector performance19Style and size24Strategy baskets25Earnings, sales, and revisions30Valuation31Factors33Fund flows, fund performance, and short interest34Correlation, breadth, and dispersion35Economics36Goldman Sachs macro forecasts37PerformanceThe S&P 500 was up 0.8% this week. Utilities was the best-performing sector (+3.8%) while Communication Services was the worst-performing sector (-3.9%). We expect the S&P 500 will end 2024 at 5200 (+3.0%). Investors should consider this report as only a single factor in making their investment decision. For Reg AC certification and other important disclosures, see the Disclosure Appendix, or go to www.gs.com/research/hedge.html.The dictum “earnings drive stocks” is particularly apt in the current environment where equity valuations are constrained by rising bond yields that reflect investor fears of persistent inflation. Treasury yields have climbed by 45 bp during the past month to 4.7%, pressuring P/E multiples. Stocks can digest a growth-driven rise in rates but struggle from hawkish monetary policy or when yields rise sharply. The prospect of delayed rate cuts has driven investors towards stocks with “quality” attributes. We rebalance five baskets related to rates and “quality”: Rate Sensitive (GSTHUSTY), Strong Balance Sheet (GSTHSBAL), Weak Balance Sheet (GSTHWBAL), High Quality (GSTHQUAL), and Stable Growers (GSTHSTGR).Goldman SachsConsensusPortfolio StrategyBottom-Up2024E2025E2024E2025EEPS$241$256$243$276Growth8%6%9%13%NTM2025ENTM2025EP/E20.5x19.7x20.1x18.3x
  2. byercr\home\Desktop\BCB_0-SA_MAIN\BCB_2020-NOV-20\REPOST-USKickstart\Kickstart2020-11-20T22_44_20Z2020-11-20T23_19_23Z.pptxGoldman Sachs2US Weekly Kickstart26 April 2024Conversations we are having with clients: Rates, equities, and “quality” attributesThis week 37% of S&P 500 companies reported 1Q earnings results, including the mega-caps GOOGL, META, MSFT, and TSLA. AAPL and AMZN will report next week (Exhibit 15). Roughly 1/3 of the 229 S&P 500 firms that have reported results so far have beaten consensus sales estimates but 2/3 of companies have beaten EPS estimates with an average surprise of 9%. Concurrent with the flood of generally positive micro earnings results, macro PCE inflation data released this week corroborated investors’ views that Fed cuts are not imminent. Since the start of 2024, the number of 25 bp cuts implied by the fed futures market has declined from six to fewer than two. The 10-year nominal Treasury yield has increased from 3.9% to 4.7% and the real yield has climbed from 1.7% to 2.3%. Our economists believeinflation relief has only been postponed and expect quarterly cuts starting in July, but risks are tilted to the later side.Many clients have questioned the outlook for equities if markets continue to price fewer and later Fed cuts. Even in the face of climbing rates, the S&P 500 has returned 6% this year and is just 4% below its all-time-high of 5254 (Exhibit 1). We expect earnings growth will lift the index by 3% to our year-end target of 5200. While our economists expect continued disinflation that will lead to rate cuts later this year, the delayed interest rate cuts should constrain equity valuations. Stocks can continue to rally if higher-for-longer interest rates are driven by resilient economic growth as opposed to hawkish policy.The YTD upgrade in the market’s pricing of economic growth largely explains the resilience in equities this year alongside the climb higher in interest rates. The performance of cyclical vs. defensive stocks (ticker: GSPUCYDE) suggests investors have increased their pricing of real US economic growth to roughly 4% from 2% at the start of 2024 (Exhibit 2). However, during the past few weeks, the driver of rates has shifted from better growth to hawkish monetary policy concerns, which has been more difficult for stocks to digest. We expect equities will struggle to find their footing if rates continue to rise sharply, regardless of the macro driver. Since 2006, the S&P 500 has fallen by an average of 4% when real yields rose by more than 2 standard