David Kostin chief U.S. equity strategist at Goldman Sachs is maintaining his 1,250 year-end target. He thinks the consensus estimate for fourth quarter earnings are too high and that earnings growth will be minimal at $100 per share this year, and $106 next year.
However, he did identify a few stock that everyone should keep an eye on.
In an interview with CNBC’s Gary Kaminsky, Kostin draws on stocks that constantly appear on the top of hedge funds’ lists:
“When we look at the ownership of 7,000 different stock positions going back over the last 10 years looking at this every 90 days. What do we find? We find that there’s a couple of ways to look at hedge fund ownership. One is concentrated ownership; that’s where hedge funds own a significant 30, 40, 50 per cent of shares outstanding.
The other way to think about it is the positions that matter most to the results and performance of a hedge fund. …That’s going to be a company like Apple which is among the top 10 positions of many, many, many funds. When you go through the ownership of each fund what you’ll find is that consistently these stocks appear among their top holdings.”
Kostin said these were the five most important stocks based on that latter definition.
- Express Scripts
Kostin also said that the consumer discretionary and technology sectors offer the best stock picking opportunities. Also, stocks like Amazon, Johnson & Johnson, McDonald’s, Wal-Mart are being dropped by hedge funds.