Tesla may profit from economic ’soft landing’: Goldman Sachs

Because the Federal Reserve hopes to engineer a “soft landing,” effectively steering the economy clear of recession while maintaining inflation, firms like Tesla may benefit greatly. A lot so, in reality, that one investment firm has chosen Tesla amongst a listing of firms that could possibly be well-poised if the Fed succeeds.

Above: A Tesla Model Y. (Image: Makara Heng / Pexels)


Tesla is one among 46 firms to make a recent Goldman Sachs list of stocks that might profit from Fed hopes for a soft landing, following recent rate of interest hikes, in accordance with The Street. The list focuses on firms with over $5 billion in market capitalization in cyclical industry groups, with a number of other stipulations for inclusion.


The Altman z-score index determines how close firms are to bankruptcy, with higher scores representing lower probabilities of bankruptcy. The list from Goldman Sachs includes Russell 3000 firms which are profitable with Altman z-scores below their 10-year median. It excludes some energy-specific firms and others which have outperformed their larger industry groups since 2021, though Tesla is taken into account diversified enough to be included.


The Goldman Sachs list includes many capital goods and diversified financial stocks, all with a median market cap of $10 billion. One fellow diversified tech stock included on the list was fellow tech stock AMD, alongside other noteworthy stocks akin to Capital One Financial, 3M, Parker Hannifin and several other others.


Morningstar analyst Seth Goldstein recently noted Tesla’s durable competitive advantage by giving the corporate a “narrow moat,” placing the fair value on the automaker’s stock at $220 — up 80 percent from the corporate’s January 3 trades at $122. Goldstein identified the corporate’s lower-than-expected deliveries in Q4 2022, still predicting long-term growth.


“Nonetheless, fourth-quarter deliveries still grew 31 percent yr over yr, which we view as an indication that demand remains to be present, and the corporate can still grow,” Goldstein wrote in a commentary.


“Accordingly, we forecast over 1.6 million vehicles delivered in 2023, a 24% growth rate. [Further,] our long-term assumptions remain intact. We forecast over 5 million vehicles [in annual deliveries] by 2031, as Tesla launches the Cybertruck and recent inexpensive vehicle platform.”


A Tesla spokesperson in Germany recently said that the automaker’s price cuts were resulting from “a partial normalization of cost inflation,” in accordance with Automotive News, and echoing recent similar sentiments from an executive in China.


“At the top of a turbulent yr with interruptions to the provision chain, we’ve got achieved a partial normalization of cost inflation, which supplies us the boldness to pass this relief onto our customers,” the spokesperson said.


Calming inflation and job growth are welcome signs for investors and economists alike, and a few think the Fed could also be seeing signs of a soft landing as these aspects ease. Tesla and the opposite Goldman Sachs-list-included stocks could possibly be prepared to face in interesting 2023, with many predicting a successful soft landing to spur on continued growth.




Source: The Street / Automotive News

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