deviations in a month (Exhibit 3). Today, a two standard deviation 1-month increase in the real 10-year yield equals roughly 55 bp. In line with the historical playbook, real 10-year yields have risen by 40 bp since mid-March and the S&P 500 has declined by 4%. While “higher for longer” rates are not necessarily an insurmountable obstacle for stocks, certain parts of the equity market are more likely to lag if rates keep climbing. Most notably, stocks with weak balance sheets have generally struggled (Exhibit 4). Balance sheet concerns have contributed to the YTD weakness of the Russell 2000 (-2% vs. +6% for the S&P 500). Russell 2000 borrow costs equal 5.7%, 200 bp above S&P 500 borrow costs. In addition, small-caps have more floating rate debt and weaker cash flow margins. Our basket of strong balance sheet stocks (GSTHSBAL) has outperformed its weak balance sheet counterpart (GSTHWBAL) by 5 pp YTD (+6% vs. +1%). A basket of stocks with high floating rate debt (GSXUHIFL) has also lagged. Investors are currently assigning an unusually large valuation premium to stocks with “quality” attributes (Exhibit 5).Our sector-neutral factors focusing on balance sheet strength, profit margins, and returns on capital all trade at an NTMP/E premium ranking in the top decile relative to history.The investor preference for stocks with strong balance sheets and high returns on capital has been one of many factors supporting the recent outperformance of the mega-cap tech stocks. The stocks sometimes called the “Magnificent 7” –AAPL, AMZN, GOOGL, META, MSFT, NVDA, and TSLA –each have Altman Z-scores, cash/asset ratios, and growth investment ratios greater than the median S&P 500 stock (Exhibit 6). Companies with strong cash flows and high cash balances can invest for growth andreturn cash to shareholders. META more than doubled its buyback activity during 1Q. Last week we highlightedthat GOOGL was the top-ranked candidate to initiate a dividend; this week it announced its first dividend. The implied annualized yield equals 0.5% and reflects a payout ratio of roughly 10%. However, earnings results this week were a reminder that earnings growth is ultimately the key driver of equity prices. TSLAmissed on backward-looking 1Q sales and earnings but guided to a sooner-than-expected launch of lower-cost vehicles and the stock jumped 12% as a result. In contrast, METAplunged 11% after delivering muted revenue guidance and elevated spending expectations for 2Q. MSFTand GOOGLrallied 2% and 10%, respectively, after beating estimates, partly thanks to robust AI demand. Unlike previous episodes where investors flocked to “quality” stocks, the earnings growth environment today is healthy. This time last year, the strength of “quality stocks” could be attributed to investor concerns about a hard landing, but the growth backdrop has improved substantially during the past 12 months. S&P 500 EPS grew by 6% year/year in 2H 2023, and we forecast growth of 8% this year to $241. During most previous periods of strong S&P 500 profit growth, “quality” stocks such as those with high returns on capital have typically underperformed and traded with much less of a valuation premium relative to their lower-quality peers (Exhibit 7). Today, rather than growth, concerns over the cost of capital are supporting quality. If the Fed proceeds with cuts later this year and those concerns recede, quality stocks will likely give back some of their recent outperformance.Should the outlook for earnings growth deteriorate, the recent stretch of quality outperformance will likely continue and alsoexpand to include stocks with stable growth. Our Stable Growers basket (GSTHSTGR) has lagged the equal-weight S&P 500 by 1 pp YTD (+2% vs. +3%) and has underperformed relative to other “quality” factors (Exhibit 8). Intuitively, stocks with stable growth typically perform bestalongside decelerating economic growth. Constituents with the most stable quarterly EBITDA year/year growth during the past 10 years include VRSN, DOX, and AWK.We rebalance five baskets related to rates, balance sheet strength, and “quality” attributes in this report: Interest Rate Sensitive (GSTHUSTY), Strong Balance Sheet (GSTHSBAL), Weak Balance Sheet (GSTHWBAL), High Quality Stock (GSTHQUAL), and Stable Growers (GSTHSTGR). See Exhibits 9 -13 for constituents of the baskets.
