Welcome to Extreme Investor Network, where we provide expert insights and analysis to help you make informed investment decisions. Today, we’re discussing a recent report from Goldman Sachs that highlights the importance of considering companies with high levels of capital expenditure and research and development expenses.
According to Goldman Sachs, companies that are investing heavily in their own growth have the potential to outperform in a strong economy. This year, companies focusing on capex and R & D have outperformed those focused on returning cash to shareholders through buybacks and dividends by 2 percentage points.
But what exactly does this mean for investors? Well, capital expenditure, or capex, refers to a company’s big, long-term expenses such as equipment, machinery, and buildings. On the other hand, research and development, or R & D, encompasses the expenses associated with creating new products or services.
David Kostin, Goldman’s head of U.S. equity strategy, notes that companies prioritizing capex and R & D have historically outperformed during periods of strong economic growth. With global manufacturing data on the rise and confidence in continued growth, now may be a prime opportunity to consider companies investing in growth.
Goldman has identified several companies in the S & P 500 with the highest percentage of capex and R & D per market cap. Among them are travel names like Norwegian Cruise Line, United Airlines, American Airlines, and Delta Air Lines, as well as tech companies like Meta Platforms, Intel, HP, and Western Digital.
In conclusion, investing in companies that are prioritizing growth through capital expenditure and research and development could be a strategic move in a thriving economy. Stay tuned to Extreme Investor Network for more expert insights and investment opportunities.
