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Unlocking Profit Potential: Goldman's Top ROE Growth Stocks for 2024

In the midst of the market's ascent to unprecedented heights, Goldman Sachs presents a strategic shift towards long-term growth plays as investors brace for lower interest rates. 

The renowned firm has recalibrated its return on equity growth basket, a sector-neutral compilation of 50 stocks outshining the S&P 500 in consensus expected ROE growth over the next year.

Goldman's chief U.S. equity strategist, David Kostin, envisions a scenario where the Federal Reserve's easing sets the stage for diminishing borrowing costs, igniting a trajectory for higher equity returns. In a recent note, Kostin projects a slight expansion in ROE for 2024, primarily driven by improvements in EBIT margin. The market maestro foresees an evolution in investor sentiment, with a pivot from stocks guaranteeing present high profitability towards those promising greater profitability in the future.

Golman Sachs headquarter, investment bank

Return on equity (ROE), a pivotal measure calculated by dividing a company's net income by shareholders' equity, takes center stage in Goldman's selection criteria. As the Fed contemplates multiple rate cuts, Goldman's basket includes names like gold mining titan Newmont (NEM), wireless infrastructure giant American Tower (AMT), chipmaker Advanced Micro Devices (AMD), and iconic toy manufacturer Hasbro (HAS) – all boasting an ROE surpassing 35.

Among these, AMD has already demonstrated resilience, charting a 14% surge in 2024. Fueled by optimism surrounding its artificial intelligence initiatives, AMD aims to challenge Nvidia (NVDA) with its latest AI chip. Despite the buy ratings from nearly 80% of analysts, consensus price targets hint at a potential downside of nearly 12%, as per LSEG.

Newmont, the gold mining stalwart, claims the top spot in the basket with an impressive ROE of 50. Despite a sluggish start to the year, recent momentum and UBS's bullish outlook on gold prices in 2024 hint at a potential buying opportunity. Analyst consensus indicates a substantial upside of nearly 45% from current levels.

American Tower, a communications-focused REIT, emerges as another star in Goldman's selection. With a consensus buy rating and an anticipated 13% upside, the company stands as a testament to the second-highest expected ROE growth among the chosen stocks.

Intriguingly, Goldman's basket extends beyond these to include streaming giant Netflix (NFLX), telecom powerhouse T-Mobile (T), and financial giant Citigroup (C). Each bears the imprint of Goldman's rigorous selection process, positioning them as contenders for robust growth.

As the market evolves, Goldman's strategic insights offer investors a compelling narrative for navigating the complex landscape of equities in 2024. The allure of high ROE growth beckons, presenting a mosaic of opportunities for those keen on unlocking the profit potential that lies ahead.


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