A Goldman Sachs equity strategist has identified a new investment strategy that could help ride out market volatility: “HALO” stocks, where “HALO” stands for “Heavy Assets, Low Obsolescence”.
What’s Driving the HALO Trend
The concept of HALO stocks is simple: invest in companies with substantial, hard-to-replace assets and those that can maintain their value over time. Examples of such sectors include healthcare, renewable energy, and semiconductor manufacturing.
Goldman Sachs strategist David Kostin believes that HALO stocks are primed to emerge as “structural winners” in the market. They’re the companies that can withstand the test of time, even in a rapidly changing economic landscape. “These are the companies that will continue to deliver returns, regardless of what the market throws at them,” says Kostin.
Why HALO Stocks Are Attractive
The appeal of HALO stocks lies in their ability to provide a stable source of income, even in a recession. Unlike companies with intangible assets or cyclical businesses, HALO stocks are less susceptible to market fluctuations. “These are the companies that have a moat around their business, making it difficult for others to compete,” says Kostin.
Some examples of companies that fit the HALO criteria include Johnson & Johnson, a healthcare giant with a diverse portfolio of medical devices and pharmaceuticals, and Siemens, a leading manufacturer of industrial equipment and renewable energy solutions.
What This Means for Investors
For investors looking to build a long-term portfolio, HALO stocks offer an attractive option. By focusing on companies with substantial, hard-to-replace assets and those that can maintain their value over time, investors can mitigate risk and potentially reap higher returns.
