Goldman’s High Growth Investment ratio stocks: EA, AMZN, FANG, etc

Goldman Sachs analysts put together a basket of stocks with the highest growth investment ratio.

They define “growth investment ratio” as trailing three-year capital expenditures minus depreciation and plus research and development expenses as a share of its cash flow from operations.

In a recent note, Goldman analysts said that they expect S&P 500 (SP500) cash spending to grow by 8% this year to $3.6T, and 11% next year to $4T.

In addition, 47% of spending will be allocated to capex and R&D, 45% to buybacks and dividends, and 8% to cash mergers and acquisitions.

R&D is expected to grow by 9% in 2025, “driven by solid earnings growth and a supportive economic environment,” said David J. Kostin, chief U.S. equity strategist, in a note.

This, however, is a deceleration from the pace of the first half of the year of 13% along with decelerating sales growth, “but a convergence back towards the pre-pandemic average of 8%.”

These are the constituents of the “high growth investment ratio” basket, with data as of Oct. 17, and organized by sector:

Communication services

• Electronic Arts (EA) – Three-year growth investment ratio: 106%
• Meta Platforms Inc. (META) – Three-year growth investment ratio: 83%
• Alphabet Inc. (GOOGL) – Three-year growth investment ratio: 62%
• Match Group Inc. (MTCH) – Three-year growth investment ratio: 40%
• Verizon Communications (VZ) – Three-year growth investment ratio: 9%

Consumer discretionary

• Amazon.com Inc. (AMZN) – Three-year growth investment ratio: 137%
• Norwegian Cruise Line Holdings (NCLH) – Three-year growth investment ratio: 111%
• Carnival Corp. (CCL) – Three-year growth investment ratio: 109%
• Garmin Ltd. (GRMN) – Three-year growth investment ratio: 85%
• Royal Caribbean Group (RCL) – Three-year growth investment ratio: 73%
• eBay Inc. (EBAY) – Three-year growth investment ratio: 71%

Consumer staples

• Lamb Weston Holdings (LW) – Three-year growth investment ratio: 61%
• Dollar Tree Inc. (DLTR) – Three-year growth investment ratio: 40%
• Constellation Brands (STZ) – Three-year growth investment ratio: 33%

Energy

• Diamondback Energy (FANG) – Three-year growth investment ratio: 38%
• Hess Corp. (HES) – Three-year growth investment ratio: 33%

Health care

• Incyte Corp. (INCY) – Three-year growth investment ratio: 379%
• Moderna Inc. (MRNA) – Three-year growth investment ratio: 196%
• Vertex Pharmaceuticals (VRTX) – Three-year growth investment ratio: 196%
• Eli Lilly & Co. (LLY) – Three-year growth investment ratio: 194%
• Insulet Corp. (PODD) – Three-year growth investment ratio: 168%
• Merck & Co. Inc. (MRK) – Three-year growth investment ratio: 114%
• Biogen Inc. (BIIB) – Three-year growth investment ratio: 107%

Industrials

• Boeing Co. (BA) – Three-year growth investment ratio: 292%
• Axon Enterprise (AXON) – Three-year growth investment ratio: 172%
• Uber Technologies (UBER) – Three-year growth investment ratio: 85%
• Southwest Airlines (LUV) – Three-year growth investment ratio: 71%
• Commins Inc. (CMI) – Three-year growth investment ratio: 67%

Information technology

• Western Digital (WDC) – Three-year growth investment ratio: 532%
• Intel Corp. (INTC) – Three-year growth investment ratio: 205%
• First Solar Inc. (FSLR) – Three-year growth investment ratio: 129%
• Cadence Design Systems (CDNS) – Three-year growth investment ratio: 112%
• Synopsys Inc. (SNPS) – Three-year growth investment ratio: 108%
• Advanced Micro Devices (AMD) – Three-year growth investment ratio: 92%
• Zebra Technologies (ZBRA) – Three-year growth investment ratio: 92%
• Palantir Technologies (PLTR) – Three-year growth investment ratio: 82%
• QUALCOMM Inc. (QCOM) – Three-year growth investment ratio: 82%
• Trimble Inc. (TRMB) – Three-year growth investment ratio: 80%
• F5 Inc. (FFIV) – Three-year growth investment ratio: 73%
• Autodesk Inc. (ADSK) – Three-year growth investment ratio: 70%
• Keysight Technologies (KEYS) – Three-year growth investment ratio: 69%
• NetApp Inc. (NTAP) – Three-year growth investment ratio: 68%
• GoDaddy Inc. (GDDY) – Three-year growth investment ratio: 66%
• Oracle Corp. (ORCL) – Three-year growth investment ratio: 65%
• Teradyne Inc. (TER) – Three-year growth investment ratio: 63%
• Texas Instruments (TXN) – Three-year growth investment ratio: 61%
• Seagate Tech Holdings (STX) – Three-year growth investment ratio: 60%

Utilities

• AES Corp. (AES) – Three-year growth investment ratio: 182%
• PG&E Corp. (PCG) – Three-year growth investment ratio: 136%

Materials

• Albemarle Corp. (ALB) – Three-year growth investment ratio: 112%