There are two trains of thought on Wall Street about the direction of the market and the economy. One is basically that we are now in a bear market rally, and when the current strength the market has seen to start the year rolls over, we likely retest the lows we put in last summer. The other is that interest rate hikes are close to being over, the consumer has been resilient, the economy will not be as bad as people think and there is a possibility for what is called a soft landing.
A soft landing in the business cycle is the process of an economy shifting from growth to slow growth to potentially flat as it approaches but avoids a recession. It is usually caused by government attempts to slow inflation, which is of course what the Federal Reserve has done over the past year by raising the federal funds rate from 0% to 4.25% to 4.50%.
A new Goldman Sachs research report highlights the stocks the firm feels will do well in a soft or hard landing. Note that the strategists at the bank are not as negative as others on Wall Street, and the report said this:
For 2023, most investors expect the US will enter a recession at some point during the year, and most economists have a similar forecast. In contrast, Goldman Sachs economists believe the US will avoid a recession and assign only a 1/3 probability of a downturn. Recent labor and inflation data support the soft landing thesis. But prudent investors should at least consider the implications if a hard landing transpires.
The analysts identified 66 companies that should outperform in a soft landing environment. We screened those companies and found six top stocks that are Buy rated at Goldman Sachs and come with dependable dividends. It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
Blue Owl Capital
Goldman Sachs team is quite positive on this asset management company, as the stock is on the firm’s Conviction List of top stock picks. Blue Owl Capital Inc. (NYSE: OWL) offers permanent capital base solutions that enable it to offer a holistic platform to middle market companies, large alternative asset managers and corporate real estate owners and tenants.
The company provides direct lending products that offer private credit products comprising diversified, technology, first lien and opportunistic lending to middle-market companies. Its GP capital solutions products offer capital solutions, including GP minority equity investments, GP debt financing and professional sports minority investments to large private capital managers. Its real estate products are focused on structuring sale-leaseback transactions, which includes triple net leases.
Blue Owl Capital offers its solutions through permanent capital vehicles, as well as long-dated private funds.
Investors receive a 3.58% dividend. The Goldman Sachs price target is $15, and the consensus target is $15.30. Tuesday’s last trade was for $12.54 a share.
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