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Goldman Sachs sees bargaining position after price crash: “Overreaction”

The pressure on growth stocks has gone too far and given rise to a golden opportunity to pick up future winners to “values ​​not seen in six, seven years”. This is what Goldman Sachs CEO Luke Barrs claims, who in an interview with Di points out where investors according to him can currently find gold nuggets at a sale price. “The correction we have seen has, in our opinion, been an overreaction,” he says.Published: 13 April 2022, 09:33

Text The American investment bank Goldman Sachs entered 2022 with a positive view of the stock market. Since then, a lot has happened, not least with the outbreak of war in Ukraine. However, the bank has continued to outweigh equities in its allocation, says Luke Barrs, head of equities responsible for Europe, the Middle East and Africa. “We are a little more conservative when we look on risk assets for the rest of the year. But we still find the values ​​attractive and we still believe that profit growth in most cases will land around medium-high single-digit numbers, ”he says.If the timeline is drawn brightens the outlook further, according to the share manager. “Geopolitical events will probably play a major role in market development in the short term. But over the next three to five years, we have an incredibly positive outlook, given the entry level that now exists in many high-quality assets. ”Not least, Luke Barrs sees a golden buying position in what he calls“ innovative growth companies ”. He says that although it is natural that highly valued growth companies have taken a beating due to rising interest rates but that the market has gone too far. “The correction we have seen has, in our opinion, been an overreaction. Several tech companies, especially capital-light companies in, for example, e-commerce, energy conversion and cleantech as well as biotechnology, have seen their values ​​plummet by 40–50 percent. At the same time, the fundamentals, regardless of whether you look at sales or profit growth, remain robust, ”says Luke Barrs. According to him, the classic distinction between value and growth companies is too blunt. Instead, it is important to choose the companies in the latter category that really have the opportunity to deliver in the future, he says. “When we talk about growth companies in the true sense of the word companies that can deliver significant growth on both the first and last line based on structural trends it is a much narrower category. Then it is typically about companies that have disruptive and innovative technology “, says Luke Barrs.He does not want to recommend some specific stocks, but instead points out several areas in which he believes that investors now have the opportunity to pick up innovative growth companies to “values ​​not seen in six, seven years.” “On the hardware side, it is the semiconductor industry that we find most interesting. We have and have had disruptions in supply chains, which has led to prices reaching attractive levels. And semiconductors are fundamental to virtually every major technological trend we see coming. “The CEO also emphasizes that Asia’s great dominance in the semiconductor field is now a critical focus area for the West.” in Asia is a significant geopolitical and macroeconomic risk. The large investments that are now being made to build up domestic capacity can lead to a very interesting supercycle. ”Luke Barr also sees great investment opportunities in the software sector, not least when it comes to so-called saas companies that have recurring income. He points out that wage inflation, which is so far mainly felt in the United States, gives companies an increased incentive to invest in technology that increases productivity per employee. ”Then it is also the case that many companies paused their major technology development and infrastructure projects it was mostly about surviving. But now companies are starting to return to the projects and look at their long-term strategies, ”says Luke Barrs.He also tracks that company who succeed in meeting the consumption needs of the so-called “millennial” generation people born from the early 1980s until the turn of the millennium have a future ahead of them. There, e-commerce and digital payment solutions are two clear trends, according to the share manager. “Admittedly, many such companies now face tough comparative figures because some growth came earlier with the pandemic. This has led to the values ​​being adjusted downwards. But overall, the penetration rate is still fairly low and we see great opportunities ahead “, says Luke Barrs.Adam Hillerbrand Rune


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