Tesla CEO Elon MuskNoah Berger/Reuters
The report includes a list of secular growth stocks that trade at “reasonable valuations.”
The list was compiled using Goldman Sachs’s “rule of ten” criteria. In order to be included on the list, a stock must have each of the following:
- At least 10% long term EPS growth
- At least 10% 2015A and 2016E sales growth
- At least 10% 2017E and 2018E sales growth
Of the over 750 stocks analyzed, 60 met all three criteria. The top 13 include some of the largest companies by market cap in the world like Netflix, Amazon, and Tesla, along with some lesser known companies as well.
Here are the top 13 “rule of ten” secular growth stocks trading at reasonable valuations, arranged by Goldman Sachs’s growth forecast for 2107.
Goldman Sachs
Tesla, Inc.
Markets Insider
Ticker:TSLA
Sector: Consumer Discretionary
Market Cap: $51 billion
Total Return YTD: 45%
Realized Sales Growth
2015: 27%
2016: 73%
Goldman Sachs Realized Growth Forecast
2017: 72%
2018: 34%
Long Term EPS Growth: 35%
EV/Sales: 6.3x
Source: Compustat, FactSet, and Goldman Sachs Global Investment Research. As of July 6, 2017.
Pure Storage Inc.
Markets Insider
Ticker:PSTG
Sector: Information Technology
Market Cap: $3 billion
Total Return YTD: 11%
Realized Sales Growth
2015: 152%
2016: 65%
Goldman Sachs Realized Growth Forecast
2017: 39%
2018: 29%
Long Term EPS Growth: 35%
EV/Sales: 2.7x
Source: Compustat, FactSet, and Goldman Sachs Global Investment Research. As of July 6, 2017.
Zendesk, Inc.
Markets Insider
Ticker:ZEN
Sector: Information Technology
Market Cap: $3 billion
Total Return YTD: 29%
Realized Sales Growth
2015: 64%
2016: 49%
Goldman Sachs Realized Growth Forecast
2017: 35%
2018: 30%
Long Term EPS Growth: 26%
EV/Sales: 5.1x
Source: Compustat, FactSet, and Goldman Sachs Global Investment Research. As of July 6, 2017.
Square Inc.
Markets Insider
Ticker:SQ
Sector: Information Technology
Market Cap: $9 billion
Total Return YTD: 70%
Realized Sales Growth
2015: 49%
2016: 35%
Goldman Sachs Realized Growth Forecast
2017: 33%
2018: 31%
Long Term EPS Growth: 85%
EV/Sales: 4.6x
Source: Compustat, FactSet, and Goldman Sachs Global Investment Research. As of July 6, 2017.
GrubHub Inc.
Markets Insider
Ticker:GRUB
Sector: Information Technology
Market Cap: $4 billion
Total Return YTD: 15%
Realized Sales Growth
2015: 43%
2016: 36%
Goldman Sachs Realized Growth Forecast
2017: 33%
2018: 25%
Long Term EPS Growth: 22%
EV/Sales: 6.3x
Source: Compustat, FactSet, and Goldman Sachs Global Investment Research. As of July 6, 2017.
Wayfair Inc.
Markets Insider
Ticker:W
Sector: Consumer Discretionary
Market Cap: $6 billion
Total Return YTD: 112%
Realized Sales Growth
2015: 71%
2016: 50%
Goldman Sachs Realized Growth Forecast
2017: 32%
2018: 27%
Long Term EPS Growth: 24%
EV/Sales: 1.3x
Source: Compustat, FactSet, and Goldman Sachs Global Investment Research. As of July 6, 2017.
RingCentral Inc.
Markets Insider
Ticker:RNG
Sector: Information Technology
Market Cap: $3 billion
Total Return YTD: 73%
Realized Sales Realized Growth Growth
2015: 35%
2016: 28%
Goldman Sachs Forecast
2017: 30%
2018: 24%
Long Term EPS Growth: 35%
EV/Sales: 6.3x
Source: Compustat, FactSet, and Goldman Sachs Global Investment Research. As of July 6, 2017.
Netflix Inc.
Markets Insider
Ticker:NFLX
Sector: Consumer Discretionary
Market Cap: $63 billion
Total Return YTD: 18%
Realized Sales Growth
2015: 23%
2016: 30%
Goldman Sachs Realized Growth Forecast
2017: 30%
2018: 25%
Long Term EPS Growth: 58%
EV/Sales: 6.8x
Source: Compustat, FactSet, and Goldman Sachs Global Investment Research. As of July 6, 2017.
Splunk Inc.
Markets Insider
Ticker:SPLK
Sector: Information Technology
Market Cap: $8 billion
Total Return YTD: 10%
Realized Sales Growth
2015: 48%
2016: 42%
Goldman Sachs Realized Growth Forecast
2017: 27%
2018: 24%
Long Term EPS Growth: 40%
EV/Sales: 6.7x
Source: Compustat, FactSet, and Goldman Sachs Global Investment Research. As of July 6, 2017.
Palo Alto Networks
Markets Insider
Ticker:PANW
Sector: Information Technology
Market Cap: $12 billion
Total Return YTD: 6%
Realized Sales Growth
2015: 56%
2016: 36%
Goldman Sachs Realized Growth Forecast
2017: 24%
2018: 21%
Long Term EPS Growth: 31%
EV/Sales: 6.9x
Source: Compustat, FactSet, and Goldman Sachs Global Investment Research. As of July 6, 2017.
Ultimate Software Group
Markets Insider
Ticker:ULTI
Sector: Information Technology
Market Cap: $6 billion
Total Return YTD: 15%
Realized Sales Growth
2015: 22%
2016: 26%
Goldman Sachs Realized Growth Forecast
2017: 24%
2018: 18%
Long Term EPS Growth: 22%
EV/Sales: 7.5x
Source: Compustat, FactSet, and Goldman Sachs Global Investment Research. As of July 6, 2017.
salesforce.com, inc.
Markets Insider
Ticker:CRM
Sector: Information Technology
Market Cap: $62 billion
Total Return YTD: 27%
Realized Sales Growth
2015: 24%
2016: 26%
Goldman Sachs Realized Growth Forecast
2017: 23%
2018: 20%
Long Term EPS Growth: 28%
EV/Sales: 7.0x
Source: Compustat, FactSet, and Goldman Sachs Global Investment Research. As of July 6, 2017.
Amazon.com Inc.
Markets Insider
Ticker:AMZN
Sector: Consumer Discretionary
Market Cap: $461 billion
Total Return YTD: 29%
Realized Sales Growth
2015: 20%
2016: 27%
Goldman Sachs Realized Growth Forecast
2017: 22%
2018: 22%
Long Term EPS Growth: 27%
EV/Sales: 3.2x
Source: Compustat, FactSet, and Goldman Sachs Global Investment Research. As of July 6, 2017.
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