Tesla among stocks to benefit from a soft landing as U.S. likely to avoid recession

By Senad Karaahmetovic

Goldman Sachs strategists urged the broker’s clients to hope for the best but plan for the worst, a lesson learned in 2022.

While the consensus sees the U.S. entering a recession in 2023, Goldman Sachs economists believe the U.S. will manage to avoid a recession. They assign only a ⅓ probability to this scenario and add that recent jobs and reports are supportive of their view.

“Recent macro data point to a deceleration in wage gains and inflation. Our economists have a positive outlook for consumer spending but expect below-trend economic growth. Under a soft landing (no recession) scenario, we forecast S&P 500 EPS growth will be flat, as revenue growth is offset by a decline in margins. Consensus forecasts EPS growth of 3%,” the strategists wrote in a client note.

In case a soft landing is achieved, investors should own stocks like Tesla (NASDAQ:), Qualcomm (NASDAQ:), and Advanced Micro Devices (NASDAQ:).

On a more negative note, the strategists note that the earnings revisions signal a hard landing for the U.S. economy.

“The current 3-month trend of S&P 500 forward EPS revision sentiment is the most negative reading outside of the 2008 and 2020 recessions. In a hard landing (recession) scenario, we forecast S&P 500 EPS will fall by 11% (vs. our baseline forecast of flat EPS and consensus of +3%),” they added.

In this case, Goldman advises its clients to own retailers like Home Depot (NYSE:), Lowe’s (NYSE:), eBay (NASDAQ:), Costco (NASDAQ:), Kroger (NYSE:); tech names including Microsoft (NASDAQ:), Block (NYSE:), Visa (NYSE:) and Mastercard (NYSE:).