Goldman Sachs strategist reveals the ‘cheap’ sectors to own right now

Bank stocks are “inexpensive,” and commodity companies look “cheap” in this high interest-rate environment, according to Goldman Sachs’ Sharon Bell. Bell, a European strategist at the investment bank, said the two value sectors are set to do well as economic growth remains robust. Goldman forecasts global GDP to grow slightly above 2% this year — higher than was forecast by economists just a few months ago. Strong growth means that central banks are likely to keep interest rates higher for longer, according to Bell, and “that will be good for the banks.” Higher interest rates allow lenders to increase their net interest margins — a key measure of bank profitability. In Europe, Swiss banking giant UBS beat market expectations when it posted $1.7 billion in net profit for the fourth quarter of 2022. Its French and Italian peers, BNP Paribas and Unicredit , have also reported bumper results recently . But even after a 13% rise in the Stoxx Europe 600 Banks Index this year, Bell said she thinks it remains a “relatively inexpensive sector.” A0F5UJ-FF 1Y line She noted that all banks — regardless of whether they had performed well or were struggling — had benefited from higher interest rates, but stressed that those with good execution plans, such as successful restructuring programs, would be rewarded with higher valuations over time. Commodity boost The positive impact of a growing economy won’t be limited to the banking sector, according to Bell. Despite a “poor” performance in recent weeks, oil and commodity prices are also likely to go up in the second half of this year due to strong demand, she said. Brent crude oil has fallen by more than 18% to $82 a barrel over the past year. Similarly, copper prices at the London Metal Exchange are down by 9.7% to $8891 a metric ton over the same period. @LCO.1 1Y line However, Bell told CNBC’s “Squawk Box Europe”: “We think with global growth improving through this year, again, demand for commodities will go up.” Additionally, the limited supply of commodities means European oil and mining companies are likely to see their profits increase too, she said, adding that “cheap valuations on top of that” makes companies in the sector look attractive.