Goldman Sachs' 16 Stocks to Sell Amid Rising Uncertainty in 2016

Goldman Sachs expects "rising uncertainty" to affect the markets in the second half of 2016 and says investors should be cautious of stocks in the energy, materials and industrial sectors. The investment firm expects the S&P 500 to be "range-bound" for the remainder of the year, with the Index closing out the year at 2100.

"Our updated sector recommendations are driven by our expectation that 2H 2016 will be an environment of rising uncertainty, 'lower for longer' interest rates, high equity valuations, and downside risks characteristic of a late-cycle market," Goldman analyst David Kostin wrote in the July 5 note.

To help offset the uncertainty in the back half of 2016, Goldman Sachs says investors should be underweight the energy, materials and industrial sectors, opting instead for stocks within the three defensive sectors of consumer discretionary, health care and telecom services.

The report noted that while energy and materials sectors have outperformed in 2016 as commodity prices rebounded in the first half of the year, the firm forecasts "little further appreciation in the remainder of the year as global demand remains weak relative to large supply."

The industrials sector has also outperformed this year, but "prospects look less favorable going forward," Goldman's Kostin wrote. "The sector is deeply cyclical and trades expensive relative to likely growth, an unfavorable combination in the current late cycle macro environment."

Here are the 16 S&P 500 stocks Goldman Sachs rates sell within the energy, materials and industrial sectors.

Murphy Oil
Murphy Oil

Sector: Energy/Oil & Gas Exploration & Production
Dividend Yield: 5.10%

Goldman Sachs has a price target of $22 on Murphy Oil (MUR - Get Report) .

Murphy Oil is expected to report second-quarter financial results on July 27. Analysts forecast the oil and gas exploration and production company to post a loss of 45 cents a share on revenue of $477 million, a decrease of 35% year over year, according to Thomson Reuters.

Occidental Petroleum
Occidental Petroleum

Sector: Energy/Integrated Oil & Gas
Dividend Yield: 3.92%

Goldman Sachs has a price target of $67 on Occidental Petroleum (OXY - Get Report) .

Occidental Petroleum is expected to report second-quarter financial results on Aug. 3. Analysts forecast the Houston-based oil and gas company to post a loss of 18 cents a share on revenue of $2.48 billion, a decrease of 29% year over year, according to Thomson Reuters.

Occidental Petroleum is a holding in Jim Cramer's Action Alerts PLUS charitable trust portfolio. Cramer and Jack Mohr, Action Alerts Research Director wrote in a recent weekly commentary:

Occidental remains one of the premier companies in the E&P space. While the energy sector has been volatile throughout year, OXY boasts many growth assets that push it ahead of its peers and allow it to continue to produce at lower costs. The Permian Basin has been an extraordinary complement to the company's other operations and we look for it to continue to take on a larger role. We still view OXY's dividend as safe and believe its relative attractiveness has only grown in this increasingly uncertain market environment. With oil reaching some semblance of stability in recent weeks, volatility in OXY has become more predictable. That being said, we still expect shares to be range-bound as investors adjust to the new era of oil and as Brexit implications on the oil market are further digested.

Phillips 66
Phillips 66

Sector: Energy/Oil & Gas Refining & Marketing
Dividend Yield: 3.20%

Goldman Sachs has a price target of $71 on Phillips 66 (PSX - Get Report) .

Phillips 66 is expected to report second-quarter financial results on July 29. Analysts forecast the Houston-based energy company to post a profit of $1.34 a share on revenue of $25.54 billion, a decrease of 12% year over year, according to Thomson Reuters.

Transocean
Transocean

Sector: Energy/Oil & Gas Drilling
Dividend Yield: n/a

Goldman Sachs has a price target of $7.75 on Transocean (RIG - Get Report) .

Transocean is expected to report second-quarter financial results in early August. Analysts forecast the offshore drilling company to breakeven for the quarter on revenue of $926 million, a decrease of 51% year over year, according to Thomson Reuters.

Boeing
Boeing

Sector: Industrials/Aerospace & Defense
Dividend Yield: n/a

Goldman Sachs has a price target of $100 on Boeing (BA - Get Report) .

Boeing is expected to report second-quarter financial results in early August. Analysts forecast the aircraft manufacturer to post a profit of $2.16 a share for the quarter on revenue of $23.23 billion, a decrease of 5% year over year, according to Thomson Reuters.

Rockwell Collins
Rockwell Collins

Sector: Industrials/Aerospace & Defense
Dividend Yield: n/a

Goldman Sachs has a price target of $71 on Rockwell Collins (COL) .