  3. byercr\home\Desktop\BCB_0-SA_MAIN\BCB_2020-NOV-20\REPOST-USKickstart\Kickstart2020-11-20T22_44_20Z2020-11-20T23_19_23Z.pptxGoldman Sachs3US Weekly Kickstart26 April 2024Charts we are watching: Driver and speed of rate moves and associated equity performanceSource: Goldman Sachs Global Investment Research Exhibit 1: Typical S&P 500 stock rose in 1Q alongside rising interest ratesas of April 25, 2024Source: Goldman Sachs Global Investment Research Exhibit 2: Equity market pricing of economic growth has stabilized at nearly 4%as of April 25, 2024Source: Goldman Sachs Global Investment Research Exhibit 4: Rate-exposed segments of the equity market have underperformedas of April 25, 2024 Source: Goldman Sachs Global Investment ResearchExhibit 3: Equities typically struggle when interest rates rise sharplyrolling 1-month changes since 20061.4%1.6%1.8%2.0%2.2%2.4%5,2002.6%5,4005,6005,8006,0006,2006,4006,6006,8007,000Jun-2023Sep-2023Dec-2023Mar-2024Jun-2024Equal-weightS&P 500price(left)Real 10-year US Treasury yield(right, inverted)Higher equal-weight S&P 500/lower10-year real yieldHigher equities&interest rates(2)%(1)%0%1%2%3%4%5%6%70758085909510010511011512020152016201720182019202020212022202320242025Indexed return of Cyclicals vs. Defensives ex. commodities(left axis)US Current Activity Indicator (3m avg, right axis)9095100105110115Jun-23Sep-23Dec-23Mar-24Jun-24Indexedrelative performanceStockswith high floating rate debt (GSXUHIFL)vs. equal-weightS&P 500S&P 500 vs. Russell 2000Strong (GSTHSBAL) vs. weak (GSTHWBAL) balance sheets (5) %(4) %(3) %(2) %(1) %0 %1 %2 %3 %<(2)(2)-(1)(1)-(0.5)(0.5)-00-0.50.5-11-2>2S&P 500 1-month returnZ-score of interest rate change (1-month change vs. past 3 years)Nominal yieldReal yieldRatesfallingRatesrisingAverage 1-month S&P 500returnvs. change in 10-year US Treasury yields2σtoday≈55 bp
  4. byercr\home\Desktop\BCB_0-SA_MAIN\BCB_2020-NOV-20\REPOST-USKickstart\Kickstart2020-11-20T22_44_20Z2020-11-20T23_19_23Z.pptxGoldman Sachs4US Weekly Kickstart26 April 2024Charts we are watching:Valuation and performance of stocks with “quality” attributesSource: FactSet, Goldman Sachs Global Investment Research Exhibit 5: “Quality” factors trade at a valuation premium vs. historyas of April 25, 2024; percentile since 1980Source: Goldman Sachs Global Investment Research Exhibit 6: Mega-cap tech stocks have “quality” attributesas of April 25, 2024Source: Goldman Sachs Global Investment Research Exhibit 8: Stable growersbasket (GSTHSTGR) has lagged other “quality” tradesas of April 25, 2024Source: FactSet, Goldman Sachs Global Investment ResearchExhibit 7: Stocks with high returns on capital usually outperform when EPS fallsas of April 25, 2024(40)%(30)%(20)%(10)%0 %10 %20 %(40)%30 %(30)%(20)%(10)%0 %10 %20 %30 %40 %50 %60 %200020052010201520202025S&P 500 year/year EPS growth(inverted, left)High vs. low returns on capital factortrailing 12-month returns(right)Stocks with high returns on capitaloutperform stocks with low returns on capital/ S&P 500 EPS falling9698100102104106108110112114Jan-2024Feb-2024Mar-2024Apr-2024May-2024Jun-2024Indexedperformance of "quality" YTDHigh vs. low returns factorStable growers(GSTHSTGR) vs. SPWStrong vs. weak balance sheets(GSTHSBAL vs.GSTHWBAL)YTDBottom-up cons.LTMGrowthS&P 500total2024 growthNTMEV/Cash/Altmaninvest.Company nameweightreturnSalesEPSP/ESalesAssetsZ-scoreratioMicrosoft Corp.7%6%11%15%31x13x23%1042%Apple Inc.6-123225718823NVIDIA Corp.56790763133356149Alphabet Inc.4121711225291258Amazon.com Inc.4144412383145150Meta Platforms Inc.2253317217271083Tesla Inc.1-32-18461627953Magnificent 7 median4%12%17%12%31x7x27%1053%0%20%40%60%80%100%S&P 500 median04641837412Dividend yield (high vs. low)Size (small vs. large)Valuation (low vs. high)Momentum (leaders vs. laggards)Volatility (low vs. high)Returns (high vs. low)Balance sheet (strong vs. weak)Margins (high vs. low)Growth (high vs. low)Factor valuation percentile vs. historyMoreexpensive
