Goldman Forecasts Recession: Recommends Wal-Mart and Costco

A slowdown in consumer spending will likely tip the U.S. into a mild recession in the middle of this year, according to Goldman Sachs.

“A second-half margin recovery could be at risk if retailers do not plan prudently enough,” analyst Adrianne Shapira said in a note to clients.

She reduced her fiscal 2008 per share earnings estimates by an average of 12%. Sales and margins at department stores will be the hardest hit, she predicts, with a dip in per share earnings of 23%.

Discounters are “not immune,” she said, but per share earnings should be less pressured, with revised earnings per share down 5%. She recommends investors buy shares of Wal-Mart (WMT) and Costco (COST) to “maintain a defensive posture.”

Comments

[MartinLowenthal]

I was way ahead of these guys. I recommended these stocks in q3 last year. www.lompie.blogspot.co...