Top Stocks Goldman Sachs Is Buying

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 |  Includes: ACN, COG, EMR, MOS, MRK, PPL, PRU
by: The Analyst Hub

Goldman Sachs (NYSE:GS) group manages more than $100 bn in equities primarily through its asset management subsidiary Goldman Sachs Asset Management. The firm manages the Goldman Sachs series of funds apart from other series of mutual funds and caters to individuals and institutions.

Investment Strategy: Goldman Sachs Asset Management US employs various investment styles including growth, value and international strategies. The firm diversifies portfolios across all market caps, geographic location and industries. Goldman Sachs Asset Management utilizes fundamental analysis in allocating assets and selecting stocks. For the value investments, the firm invests in quality companies selling at an attractive valuation. Goldman Sachs Asset Management seeks businesses with sustainable operating fundamentals, competitive advantage, strong cash flow and balance sheets, ability to earn above their cost of capital and excellent stewardship of capital. The growth portfolios invests in high quality companies that exhibits strong business franchise, experienced management team, sustainable competitive advantage and favourable long-term prospects.

The following is a list of its top buys in the last quarter, as released in its most recent 13F filing with the SEC.

Stock

Symbol

Shares Held - 03/31/2011

Shares Held - 06/30/2011

Change in shares

Mosaic Co.

MOS

289925

6262115

5972190

PPL Corporation

PPL

7347204

19876405

12529201

Emerson Electric Co.

EMR

4273854

9198295

4924441

Merck & Co. Inc.

MRK

18591753

24909116

6317363

Cabot Oil & Gas Corporation

COG

755414

3832681

3077267

Accenture Plc

ACN

3361690

6416390

3054700

Prudential Financial, Inc.

PRU

6845162

9718071

2872909

Click to enlarge

My favorite among the above stocks is Mosaic. I would recommend buying it despite of the broader macro concerns. The Mosaic Company is a producer and marketer of concentrated phosphate and potash crop nutrients for the global agriculture industry. It is a supplier of phosphate- and potash-based crop nutrients and animal feed ingredients.

During the last downturn in 2008, excess inventory in the supply chain coupled with anticipation of decline in fertilizer prices by farmers caused fertilizer producers and retailers to take a hit. However, the current situation is different. Due to the hit fertilizer retailers had taken in 2008, they were cautious this time and have not overstocked fertilizer inventories. Thus, supply chain remains very tight. Further, grain prices corrected very sharply along with other commodities during the last downturn. Thus, farmers anticipated that fertilizer prices will come down as well. I don't see a similar commodity correction this time given the excess amount of money supply that has entered the system thanks to bailouts, quantitative easing and stimulus. In particular, when we talk of food grains where demand is inelastic, the trend is likely headed up in the mid-long term even if we consider a prolonged recession scenario. Fertilizer prices are usually correlated with food prices and I believe fertilizer companies like Mosaic are the best bet in the long term to hedge one's portfolio against inflation in these recessionary times.

For other stocks in the above list, here are some of the specifics about these companies, including a brief description of their business and growth expectations (topline and bottomline):

PPL Corporation is an energy and utility holding company. Through subsidiaries, PPL generates electricity from power plants in the northeastern, northwestern and southeastern the United States, markets wholesale or retail energy primarily in northeastern and northwestern portions of the United States, delivers electricity to customers in Pennsylvania, Kentucky, Virginia, Tennessee, and the United Kingdom, and delivers natural gas in Kentucky. PPL's EPS forecast for the current year is $2.60 and next year is $2.48. According to consensus estimates, its top line is expected to grow 29.10% in the current year and 6.70% next year.

Emerson Electric Co. is a diversified global technology company. It is engaged in designing and supplying product technology and delivering engineering services and solutions in a range of industrial, commercial and consumer markets around the world. Emerson's EPS forecast for the current year is $3.23 and next year is $3.74. According to consensus estimates, its top line is expected to grow 15.60% in the current year and 8.60% next year.

Merck & Co., Inc. is a global healthcare company. Merck delivers health solutions through its prescription medicines, vaccines, biologic therapies, animal health, and consumer care products, which it markets through its joint ventures. Merck & Co. operates in four segments: the Pharmaceutical, Animal Health, Consumer Care and Alliances segments. Merck's EPS forecast for the current year is $3.73 and next year is $3.84. According to consensus estimates, its top line is expected to grow 3.60% in the current year and decline 1.30% next year.

Cabot Oil & Gas Corporation is an independent oil and gas company engaged in the development, exploitation and exploration of oil and gas properties located in the United States. Cabot's EPS forecast for the current year is $1.46 and next year is $2.80. According to consensus estimates, its top line is expected to grow 22.10% in the current year and 43.50% next year.

Accenture plc. is a management consulting, technology services and outsourcing company. Accenture's EPS forecast for the current year is $3.39 and next year is $3.80. According to consensus estimates, its top line is expected to grow 17.50% in the current year and 9.20% next year.

Prudential Financial, Inc. is a financial services company. It has operations in the United States, Asia, Europe, and Latin America. Through its subsidiaries, it offers an array of financial products and services, including life insurance, annuities, retirement-related services, mutual funds, investment management and real estate services. Prudential's EPS forecast for the current year is $6.84 and next year is $7.82. According to consensus estimates, its top line is expected to grow 27.70% in the current year and 7.40% next year.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.