  5. byercr\home\Desktop\BCB_0-SA_MAIN\BCB_2020-NOV-20\REPOST-USKickstart\Kickstart2020-11-20T22_44_20Z2020-11-20T23_19_23Z.pptxGoldman Sachs5US Weekly Kickstart26 April 2024Constituents of our Interest Rate Sensitive basket (GSTHUSTY)Exhibit 9: Constituents of GSTHUSTYas of April 25, 2024; boldindicates new constituent; S&P 500 stocks with the highest positive stock price sensitivity to changes in the nominal 10-year US Treasury yieldSource: FactSet, Goldman Sachs Global Investment Research.BetaBetaBetatoRate sensitivitytoRate sensitivitytoRate sensitivityCompanyTickerS&P 500LevelRankCompanyTickerS&P 500LevelRankCompanyTickerS&P 500LevelRankConsumer Discretionary (10% of the Basket)Financials (14% of the Basket)Information Technology (30% of the Basket)Royal Caribbean GroupRCL1.30.0596%Comerica Inc.CMA1.10.09100%Super Micro ComputerSMCI1.10.0899%Carnival Corp.CCL.UNM0.0493KeyCorp.KEY1.20.0799ON SemiconductorON1.60.0387Tesla Inc.TSLA1.60.0491Huntington BancsharesHBAN0.70.0798Cisco Systems Inc.CSCO0.80.0281Norwegian Cruise Line HldgsNCLH1.70.0491MetLife Inc.MET0.60.0697Western DigitalWDC1.60.0281Tractor SupplyTSCO0.80.0489Charles SchwabSCHW0.80.0696Palo Alto NetworksPANW1.10.0280American Intl GroupAIG0.70.0596Arista NetworksANET1.10.0279Basket Median0.0491%Raymond James FinancialRJF0.90.0595Salesforce Inc.CRM1.20.0278Sector Median0.0058Jabil Inc.JBL0.90.0277Basket Median0.0697%Seagate Tech HoldingsSTX1.40.0277Consumer Staples (6% of the Basket)Sector Median0.0278Monolithic Power SystemsMPWR1.60.0275Bunge Global SABG0.60.0490%HP Inc.HPQ1.20.0175Archer-Daniels-MidlandADM0.40.0281Health Care (12% of the Basket)Apple Inc.AAPL1.20.0172Constellation BrandsSTZ0.80.0174Cigna GroupCI0.40.0278%Oracle Corp.ORCL1.00.0172Elevance HealthELV0.50.0277Gartner Inc.IT0.80.0171Basket Median0.0281%Molina HealthcareMOH0.60.0173CDW Corp.CDW1.00.0171Sector Median(0.02)33CVS Health Corp.CVS0.60.0171Humana Inc.HUM0.40.0168Basket Median0.0277%Energy (4% of the Basket)DexCom Inc.DXCM0.90.0167Sector Median(0.00)55APA Corp.APA1.20.09100%HalliburtonHAL1.20.08100Basket Median0.0172%Materials (2% of the Basket)Sector Median(0.03)27Mosaic Co.MOS0.90.0697%Basket Median0.09100%Sector Median0.0697Industrials (8% of the Basket)Basket Median0.0697%Northrop GrummanNOC0.40.0594%Sector Median(0.00)56Real Estate (2% of the Basket)Paycom SoftwarePAYC1.40.0594Boston PropertiesBXP1.20.0167%Textron Inc.TXT0.80.0492Communication Services (10% of the Basket)Cummins Inc.CMI0.80.0492Meta Platforms Inc.META1.40.0283%Basket Median0.0167%Walt DisneyDIS1.20.0281Sector Median(0.03)21Basket Median0.0493%Take-Two Interactive SoftwareTTWO1.10.0276Sector Median0.0061Alphabet Inc.GOOGL1.30.0174Utilities (2% of the Basket)Fox Corp.FOXA0.90.0173NRG Energy Inc.NRG1.20.0384%Basket Median0.0276%Basket Median0.0384%Sector Median(0.01)43Sector Median(0.04)11Interest Rate Sensitive <GSTHUSTY> Median0.0281%S&P 500 Median(0.01)50
  6. byercr\home\Desktop\BCB_0-SA_MAIN\BCB_2020-NOV-20\REPOST-USKickstart\Kickstart2020-11-20T22_44_20Z2020-11-20T23_19_23Z.pptxGoldman Sachs6US Weekly Kickstart26 April 2024Constituents of our Strong Balance Sheet basket (GSTHSBAL)Exhibit 10: Constituents of GSTHSBALas of April 25, 2024; boldindicates new constituent; 50 stocks with highest Altman z-score Source: FactSet, Goldman Sachs Global Investment Research.Altman z-score is a weighted measure of balance sheet strength comprised of five ratios: working capital/assets, retained earnings/assets, EBIT/assets, market cap/liabilities, and sales/assets. MarketCons.MarketCons.CapYTD2024E salesNTMNet debtAltmanCapYTD2024E salesNTMNet debtAltmanCompanyTicker($bn)returngrowthP/Eto EBITDAZ-ScoreCompanyTicker($bn)returngrowthP/Eto EBITDAZ-ScoreCOMMUNICATION SERVICES (12% of the Basket)HEALTH CARE (14% of the Basket)Alphabet Inc.GOOGL$181712%11%22x(0.8)x11.8Intuitive SurgicalISRG$13111%12%56x(2.6)x40.3Meta Platforms Inc.META971251721(0.3)10.1West Pharmaceutical Svc.WST275245(0.6)20.1Netflix