Investors’ collective anxiety about a potential recession appeared to spike on Tuesday after a key inflation reading came in hotter than expected. Goldman Sachs has a way to play any possible recessionary scenario, however. The S & P 500 experienced its worst day of the year on Tuesday. The stock market’s so-called “fear index” had been falling steadily throughout the summer rally off the lows but has been climbing for almost a month now. Investors have debated for weeks whether a recession is coming (or if one is already here) and if so, how bad it will be. On Tuesday, fear rose that the Fed will tip the economy into a downturn as it tries to stifle inflation. Goldman Sachs says its basket of stable growth stocks could be a safe place to ride out any version of a recession. The firm looked to find stocks that were the most consistent in growing cash flows. That is, those with the least variability in EBITDA over the last 10 years. The portfolio they found has a median EBITDA variability of 8.7. The median in the Russell 1000 is 28.4. In other words, these stocks generate cash much more consistently than the rest of the market. Here are 10 of the stocks in the Goldman portfolio: Information technology companies have the biggest representation on the list. Almost all of them are down by low double digit percentages for the year. Visa is down only 8%, and has cash flow variability of 11.3%. Oracle is down 13% and has a variance of just 6.1%. Colgate-Palmolive has the smallest cash flow variance on the list at 4.3%. Its shares are down just 7% this year. Healthcare stock Johnson & Johnson and industrial stock Hubbell have fared better than many in 2022. Johnson & Johnson is down just 3% while Hubbell has managed a modest 1% gain.
© heardonwallstreet.com