Goldman Sachs said the stock market performance has been driven by company specific factors rather than the macroeconomic environment, and the Wall Street firm identified a host of names that it said offer the most attractive microeconomic setups. The investment bank used a so-called ” dispersion score ” for each S & P 500 stock to identify “the best stock-picking opportunities going forward.” The score is calculated based on (1) the proportion of trailing returns explained by micro, company-specific factors, not macro drivers; and (2) a forecast of the volatility tied to the portion of returns attributable to those micro factors, Goldman said in a 31-page report issued Friday. “For fund managers, our forward-looking dispersion framework identifies stocks with the most attractive combination of micro-driven returns and firm-specific risk,” David Kostin, Goldman’s head of U.S. equity strategy, wrote in the note to clients. It’s important to note that stocks with high dispersion scores reflect a large alpha opportunity , but not necessarily in one direction or the other, meaning a stock can have outsized outperformance or underperformance. Goldman found that among the 11 S & P 500 sectors, consumer discretionary and technology groupings offer the best stock picking opportunities based on their dispersion scores, while real estate and utilities have the lowest scores, hence less chance of generating alpha. Stocks with the highest dispersion scores in the benchmark stock index are Monster Beverage , DexCom , Akamai Technologies , Centene and Align Technology , according to Goldman. — CNBC’s Michael Bloom contributed reporting.
2024-03-11 09:17:00
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