Goldman’s Lost Decade Forecast: These 3 Growth Stocks Can Win

Key Points

• Analysts at Goldman Sachs are now calling for flat market returns in the next decade, calling for growth stocks to come into play.
• Three companies stand out in their massive EPS projections by Wall Street analysts through EPS forecasts and price targets.
• Aligning with fundamental demand trends will help investors land more stability and growth in the coming years.

The stock market is about to undergo a major global shift. Over the next decade, the generational wealth accumulated over the past ten years may shift into a stagnant phase, resembling Japan’s "Lost Decade" for U.S. stocks. The reason behind this view is pretty clear, and investors will understand more about these impacts in just a minute.

Analysts at Goldman Sachs have now stated that they expect the broader S&P 500 index to only deliver an annualized return of 3% for the next ten years, meaning trouble for those who primarily dollar-cost-average (DCA) into indexes like the SPDR S&P 500 ETF Trust NYSEARCA: SPY. However, not all stocks are made equal in this prediction, which is why today’s list will be important to keep in the coming years.

Focusing on growth stocks can be the key to outperforming this lost decade scenario, where earnings per share (EPS) growth can significantly outpace the rate of growth in the S&P 500 and the overall economy. In this list, investors will find names like SoFi Technologies Inc. NASDAQ: SOFI as part of a real estate sector play, then Boeing Co. NYSE: BA as a turnaround in the transportation sector, and finally, Tesla Inc. NASDAQ: TSLA as an inflation hedge.

SoFi Stock Positioned to Outperform as the S&P 500 Faces a Lost Decade

The real estate sector has been slowing down in the past couple of quarters, with the number of listings going on the rise by up to 50% over the past 12 months, according to Realtor.com. More than that, the pace of building permits and housing starts shows similar headwinds for investors to consider today.

However, SoFi is at the forefront of the potential market turn, considering that it offers mortgage products to would-be homebuyers. Knowing that the mortgage market index sits at a 1996 low today, and the Federal Reserve (the Fed) started a new path of interest rate cuts, more demand for mortgages could be on the way for SoFi stock.

This is why Wall Street analysts now see SoFi delivering up to $0.10 in earnings per share (EPS) for the next 12 months, a tenfold increase from today’s $0.01 EPS. This growth rate will allow most portfolios to outperform the broader stock market and Goldman’s predicted lost decade, but there’s more.

SoFi’s short interest is as high as 17.9% of the overall float, meaning that if the company can deliver these projected growth rates, then a sharp rally in the stock could trigger what’s known as a short squeeze when these short sellers are forced to cover their positions (creating more buying pressure).

Boeing’s Turnaround: Why the Next Decade Could Be Your Easiest Buy

After a few years of struggling with incidents and safety issues, Boeing stock is finally showing some signs of a potential bottoming, especially as a new management initiative is being proposed. Recent trading volume shows investors why Boeing stock’s price today might be near its bottom; here’s why.

As the stock traded down to 59% of its 52-week high recently, volume contracted to only 8 million shares a day, significantly below the average daily volume of up to 98 billion shares. This means nobody, not bears nor bulls, thinks that Boeing is tradeable at this price, so the actual market is higher, considering that the move has been lower.

The view that Boeing stock’s fair value is higher might stem from the company announcing one of its biggest tailwinds yet. Now that China’s economy is coming back online, with aggressive interest rate cuts and government stimulus, some sectors like air travel could be a major source of activity moving forward.

A press release by Boeing states that China’s air travel will grow by 5.2% a year for the next two decades, creating a demand for up to 8,830 new planes from the nation, a massive order flow that Boeing is set to fill. More than that, Wall Street analysts think that these trends can get Boeing back to its former glory.

With a forecast for $1.8 EPS in the next 12 months, analysts expect a significant jump from Boeing’s current net loss of $2.9. A return to profitability justifies recent price targets from Susquehanna, set at $210 a share, which call for a 32% upside from where Boeing stock trades today.

How Sustained Inflation Could Drive Higher Demand for Tesla EVs

Recently, Stanley Druckenmiller (responsible for George Soros' track record) quoted him initiating a short position in the bond market, as he now expects to see inflation at levels similar to the 1970s. Of course, this means oil prices could rise, making gasoline less attractive.

This is where Tesla's demand could come into play, as electric vehicles (EVs) are a cheaper alternative in high-fuel-cost environments. Wall Street analysts now see the company trading as high as $310 a share, according to those at Morgan Stanley. This valuation calls for up to 43.5% upside from where Tesla stock trades today.

Knowing that Tesla's new earnings release might turn the needle to new bullish sentiment for the company moving forward, some bears started to sell Tesla stock recently. Investors can see this trend through the 3.7% decline in short interest over the past month.

More than that, those at Bank Pictet & Cie Europe decided to boost their holdings in Tesla stock by 41.7% as of October 2024 ahead of earnings announcements, bringing their net position up to $10.8 million today.