Rockwell Collins is expected to report fiscal third-quarter financial results on July 25. Analysts forecast the avionics and IT systems company to post a profit of $1.58 a share for the quarter on revenue of $13.47 billion, an increase of 4% year over year, according to Thomson Reuters.

Dun & Bradstreet
Dun & Bradstreet

Sector: Industrials/Research & Consulting Services
Dividend Yield: 1.58%

Goldman Sachs has a price target of $98 on Dun & Bradstreet (DNB) .

Dun & Bradstreet is expected to report second-quarter financial results in early August. Analysts forecast the business data and analytics company to post a profit of $1.18 a share for the quarter on revenue of $395 million, an increase of 3% year over year, according to Thomson Reuters.

Emerson Electric
Emerson Electric

Sector: Industrials/Electrical Components & Equipment
Dividend Yield: n/a

Goldman Sachs has a price target of $44 on Emerson Electric (EMR - Get Report) .

Emerson Electric is expected to report fiscal third-quarter financial results on Aug. 2. Analysts forecast the St. Louis-based company to post a profit of 85 cents a share for the quarter on revenue of $5.34 billion, a decrease of 3% year over year, according to Thomson Reuters.

Flowserve
Flowserve

Sector: Industrials/Industrial Machinery
Dividend Yield: n/a

Goldman Sachs has a price target of $37 on Flowserve (FLS - Get Report) .

Flowserve is expected to report second-quarter financial results at the end of July or early August. Analysts forecast the Texas-based flowcontrol system manufacturer to post a profit of 61 cents a share for the quarter on revenue of $1 billion, a decrease of 14% year over year, according to Thomson Reuters.

W.W. Grainger
W.W. Grainger

Sector: Industrials/Trading Companies & Distributors
Dividend Yield: 2.16%

Goldman Sachs has a price target of $203 on W.W. Grainger (GWW - Get Report) .

Grainger is expected to report second-quarter financial results on July 19. Analysts forecast the Illinois-based industrial supply company to post a profit of $3.19 a share for the quarter on revenue of $2.58 billion, an increase of 3% year over year, according to Thomson Reuters.

Jacobs Engineering
Jacobs Engineering

Sector: Industrials/Construction & Engineering
Dividend Yield: n/a

Goldman Sachs has a price target of $40 on Jacobs Engineering (JEC - Get Report) .

Jacobs Engineering is expected to report fiscal third-quarter financial results at the end of July or early August. Analysts forecast the company to post a profit of 75 cents a share for the quarter on revenue of $2.79 billion, a decrease of 4% year over year, according to Thomson Reuters.

Parker Hannifin
Parker Hannifin

Sector: Industrials/Industrial Machinery
Dividend Yield: n/a

Goldman Sachs has a price target of $91 on Parker Hannifin (PH - Get Report) .

Parker Hannifin is expected to report fiscal fourth-quarter financial results in early August. Analysts forecast the company to post a profit of $1.75 a share for the quarter on revenue of $2.93 billion, a decrease of 7% year over year, according to Thomson Reuters.

United Rentals
United Rentals

Sector: Industrials/Trading Companies & Distributors
Dividend Yield: n/a

Goldman Sachs has a price target of $58 on United Rentals (URI - Get Report) .

United Rentals is expected to report second-quarter financial results later this month. Analysts forecast the equipment rental company to post a profit of $1.82 a share for the quarter on revenue of $1.4 billion, a decrease of 2% year over year, according to Thomson Reuters.

Ecolab
Ecolab

Sector: Materials/Specialty Chemicals
Dividend Yield: 1.19%

Goldman Sachs has a price target of $103 on Ecolab (ECL - Get Report) .

Ecolab is expected to report second-quarter financial results on Aug. 2. Analysts forecast the water, hygiene and energy technologies and services company to post a profit of $1.08 a share for the quarter on revenue of $3.32 billion, a decrease of 2% year over year, according to Thomson Reuters.

Monsanto
Monsanto

Sector: Materials/Fertilizers & Agricultural Chemicals
Dividend Yield: 2.20%

Goldman Sachs has a price target of $92 on Monsanto (MON) .

Monsanto recently rejected a $66 billion takeover offer by Bayer. The seed and fertilizer company reported disappointing fiscal third-quarter results on June 29.

Owens-Illinois
Owens-Illinois

Sector: Materials/Metals & Glass Containers
Dividend Yield: n/a

Goldman Sachs has a price target of $18 on Owens-Illinois (OI - Get Report) .

Owens-Illinois is expected to report second-quarter financial results on July 27. Analysts forecast the glass container manufacturer to post a profit of 63 cents a share for the quarter on revenue of $1.73 billion, an increase of 12% year over year, according to Thomson Reuters.

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