Inc.NFLX2441615290.47.2IDEXX LaboratoriesIDXX41(12)9420.717.8Electronic ArtsEA34(7)(0)17(0.2)5.3Edwards LifesciencesEW5315931(0.5)14.9Take-Two Interactive SoftwareTTWO24(11)21234.52.3Vertex PharmaceuticalsVRTX102(2)923(2.0)14.8Walt DisneyDIS207255222.22.1Regeneron PharmaceuticalsREGN941619(1.4)10.8Eli Lilly & Co.LLY6882521511.410.3Basket Median6.2Sector Median1.7Basket Median14.9CONSUMER DISCRETIONARY (12% of the Basket)Sector Median3.9Deckers OutdoorDECK$2121%11%26x(0.9)x15.9lululemon athletica inc.LULU45(30)1125(0.0)14.7INDUSTRIALS (10% of the Basket)Chipotle Mexican GrillCMG853615531.313.4Copart Inc.CPRT$5313%8%35x(1.2)x42.1Garmin Ltd.GRMN27121025(1.2)12.8Fastenal Co.FAST3966310.225.0Tesla Inc.TSLA542(32)461(1.4)9.4Old Dominion Freight LineODFL43(3)630(0.1)24.3Home Depot Inc.HD330(4)1211.97.2Cintas Corp.CTAS67119411.112.2Rollins Inc.ROL2129430.911.2Basket Median13.1Sector Median3.0Basket Median24.3Sector Median3.8CONSUMER STAPLES (8% of the Basket)Monster BeverageMNST$55(8)%11%28x(1.4)x25.8INFORMATION TECHNOLOGY (34% of the Basket)Costco WholesaleCOST32010643(0.4)8.6NVIDIA Corp.NVDA$204167%76%31x(0.2)x61.4Colgate-PalmoliveCL74134251.76.6Monolithic Power SystemsMPWR3251247(1.8)50.3Sysco Corp.SYY3875172.75.6Arista NetworksANET82121334(1.6)23.1Cadence Design SystemsCDNS7521244(0.2)22.9Basket Median7.6Super Micro ComputerSMCI461779327(0.3)19.1Sector Median3.4Synopsys Inc.SNPS813837(0.5)14.1Fair Isaac Corp.FICO30314452.713.1ENERGY (6% of the Basket)Adobe Inc.ADBE214(21)1225(0.4)12.8EOG Resources Inc.EOG$7914%2%11x(0.1)x5.2Teradyne Inc.TER170230(1.0)12.8Valero Energy Corp.VLO5730(6)100.54.8EPAM Systems Inc.EPAM14(20)322(2.3)12.4Exxon Mobil Corp.XOM48222(3)130.24.7Advanced Micro DevicesAMD24841436(0.7)12.4ServiceNow Inc.NOW14712150(1.2)11.1Basket Median4.8Intuit Inc.INTU175112340.910.8Sector Median2.9Applied MaterialsAMAT16422322(0.1)10.8Lam Research Corp.LRCX118151326(0.1)10.5MATERIALS (4% of the Basket)Texas InstrumentsTXN1594(10)320.39.9Steel Dynamics Inc.STLD$2213%(2)%12x0.3x5.8Microsoft Corp.MSFT296561531(0.0)9.8Nucor Corp.NUE431(9)130.15.0Basket Median5.4Basket Median12.8Sector Median2.4Sector Median5.1Strong Balance Sheet <GSTHSBAL> Median$776%9%30x(0.2)x12.0S&P 500 Median3444181.73.6
  7. byercr\home\Desktop\BCB_0-SA_MAIN\BCB_2020-NOV-20\REPOST-USKickstart\Kickstart2020-11-20T22_44_20Z2020-11-20T23_19_23Z.pptxGoldman Sachs7US Weekly Kickstart26 April 2024Constituents of our Weak Balance Sheet basket (GSTHWBAL)Exhibit 11: Constituents of GSTHWBALas of April 25, 2024; boldindicates new constituent; 50 stocks with lowest Altman z-score Source: FactSet, Goldman Sachs Global Investment Research.Altman z-score is a weighted measure of balance sheet strength comprised of five ratios: working capital/assets, retained earnings/assets, EBIT/assets, market cap/liabilities, and sales/assets. MarketCons.MarketCons.CapYTD2024E salesNTMNet debtAltmanCapYTD2024E salesNTMNet debtAltmanCompanyTicker($bn)returngrowthP/Eto EBITDAZ-ScoreCompanyTicker($bn)returngrowthP/Eto EBITDAZ-ScoreCOMMUNICATION SERVICES (12% of the Basket)HEALTH CARE (14% of the Basket)Match Group Inc.MTCH$9(13)%7%14x3.0x0.2Viatris Inc.VTRS$147%(0)%4x3.5x0.9Warner Bros. DiscoveryWBD20(27)1NM1.70.5DaVita Inc.DVA12274144.61.6Charter CommunicationsCHTR38(33)184.70.6Amgen Inc.AMGN144(6)17132.31.6AT&T Inc.T1192073.40.7GE Healthcare TechnologiesGEHC39114192.21.8Paramount GlobalPARA7(17)4107.01.1Baxter IntlBAX2051134.32.0Verizon CommunicationsVZ1658183.61.2Pfizer Inc.PFE143(11)3111.52.0Revvity Inc.RVTY13(6)2212.82.2Basket Median0.7Sector Median1.7Basket Median1.8Sector Median3.9CONSUMER DISCRETIONARY (12% of the Basket)Norwegian Cruise Line HldgsNCLH$8(3)%9%14x7.4x0.1INDUSTRIALS (10% of the Basket)Carnival Corp.CCL.U17(18)14135.90.6American Airlines GroupAAL$93%5%5x4.8x0.7Caesars EntertainmentCZR8(19)2296.00.6Dayforce Inc.DAY9(11)14332.71.0MGM Resorts IntlMGM14(6)41711.70.9Delta Air LinesDAL3224672.91.1Expedia Group Inc.EXPE18(10)910(0.3)1.0United Airlines HoldingsUAL1830752.21.2Ford Motor Co.F5110275.61.1Boeing Co.BA102(36)68311.61.3Basket Median0.8Basket Median1.1Sector