The old saying is that you have to spend money to make money.
That’s abundantly true in the equity market, where companies that sink considerable capital back into their businesses frequently see their stocks rewarded further down the line.
But investing for future growth is easier said than done. After all, many traders are impatient and want to see bottom lines swell right this instant. It’s the sort of pressure that can dissuade some companies from thinking about the long-term picture.
But according to Goldman Sachs, corporations that are investing in the future are actually outperforming the market. The firm has constructed a basket of stocks that possess a high growth investment ratio, and it has handily beaten the benchmark S&P 500 in 2018.
The index consists of the companies with the highest ratio of three-year capital expenditure and research-and-development spending, as a share of cash flow from operating activities.
And to make matters even more enticing for potential buyers of the stocks in this index, these types of companies should theoretically be able to turn that reinvestment into robust earnings growth further down the line. Considering that profit expansion has been the foremost driver of gains throughout the bull market, this is an attractive attribute.
Without further ado, here are the 17 stocks Goldman says have poured the most money into future growth over the past three years, ranked in increasing order of three-year growth investment ratio.
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