IIn this market environment, investors from all walks of life should favor companies with strong balance sheets. For those with longer time horizons, evaluating some names beaten with disruptive growth traits could be rewarding.
Some exchange-traded funds offer market participants opportunities to access both varieties of stocks. Enter the Goldman Sachs Innovate Equity ETF (GINN). GINN tracks the Solactive Innovative Global Equity Index and holds 468 stocks – a bench deep enough to ensure investors are exposed to both strong balance sheet names as well as forward-looking, innovative companies.
An example of a disruptor in GINN’s portfolio is crypto exchange giant Coinbase (NASDAQ:COIN). The stock is being punished this year in the midst of “crypto winter,” and while this is a test for digital assets and crypto-correlated stocks, that doesn’t necessarily mean the long run thesis. term for assets such as Coinbase is dead.
“Trust in the platform is still necessary to support an investment in COIN shares, but we note that the company is incredibly liquid, one of the best houses in the block in uncertain times and we currently believe that COIN remains strong. positioned to weather a very tough time in the market and possibly even take market share from weaker competitors that are underprepared for a market downturn,” according to JMP Securities.
As for individual stocks with strong balance sheets, GINN also has plenty, including Google parent company Alphabet (NASDAQ:GOOG) and semiconductor maker Micron Technology (NASDAQ:MU). UBS analyst Tim Arcuri recently reiterated Micron as the top pick.
“Amid macro concerns, we believe investors continue to overlook several key factors,” Arcuri wrote. “Although weakness in the PC/smartphone end market weighs somewhat on ASP DRAMs in the near term, we expect very strong price support heading into C2023 as industry growth in the supply of bits should compress considerably.”
As for Alphabet, its cash as a percentage of business is currently 7.2% and its cash flow is expected to increase over the next two years, according to CNBC.
Other companies with impressive balance sheets also residing in GINN include Arista Networks (NASDAQ:ANET) and blue-chip pharmaceutical giants Johnson & Johnson (NYSE:JNJ) and Merck (NYSE:MRK), both members of the Dow Jones Industrial Medium.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.