Median3.0Sector Median3.8CONSUMER STAPLES (8% of the Basket)INFORMATION TECHNOLOGY (34% of the Basket)Kraft HeinzKHC$475%1%12x3.0x1.1Seagate Tech HoldingsSTX$183%19%18x8.2x0.5Molson Coors BeverageTAP1331112.51.5Hewlett Packard EnterpriseHPE221591.90.8Keurig Dr PepperKDP4634173.41.5Gen Digital Inc.GEN13(9)394.31.0J.M. SmuckerSJM12(8)7112.81.7Oracle Corp.ORCL316108193.71.9HP Inc.HPQ28(6)281.71.9Basket Median1.5Intel Corp.INTC148(30)6222.51.9Sector Median3.4Western DigitalWDC23333313(18.4)1.9Corning Inc.GLW274(0)162.32.4ENERGY (6% of the Basket)NetApp Inc.NTAP2116415(0.1)2.7Kinder Morgan Inc.KMI$428%13%15x4.2x0.8Trimble Inc.TRMB1511(5)213.02.9Williams CompaniesWMB4815(3)213.40.8Jabil Inc.JBL15(7)(14)120.73.0EQT Corp.EQT1755201.81.5Akamai TechnologiesAKAM15(14)7152.33.1Teledyne TechnologiesTDY18(16)3182.03.1Basket Median0.8Qorvo Inc.QRVO11217151.73.2Sector Median2.9Cisco Systems Inc.CSCO195(3)(6)13(0.8)3.4NXP SemiconductorsNXPI614(2)171.43.4MATERIALS (4% of the Basket)Zebra TechnologiesZBRA1572243.13.7DuPontDD$32(4)%0%20x1.6x1.1International Flav/FragIFF225(4)225.31.2Basket Median2.7Sector Median5.1Basket Median1.2Sector Median2.4Weak Balance Sheet <GSTHWBAL> Median$202%4%14x2.9x1.2S&P 500 Median3444181.73.6
  8. byercr\home\Desktop\BCB_0-SA_MAIN\BCB_2020-NOV-20\REPOST-USKickstart\Kickstart2020-11-20T22_44_20Z2020-11-20T23_19_23Z.pptxGoldman Sachs8US Weekly Kickstart26 April 2024Constituents of our High Quality Stock basket (GSTHQUAL)Exhibit 12: Constituents of GSTHQUALas of April 25, 2024; boldindicates new constituent; large-cap stocks with strong balance sheets, histories of stable sales and earnings growth, above-average ROE, low historical drawdown riskSource: FactSet, Goldman Sachs Global Investment Research.Market2024EMarket2024ECapAltmanP/EEPSDivROEQualityCapAltmanP/EEPSDivROEQualityCompanyTicker($ bil)Z-Score(NTM)GrowthYieldLTMScoreCompanyTicker($ bil)Z-Score(NTM)GrowthYieldLTMScoreCommunication ServicesHealth CareAlphabet Inc.GOOGL$ 1,81711.822x17%0.0%30%94Zoetis Inc.ZTS$ 707.226x9%1.1%48%91Charter CommunicationsCHTR380.68110.04584IDEXX LaboratoriesIDXX4117.842100.07289T-Mobile US Inc.TMUS1951.417311.61577UnitedHealth GroupUNH4573.517101.52689Comcast Corp.CMCSA1501.5953.31976STERIS plcSTE203.52171.01088Meta Platforms Inc.META97110.121330.53474ResMed Inc.RMD279.123181.02487Charles River Laboratories IntlCRL122.72030.01682Basket Median77Sector Median48Basket Median88Sector Median49Consumer DiscretionaryO'Reilly AutomotiveORLY$ 623.924x10%0.0%NM98IndustrialsHome Depot Inc.HD3307.22112.7NM90Fastenal Co.FAST$ 3925.031x5%2.3%34%94Tractor SupplyTSCO295.62521.75388Paychex Inc.PAYX444.62572.94691LKQ Corp.LKQ112.91122.81580Cintas Corp.CTAS6712.241130.83791lululemon athletica inc.LULU4514.725110.04579Rollins Inc.ROL2111.243111.43790Basket Median88Basket Median91Sector Median50Sector Median52Consumer StaplesInformation TechnologyChurch & DwightCHD$ 265.530x9%1.1%20%94Cadence Design SystemsCDNS$ 7522.944x15%0.0%35%95Monster BeverageMNST5525.828160.02184Accenture PlcACN1947.22431.73095Hershey Co.HSY284.319(0)2.95183Synopsys Inc.SNPS8114.137110.02390Tyler TechnologiesTYL197.748170.0786Basket Median84Monolithic Power SystemsMPWR3250.34790.82286Sector Median53Amphenol Corp.APH717.434140.72586Broadcom Inc.AVGO6066.825161.63880EnergyCDW Corp.CDW333.82361.06980Marathon PetroleumMPC$ 733.611x(23)%1.7%38%63Fair Isaac Corp.FICO3013.145250.0NM80Coterra Energy Inc.CTRA212.813(18)2.81360EPAM Systems Inc.EPAM1412.422(3)0.01678Arista NetworksANET8223.13480.03475Basket Median61Microsoft Corp.MSFT29659.831110.83875Sector Median51Cognizant Tech SolutionsCTSH336.71411.81874KLA Corp.KLAC916.92550.9NM73FinancialsF5 Inc.FFIV114.314(2)0.02072Intercontinental ExchangeICE$ 75NM21x7%1.4%11%87MSCI Inc.MSCI37NM3091.4NM87Basket Median80Arthur J. GallagherAJG51NM23161.01778Sector Median53Truist FinancialTFC51NM11(12)5.5975Raymond James FinancialRJF25NM12151.51874MaterialsCharles SchwabSCHW133NM2091.32069Sherwin-WilliamsSHW$ 784.126x10%0.9%69%92Northern TrustNTRS17NM12143.6968Basket Median92Basket Median75Sector Median53Sector Median52Real EstateUtilitiesAmerican TowerAMT$ 81NM24x125%3.8%42%81American Water WorksAWK$ 24NM23x7%2.3%10%84Basket Median81Basket Median84Sector Median52Sector Median50High Quality Stock <GSTHQUAL> Median48.07.223x9%1.1%25%84S&P 500 Median34.23.61861.61752
