A Goldman Sachs stock portfolio that tracks industry-dominant “superstar” companies in the United States is beating the stock market over the last three years.
Among the stocks on the list: Procter & Gamble, which dominates consumer products, Altria Group, which dominates tobacco, along with Google parent Alphabet and PepsiCo. These companies often benefit from a high share of industry sales, strong pricing power and fat profit margins — all of which contribute to a compelling investment thesis, Goldman’s chief U.S. equity strategist, David Kostin, wrote Tuesday.
The stock strategist added that companies with the highest share of industry sales have returned 49% since 2015 compared with 16% for companies with the lowest share after controlling for industry group.
“The market positioning of superstar firms often allows for greater bargaining power over consumers and workers and higher profitability,” Kostin said in a note to clients. “Superstar firms have been one driver of the explosion in US corporate margins post-crisis.”