As the Federal Reserve hopes to secure a “soft landing” that effectively steers the economy out of a recession while lowering inflation, companies like Tesla could benefit greatly — so much so that an investment firm picked Tesla from a list of companies that did could be well-armed if the Fed succeeds.
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Tesla is one of 46 companies that have compiled an updated list of Goldman Sachs stocks that would benefit from the Fed’s hopes of a soft landing following recent rate hikes, according to The Street. The list focuses on companies with a market capitalization above $5 billion in cyclical industry groups, with some other conditions for inclusion.
The Altman Z-Score index determines how close companies are to bankruptcy, with higher scores representing lower chances of bankruptcy. Goldman Sachs’ list includes Russell 3000 companies that are profitable with Altman Z-Scores below their 10-year median. It excludes some energy-specific companies and others that have outperformed their larger industry groups since 2021, although Tesla is considered diversified enough to be included.
Goldman Sachs’ list includes many capital goods and diversified financial stocks, all with a median market cap of $10 billion. Another diversified tech stock on the list was tech stock AMD, alongside other notable stocks such as Capital One Financial, 3M, Parker Hannifin, and several others.
Morningstar analyst Seth Goldstein recently noted Tesla’s enduring competitive advantage, giving the company a “narrow moat” and setting the automaker’s stock to be a fair value of $220 — an 80 percent increase from when it was traded company on January 3 at $122. Noting the company’s lower-than-expected shipments in the fourth quarter of 2022, Goldstein continued to forecast long-term growth.
“However, fourth-quarter shipments were still up 31 percent year over year, which we take as a sign that demand is still there and the company still has room to grow,” Goldstein wrote in a comment.
“Accordingly, we forecast over 1.6 million vehicles delivered in 2023, a growth rate of 24%. [Further,] our long-term assumptions remain intact. We forecast over 5 million vehicles [in annual deliveries] by 2031 when Tesla launches the Cybertruck and a new affordable vehicle platform.”
A Tesla spokesman in Germany recently said that the automaker’s price cuts were due to “a partial normalization of cost inflation,” according to Automotive News, echoing similar views from an executive in China.
“At the end of a turbulent year of supply chain disruptions, we have achieved partial normalization in cost inflation, giving us the confidence to pass this relief on to our customers,” the spokesman said.
A slowdown in inflation and job growth are welcome signs for investors and economists alike, and some believe the Fed could see signs of a soft landing as these factors ease. Tesla and the others on Goldman Sachs’ list could be poised for an interesting 2023, with many predicting a successful soft landing to fuel continued growth.
Originally posted on EVANNEX. Written by Peter McGuthrie.
Related story: Tesla could be the top seller of US vehicles by the end of next year
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