  9. byercr\home\Desktop\BCB_0-SA_MAIN\BCB_2020-NOV-20\REPOST-USKickstart\Kickstart2020-11-20T22_44_20Z2020-11-20T23_19_23Z.pptxGoldman Sachs9US Weekly Kickstart26 April 2024Constituents of our Stable Growth basket (GSTHSTGR)Exhibit 13: Constituents of GSTHSTGRas of April 25, 2024; boldindicates new constituent; Russell 1000 stocks with the most stable year/year EBITDA growth on a quarterly basis during past 10years Source: FactSet, Goldman Sachs Global Investment Research.10-year10-yearEBITDAEBITDAYTD2024E growthNTMgrowthYTD2024E growthNTMgrowthCompany NameTickerreturnSalesEPSP/EvariabilityCompany NameTickerreturnSalesEPSP/EvariabilityCOMMUNICATION SERVICESHEALTH CARESirius XM Holdings, Inc.SIRI(44)%(2)%(7)%10x7ResMed Inc.RMD7%10%15%23x8Comcast CMCSA(12)2698Zoetis, Inc. ZTS(22)79269Iridium Communications Inc.IRDM(28)2461408Amgen Inc.AMGN(6)1741310Omnicom Group IncOMC13681213Mettler-Toledo International Inc.MTD2153011Cable One, Inc.CABO(30)(3)(5)918McKesson MCK179121711Charles River Laboratories International, Inc.CRL(4)232012CONSUMER DISCRETIONARYDomino's Pizza, Inc.DPZ20%7%8%30x7INDUSTRIALSAutoZone, Inc.AZO14716188Waste Management, Inc.WM19%6%16%29x6Home Depot, Inc.HD(4)122111Fastenal CompanyFAST665316O'Reilly Automotive, Inc.ORLY117102412Rollins, Inc.ROL2913437Genuine Parts CompanyGPC17361612Verisk Analytics IncVRSK(7)714338Paychex, Inc.PAYX356259CONSUMER STAPLESPepsiCo, Inc.PEP5%3%7%21x6INFORMATION TECHNOLOGYColgate-Palmolive CompanyCL1348256VeriSign, Inc.VRSN(11)%5%(1)%22x4Altria Group, Inc.MO100387Amdocs LimitedDOX(2)310125Oracle ORCL10910197ENERGYAccenture Plc ACN(11)24247Kinder Morgan Inc Class PKMI8%12%13%15x15CDW CDW736237ONEOK, Inc.OKE1836(9)1617Cisco Systems, Inc.CSCO(3)(7)(6)1310Cognizant Technology Solutions CTSH(11)011411FINANCIALSAkamai Technologies, Inc.AKAM(14)791511Marsh & McLennan Companies, Inc.MMC7%8%9%22x7Roper Technologies, Inc.ROP(1)1182912Bank of New York Mellon CorpBK12236108Amphenol APH2010133413Jack Henry & Associates, Inc.JKHY272298International Business Machines IBM4241715MSCI Inc. MSCI(18)129308F5, Inc.FFIV2(1)81416S&P Global, Inc.SPGI(5)712289Cadence Design Systems, Inc.CDNS212154416Primerica, Inc.PRI7611129Motorola Solutions, Inc.MSI12672716Nasdaq, Inc.NDAQ418(3)219REAL ESTATEMATERIALSSBA Communications Corp. SBAC(22)%(1)%7%38x6AptarGroup, Inc.ATR14%4%9%26x8UTILITIESAmerican Water Works Company, Inc.AWK(7)%5%7%23x6Stable Growers basket median2%6%8%22x8Russell 1000 median3571830
  10. byercr\home\Desktop\BCB_0-SA_MAIN\BCB_2020-NOV-20\REPOST-USKickstart\Kickstart2020-11-20T22_44_20Z2020-11-20T23_19_23Z.pptxGoldman Sachs10US Weekly Kickstart26 April 2024S&P 500 earnings resultsExhibit 14: S&P 500 1Q 2024 earnings resultsas of April 25, 2024Source: FirstCall, Bloomberg, I/B/E/S, Goldman Sachs Global Investment Research.S&P 500 EQUAL-WEIGHTEDEARNINGSREVENUENumber of CompaniesStd Dev SurprisesAbsolute SurprisesAvg 1QStd Dev SurprisesAvg 1QReportedTotal% of Co'sPositiveNegativeIn-LinePositiveNegativeSurprisePositiveNegativeSurpriseConsumer Staples153839%87%7%7%87%7%10%60%20%0%Information Technology2565388081284161452161Health Care2564397642092897603Consumer Discretionary235244749177822151791Communication Services10195370030901074030(0)Industrials437954609287716823230Materials1328465415316923923231Energy10234350104060201430203Real Estate8312650133875131638130Financials5071704814386428538201Utilities730232929434357(3)057(7)S&P 50022950046%63%10%27%76%19%9%38%18%1%Comparative Data (full earnings season)4Q 202355%12%33%73%23%9%38%17%0%3Q 20235993279177332002Q 20235783576207422011Q 20235610347522851103S&P 500 CAP-WEIGHTEDEARNINGSREVENUEWeight of CompaniesStd Dev SurprisesAbsolute SurprisesAvg 1QStd Dev SurprisesAvg 1QReportedTotal% of Co'sPositiveNegativeIn-LinePositiveNegativeSurprisePositiveNegativeSurpriseInformation Technology122940%97%1%2%99%1%6%80%4%2%Communication Services89919604991176191Consumer Staples46579415941845480Health Care712577732094665702Industrials59597152288101126151Real Estate12306353387518388(0)Financials913696043584975482Consumer Discretionary310295024854464212(2)Materials124343134463301132292Utilities122923166171299037(6)Energy3463166784249213293S&P 5005310053%76%3%21%88%10%9%53%11%1%
