Goldman Sachs recently put out a report, and continue to follow it up, in which they aggressively recommend overweighting US companies that have high sales exposure to BRIC economies, as they have been outperforming the market and are expected to continue to do so.
The basis of this is Goldman's outlook for growth in the BRICs next year. GS expects BRICs combined GDP to grow by 8.7% vs. the consensus 7.2%, with China and India leading the way. For China and India, Goldman's outlook for growth is also more aggressive with China registering 11.9% and India 7.2% in 2010.
Goldman's BRICs hit list of 50 companies makes the case, with Year-To-Date performance of 43% vs. 17% for the S&P 500. Its hard to argue with Goldman, given that they rule the BRICs trade, and to their credit, coined it themselves.
Goldman said:
We favor exposure to Brazil, Russia, India and China (BRICs) over developed markets given the significantly higher GDP growth outlook. We believe investors should use this basket to identify stocks with high exposure to emerging market growth. Long/short investors should consider buying this basket against the S&P 500 to gain exposure to higher growth in the BRICs countries versus slower growth in developed regions.
In its morning notes yesterday GS said:
BRICs-exposed companies outperform during earnings season Our basket of 50 stocks with high sales exposure to BRICs economies has posted stronger sales growth and surprises than the S&P 500 during the past 10 earnings seasons. We believe this outperformance will continue.
Here is Goldman's list:
Download the GS Slideshow: goldman-research-where-to-invest.
