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Goldman Sachs'(GS) latest "Conviction List" for the Americas, a roster of "buy"-rated U.S. stocks, highlights
11 consumer companies with upside of as much as 55% in the coming year.
Goldman's research team is more upbeat than its economists, who have a bleak outlook for 2012 in calling for a
little-changed S&P 500 Index and economic growth of a mere 1.5%.
But its analysts said that certain sectors, including select consumer cyclical stocks, have "attractive risk/reward," and should handily beat the broader market.
That's because improving employment trends, moderating prices, and an inability of Americans to defer some purchases any longer have been bolstering consumer spending. For example, one gauge of U.S. consumer confidence last week rose to a six-month high and online holiday sales have already surged 15% from last year, to almost $25 billion.
This is the season when investment banks, strategists and fund managers make their picks for the following year. If there's been one thread, it's that consumer stocks are poised to rebound.
S&P Capital IQ expects the economy to strengthen in what is
one of the most bullish assessments.
The research firm says certain industries tend to lead in the period following an economic slump. Those are consumer discretionary stocks, which outperformed the broader market 100% of the time, with an average gain of 29.5% within six months of the market bottom; followed by information technology, 80% of the time, with an average increase of 30%; industrials, 80% of the time, with a 26% advance; and materials, 80% of the time, with a 24.8% gain.
There have been poor performers this year that have room to run in 2012. According to
TheStreet analyst Lindsey Bell, brewer
Molson Coors Brewing(TAP), carmaker
Ford(F) and toy company
Hasbro(HAS) would be consumer shares
to gain the most from an upturn in the economy.
Even financial shares, which have been in the dog house for most of this year, may be
more prosperous in 2012. William Blair, a Chicago-based investment bank, has selected credit card firm
Visa(V), insurance broker
AON(AOC) and check-cashing company
DFC Global(DLLR) in favor of the big global banks to lead the financial sector next year.
As for Goldman Sachs, its global equity strategy unit has its own set of picks for the coming year that may differ from the "conviction buy" list, as they are based on different criteria. Besides consumer stocks, Goldman has in the past six months put drugmaker
Pfizer(PFE), business-software company
Great Plains Energy(GXP) and construction-equipment maker
Caterpillar(CAT) on its "Conviction List."
In inverse order of potential upside appreciation, here are Goldman Sachs' 2012 consumer cyclical sector stock picks, which have an average gain of 16.9% for this year: