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Goldman Sachs chief U.S. strategist David Kostin published a list of secular growth stocks – companies with proven growth no matter what the economic conditions – that is ideally suited to an investing environment that has, all of the sudden, become decidedly uncertain.

To develop the list, Mr. Kostin screened the Goldman Sachs equity universe using his “Rule of 10” to find companies with long-term expected earnings growth of more than 10 per cent, sales growth in 2015 and 2016 above 10 per cent, and with earnings forecasts for this year and 2018 above 10 per cent.

Secular growth stocks: Goldman’s Top 25

Company Symbol Sector/Industry EV/Sales 3Y Avg Ann EPS Growth 3Y Avg Ann Rev Growth 3Y Avg Ann Stock Return P/E Ratio TTM P/E Ratio Fwd
Sprouts Farmers Market Inc SFM-Q Consumer, Non-cycl 0.82 9.08 26.21 -19.96 21.58 21.00
INC Research Holdings Inc-A INCR-Q Consumer, Non-cycl 1.73 N/A 17.24 N/A 34.91 17.97
Square Inc – A SQ-N Consumer, Non-cycl 2.20 -20.67 91.49 N/A N/A 112.98
Envision Healthcare Corp EVHC-N Consumer, Non-cycl 2.35 41.39 42.07 16.12 21.41 14.25
Pandora Media Inc P-N Communications 2.66 -137.65 67.76 -27.17 N/A N/A
Pure Storage Inc – Class A PSTG-N Technology 2.99 N/A N/A N/A N/A N/A
Amazon.com Inc AMZN-Q Communications 3.11 N/A 20.55 26.61 185.50 66.75
Ulta Salon Cosmetics & Frag ULTA-Q Consumer, Cyclical 3.27 22.43 20.91 46.17 43.83 36.02
Yelp Inc YELP-N Communications 4.22 N/A 59.00 -19.68 N/A 41.42
PayPal Holdings Inc PYPL-Q Consumer, Non-cycl 4.25 N/A 17.78 N/A 36.62 25.12
Fortinet Inc FTNT-Q Technology 4.45 -48.94 23.84 14.60 425.24 42.95
Athenahealth Inc ATHN-Q Technology 4.88 N/A 30.09 -4.65 223.04 56.64
Antero Resources Corp AR-N Energy 4.96 N/A 89.73 -24.10 53.16 65.78
Alphabet Inc-Cl A GOOGL-Q Communications 5.49 12.19 14.38 12.81 30.05 21.16
Twitter Inc TWTR-N Communications 5.72 -103.97 92.96 -35.81 N/A 30.34
Nutanix Inc – A NTNX-Q Technology 5.99 -42.50 163.52 N/A N/A N/A
Cotiviti Holdings Inc COTV-N Technology 6.18 N/A 71.25 N/A 93.04 24.13
Cornerstone OnDemand Inc CSOD-Q Technology 6.29 -36.45 42.75 -10.12 N/A 301.54
Netflix Inc NFLX-Q Communications 6.35 42.50 26.42 35.79 331.24 97.77
SalesForce.com Inc CRM-N Technology 6.63 31.46 29.85 8.35 N/A 64.21
Align Technology Inc ALGN-Q Consumer, Non-cycl 6.70 45.10 14.75 13.09 39.19 32.70
GrubHub Inc GRUB-N Communications 7.41 43.47 64.76 N/A 71.13 37.15
Ultimate Software Group Inc ULTI-Q Technology 7.85 29.67 22.99 7.52 318.55 52.00
Splunk Inc SPLK-Q Technology 8.26 -75.31 49.79 -13.19 N/A 122.44
Acacia Communications Inc ACIA-Q Communications 8.69 N/A N/A N/A N/A 17.65

Source: Goldman Sachs and Bloomberg



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