Goldman Sachs found that just 50 worldwide companies currently offer long-term growth potential for investors. Of those, 12 were e-retailers or related IT companies.

Stock market rallies don’t last forever.

When the market begins to falter and investors start to look harder for growth opportunities, some e-commerce and related information technology (IT) stocks are among those worth considering, according to a report from Goldman Sachs.

Analysts at the giant investment banking, securities and investment management firm recently took a look at a global universe of more than 2,300 stocks covered by Goldman Sachs Global Investment Research and found only 50 that they labeled as good growth prospects based on the “Rule of Ten” framework introduced last year. More about that later.

Among the 50 stocks Goldman Sachs deemed likely to provide long-term—or “secular”—growth in the coming economic environment are five companies in the Internet Retailer 2017 Top 1000: Amazon.com Inc. (No. 1), ASOS PLC (No. 167), Wayfair Inc. (No. 16), Ulta Beauty (No. 119) and Yoox Net-a-Porter Group (No. 76).

Also included on the Goldman Sachs list are two companies ranked in the Internet Retailer Global 1000: JD.com (No. 2) and Anta Sports Products Ltd. (No. 264), both based in China.

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The e-commerce presence on the list goes even deeper because it includes several companies that are not retailers but nevertheless play an important role in e-commerce. They include online payment company PayPal Holdings Inc., Google’s parent company Alphabet Inc., advertising technology vendor Criteo SA, online consumer review platform Yelp Inc. and online travel company Expedia Inc.


Overall, Goldman Sachs says, global companies that sell “consumer discretionary” goods and services—those considered non-essential by consumers but desirable if their available income is sufficient to purchase them—represent 38% of the secular growth list, compared with 12% of the highly followed MSCI All-Country World Equity Index (MSCI AC World).

Also, IT companies represent 34% of the Goldman Sachs list, compared with just 18% of the MSCI AC World index.

Why is that important? For investors, a low-cost strategy for investing globally would be to buy into a mutual fund or other investment vehicle that simply replicates the MSCI AC World index. But, in its report, Goldman Sachs makes the case that investors looking for growth might want to bulk up on consumer discretionary and IT plays and make other tweaks.

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Of the 50 companies on the Goldman Sachs list, seven are classified by the investment bank as “internet and direct marketing retail” companies, which the report says represent a long-term shift away from traditional retailing. Also, 23 are based in the United States, the largest of any country, which the report says reflects “a high number of innovative, fast-growing technology companies.”

According to Goldman Sach’s Rule of Ten, a company is classified as a “secular grower” if:

  • It has realized sales growth of at least 10% in 2015 and 2016.
  • Forecast sales growth by Goldman Sachs is at least 10% in 2017 and 2018.
  • Consensus long-term earnings growth—a figure based on the combined estimates of the analysts covering each company—is at least 10%.

Goldman Sachs excludes companies below $2 billion in market capitalization, companies whose stocks are already in the top 20% of their region’s enterprise value-to-sales rankings and those with an average daily trading volume less than $10 million. Goldman Sachs also excludes financial, real estate and utility companies from its analysis.

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