  11. byercr\home\Desktop\BCB_0-SA_MAIN\BCB_2020-NOV-20\REPOST-USKickstart\Kickstart2020-11-20T22_44_20Z2020-11-20T23_19_23Z.pptxGoldman Sachs11US Weekly Kickstart26 April 20241Q earnings calendar (week of April 29th)Exhibit 15: Expected report dates for S&P 500 stocks reporting week of April 29thas of April 25, 2024Source: FactSet, Goldman Sachs Global Investment Research.YTDMkt CapConsensus 1Q 2024P/ESectorCompany nameTickerReturn($ bil)EPSStd. Dev.3 Mo RevisionYr/Yr Growth(NTM)Monday, April 29, 2024Communication ServicesParamount GlobalPARA(17)%$7$0.36$0.108%296%10.2xConsumer DiscretionaryDomino's Pizza Inc.DPZ20173.380.14(0)1630.1FinancialsArch Capital GroupACGL25352.100.0962111.3Everest Group Ltd.EG41616.010.62(2)425.8Franklin ResourcesBEN(14)130.570.03(6)(6)9.1Health CareRevvity Inc.RVTY(6)130.930.02(9)(8)21.2Information TechnologyF5 Inc.FFIV2112.870.03(3)1313.6NXP SemiconductorsNXPI4613.160.11(1)(1)16.6ON SemiconductorON(21)281.040.03(6)(12)14.9Real EstateSBA CommunicationsSBAC(22)211.210.11(13)3037.9Welltower Inc.WELL5520.250.03(10)39867.7Tuesday, April 30, 2024Consumer DiscretionaryAmazon.com Inc.AMZN14%$1804$0.83$0.0914%168%38.0xCaesars EntertainmentCZR(19)8(0.07)0.25NM8928.5McDonald's Corp.MCD(7)2002.710.05(2)321.6Starbucks Corp.SBUX(8)990.800.04(10)720.2Consumer StaplesArcher-Daniels-MidlandADM(15)331.360.09(10)(35)10.8Clorox Co.CLX5181.380.11(5)(9)23.6Coca-Cola Co.KO62670.700.01(3)221.5Molson Coors BeverageTAP3130.740.08103710.9Mondelez IntlMDLZ(2)950.890.02(5)(0)19.6Sysco Corp.SYY7380.950.01(2)516.5EnergyDiamondback EnergyFANG36374.430.150810.5Marathon PetroleumMPC35732.420.56(13)(60)10.7ONEOK Inc.OKE18471.190.06(3)(49)15.9FinancialsPayPal HoldingsPYPL4691.220.03(5)412.1Prudential FinancialPRU9403.130.14(4)188.0
  12. byercr\home\Desktop\BCB_0-SA_MAIN\BCB_2020-NOV-20\REPOST-USKickstart\Kickstart2020-11-20T22_44_20Z2020-11-20T23_19_23Z.pptxGoldman Sachs12US Weekly Kickstart26 April 20241Q earnings calendar (week of April 29th)Exhibit 15 (continued): Expected report dates for S&P 500 stocks reporting week of April 29thas of April 25, 2024Source: FactSet, Goldman Sachs Global Investment Research.YTDMkt CapConsensus 1Q 2024P/ESectorCompany nameTickerReturn($ bil)EPSStd. Dev.3 Mo RevisionYr/Yr Growth(NTM)Tuesday, April 30, 2024Health CareEli Lilly & Co.LLY256882.460.15(0)5250.8GE Healthcare TechnologiesGEHC11390.910.02(1)719.2Incyte Corp.INCY(18)110.850.14(2)12911.2Stryker Corp.SYK131282.350.04(6)1027.4Industrials3M Co.MMM2512.100.04179.9Eaton Corp.ETN321272.290.0362229.8Hubbell Inc.HUBB23223.540.09(7)(2)23.9Illinois Tool WorksITW(5)742.360.03(2)123.9Leidos HoldingsLDOS20181.700.09(3)1516.0PACCAR Inc.PCAR16592.200.093(2)13.5Republic ServicesRSG18611.350.06(3)931.1Trane TechnologiesTT23681.650.0411728.1Information TechnologyAdvanced Micro DevicesAMD42480.610.05(10)236.2Corning Inc.GLW4270.350.01(8)(14)16.0Gartner Inc.IT(1)352.530.15(6)(12)37.6Skyworks SolutionsSWKS(8)161.520.02(1)(25)13.7Super Micro ComputerSMCI177465.840.412825926.8Zebra TechnologiesZBRA7152.450.0416(38)24.0MaterialsAir Products & ChemicalsAPD(14)522.690.04(15)(2)18.1Amcor PLCAMCR(6)130.160.00(6)(6)12.4Ecolab Inc.ECL11631.330.02195232.9Martin Marietta MaterialsMLM20371.830.22(25)(15)26.6Real EstateAmerican TowerAMT(19)811.780.075314723.7Boston PropertiesBXP(10)100.500.07(1)(1)28.7Essex Property TrustESS1161.290.16(9)(46)45.8Extra Space StorageEXR(16)280.990.03(18)(28)31.0Invitation HomesINVH2210.180.021(11)47.1Public StoragePSA(14)452.470.15(8)(7)24.2UDR Inc.UDR1120.100.04(1)1295.8UtilitiesAmerican Electric PowerAEP8461.260.04(11)1415.2CenterPoint EnergyCNP3190.530.023617.7Edison IntlEIX1271.150.14(10)613.8Public Service Enterprise GrpPEG12341.310.06(7)(5)18.0
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