⭐ Goldman Sachs' Highest Quality Stocks

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We hope you’re having a great week — let’s make this post a fun one.

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⚡️ Introduction:

Goldman Sachs (GS) recently updated its ‘highest quality stocks list’ — which is broken down by sector. They identified a lot of sectors, so we’ll have to break this list up into 2 or 3 posts.

These are large-cap stocks that have strong balance sheets, a history of stable sales and earnings growth, above-average return-on-equity, and low historical drawdown risk. These stocks also trade at a next-twelve-months price-over-earnings premium ranking that is in the top decile relative to history.

I’m going to share some of the most interesting companies from the first batch below — with their stock prices charted alongside metrics like earnings and free cash flow.

These charts are of course not the only thing that should be used as an investment thesis. However, they are a great way to identify potential opportunity.

If there’s any of these that you want me to double-click on — please drop a comment or respond to this email! That way I know which ones to comprehensively breakdown in our Week in Review editions for paid subscribers.

🌐 Communication Services (XLC)

• Alphabet Inc. (GOOG)

Very bullish on this company as their operating cash flow is expected to grow by double-digits in 2025 and 2026 — they also just declared a dividend!

• Charter Communication (CHTR)

This company’s stock price seems to follow their free cash flow pretty closely. As we can see above, their free cash flow is expected to increase by +7% in 2025 and +56% in 2026.

Assuming that takes place, there certainly could be some upside to be had from a stock price appreciation perspective. I’ll be adding this one to my watchlist.

• T-Mobile US Inc. (TMUS)

Double-digit operating cash flow growth is expected from T-Mobile next year, however, Wall Street is also expecting that growth to completely stagnate in 2026.

🚗 Consumer Discretionary (XLY)

• Tractor Supply (TSCO)

Tractor Supply has been in my dividend growth portfolio for a while now — as their stock price seems to generally trade with their operating cash flow. Looking forward, Wall Street is expecting +7% growth in 2025 and another +17% growth in 2026.

I remain a bullish shareholder.

• O’Reilly Automotive (ORLY)

This graph looks very interesting — over the last year or so ORLY stock seems to have traded too high, with it now coming back down to reality. I’ll add this company to my watchlist — if it begins to trade closer to the $900 range, I’ll be interested in buying.

💰 Financials (XLF)

• Intercontinental Exchange (ICE)

This chart is very interesting. It seems their stock price has traded alongside earnings for the last decade or so, with earnings to grow by +12% in 2025 and another +12% in 2026.

I’ll absolutely be adding this to my watchlist — and maybe even purchasing shares after I do more research!

• Truist Financial Corp. (TFC)

It seems like Truist Financial’s stock price moves generally in tandem with their earnings. Their 2025 and 2026 earnings are projected to grow by +11% and +17%, respectively.

However, with all of the friction and uncertainty happening with the Federal Reserve right now — I’m not at all excited about adding a bank stock to my portfolio.

🏥 Health Care (XLV)

• Zoetis Inc. (ZTS)

I want to do more research here, but on the surface it seems like this company is both 1) undervalued historically speaking and 2) Wall Street is expecting their earnings to grow by double-digits in 2025 and 2026.

This double-digit earnings growth seems like it would be a catalyst to drive their stock price closer to $230 / share range by the end of 2026 (+45% return in 2 years).

• UnitedHealth Group (UNH)

UnitedHealth Group recently went through a massive cybersecurity attack — which is why their stock price fell -$100 per share from $550 to $450 in only 3-months. However, the conflict has been resolved and it seems like the market is moving on from the matter.

UNH is expected to deliver +12% earnings growth in 2025, and another +13% in 2026 — this will likely cause their stock price to appreciate in value over the same period of time. I’m bullish.

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Disclaimer: This is not financial advice or recommendation for any investment. The content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice.