Goldman Sachs: Use These 5 High Growth Stocks To Shield Yourself From Rising Interest Rates
Nov 26, 2021
The stock market is often threatened by rising interest rates, but not all equities are created equal.
According to Goldman Sachs, one sort of stock should keep going well as interest rates rise: high-yield growth stocks.
When real rates rose in the first quarter of 2021, growth stocks with high returns outpaced loss-making growth stocks, as David Kostin, the bank’s chief U.S. equity strategist, notes in his letter to investors. Profitable equities should hold up well if interest rates increase in 2022.
Time may be of the essence. Fears that the Fed will raise interest rates soon are fueling speculation. Already, the 10-year US Treasury note yield has risen from 0.93% in January to 1.64% today.
To help you strengthen your portfolio, Goldman has identified five fast-growing, high-yielding stocks. At least one of them has the potential to be profitable, especially if you invest for free.
Marathon Digital Holdings (MARA)
Marathon operates as a stock market. Its mining park has produced around 2,516 bitcoins so far this year.
While other bitcoin miners may be tempted to sell their coins after the recent crypto rise, Marathon just keeps them — a practice known among crypto miners as "holding on for dear life," or HODL.
The stock, unsurprisingly, performed well during the cryptocurrency boom. Marathon equities have risen 362% year to date.
The stock fell into Goldman's screening procedure since the consensus forecast for annual earnings growth from 2021 to 2023 is 105%. Moreover, the earning margin for 2023 is expected to be 51%.
Riot Blockchain (RIOT)
Another crypto venture that came up in Goldman's analysis is Riot Blockchain. It mines bitcoin and rents out mining hardware to institutions.
In the third quarter, sales were $64.8 million, an increase of 2,532% year on year.
However, Wall Street feels that the best is yet to come. From now until 2023, the consensus average sales growth prediction is 69%, with a profitability of 46%.
In 2021, the stock has already more than doubled.
Without a doubt, there are numerous opportunities to get into the crypto boom. For example, some apps allow you to pick up cryptocurrency ETFs or buy cryptocurrencies directly, without commission.
Marvell Technology (MRVL)
Chipmakers are now working to their fullest, and Marvell Technology in particular is attracting a lot of interest from investors.
Its stock has risen 57% so far this year.
Marvell's sales increased 48% year over year to $1.076 billion in the most recent fiscal quarter, driven by rising demand from data centers, the company's biggest end market.
Wall Street anticipates that the company's revenues will expand at a 20% annual rate in the following two years, with a profit margin of around 35%.
MP Materials (MP)
MP Materials is a rare earth mining firm that billionaire investor Chamath Palihapitiya assisted in taking public the previous year through a SPAC.
Mountain Pass, North America's only integrated rare earth mining and processing plant, is owned and operated by the corporation.
Year to date, the stock is up 49%.
One reason for investor optimism is that electric vehicles (EVs) require strong rare-earth magnets to convert energy into motion. Given the rapid development of the EV industry, MP revenue growth should be unbeatable.
By 2023, the corporation is predicted to raise its sales by 50% each year.
Mastercard (MA)
Mastercard has a larger market valuation than all of the previous firms combined.
While smaller firms are more agile, the financial services behemoth may also generate quick development, particularly if pandemic limitations are relaxed.
In the third quarter, Mastercard's gross dollar volume increased by 20% year on year in local currency. On the contrary, cross-border volume increased by a whopping 52%.
Experts predict that over the next two years, the company's sales will grow by 18% a year.
Mastercard currently trades at more than $330 per share. However, you can still obtain a piece of the company's stock by using the popular app, which lets you buy shares of stock for any amount you choose to spend.
A fine strategy further afield
Of course, you are not restricted to the stock market.
There are actual assets that have endured all types of interest-rate changes and still produced returns that exceeded the market.
According to the Citi Global Art Market chart, modern artwork has outpaced the S&P 500 by a whopping 174% over the last 25 years.
Investing in the fine art of artists like Banksy and Andy Warhol used to be reserved for the super-rich. But thanks to a new investment platform, you too can invest in great works of art in the same way that Jeff Bezos and Bill Gates do.