Goldman: You Must Buy Netflix and Nvidia

Goldman Sachs advised clients to invest in high-growth stocks like Netflix Inc. (NFLX) and Nvidia Corp. (NVDA).

That is because Goldman expects rising interest rates to depress earnings growth.  This in turn will place a premium on company valuations.

“The majority of the recent market rally has been driven by higher earnings rather than valuation expansion.  Going forward, we expect growth to continue to drive S&P 500 stock returns.  We expect that the prospect of 4 Fed rate hikes in 2018 will result in a forward P/E contraction.”

The firm highlighted companies that allocate 90% of cash flow from operations to fund growth initiatives.

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