<p><img src="https://static1.businessinsider.com/image/602278f867d1e300113c4f45-2400/gettyimages-526244118.jpg" border="0" alt="Goldman Sachs NYSE" data-mce-source="Ramin Talaie/Corbis/Getty Images" data-mce-caption="A Goldman Sachs trader work on the floor of the New York Stock Exchange in New York, on Friday, October 29, 2010."></p><p></p><bi-shortcode id="summary-shortcode" data-type="summary-shortcode" class="mceNonEditable" contenteditable="false">Summary List Placement</bi-shortcode><p>A return to 'normal' interest rate levels isn't as clean cut as one might think for the equities markets, with pure cyclical plays at risk of underperformance in potential downswings, according to Goldman Sachs.</p><p>Generally, government bond yields are rising, as investors are pricing in economic recovery, meaning they are more reluctant to hold fixed-income assets. The yield on the 30-year Treasury bond crossed the 2% mark for the first time in a year, and the yield on the 10-year note is now comfortably above 1%, as economic activity picks up, the US government adds more stimulus and the pace of vaccinations against COVID-19 accelerates.</p><p>In an environment of higher yields, the more economically-exposed cyclical stocks tend to outperform their defensive peers. However, when those yields pull back, it can act as a drag.</p><p>On this basis, Goldman Sachs is recommending investors "own long-duration cyclicals to capitalize on both the low level of interest rates and the economic recovery," the firm said in a note published Monday, anchored by strategist David Kostin.</p><p>Goldman Sachs have made several upgrades to their US economic outlook, most recently on Tuesday.</p><p>There's an interesting dynamic at work for investors wishing to leverage the economic recovery using cyclical stocks, but that need to protect those holdings when government bond yields temporarily sweep lower. </p><p>Goldman Sachs' solution to this issue is to use longer-duration cyclical stocks. Equity duration broadly refers to the length of time it takes for an investor to recoup their capital outlay assuming no dividend growth, so the lower the dividend yield on a stock, the longer it takes to recover that amount. Right now, low dividend yields mean duration is longer for most assets and, while a pick up in growth might be welcome, a pickup in inflation is not. </p><p>The compromise strategy offers the "best of both worlds." Goldman analysts selected a basket of names that outperformed the bank's broad cyclicals basket during the outperformance of growth stocks last year and has also performed better since value stocks came into favor in early November, with the arrival of a number of successful COVID-19 vaccines, the note said.</p><p>These are the 26 stocks that rank in the top 25% of the S&P 500, based on implied equity duration which Goldman Sachs says to buy for this long-duration strategy:</p><h3>NVIDIA Corp.</h3><img src="https://static1.businessinsider.com/image/60227a95cca90200129b727d-400-300/nvidia-corp.jpg" alt="" /><p><ul><li>Ticker: <a href="https://markets.businessinsider.com/stocks/nvda-stock">NASDAQ.NVDA</a></li><li>Sector: Semi-conductors</li></ul></p><br/><br/><h3>Advanced Micro Devices (AMD)</h3><img src="https://static1.businessinsider.com/image/60227b32cca90200129b727f-400-300/advanced-micro-devices-amd.jpg" alt="" /><p><ul><li>Ticker: <a href="https://markets.businessinsider.com/stocks/amd-stock">NASDAQ.AMD</a></li><li>Sector: Semi-conductors</li></ul></p><br/><br/><h3>Amazon.com Inc.</h3><img src="https://static4.businessinsider.com/image/60227c54cca90200129b7281-400-300/amazoncom-inc.jpg" alt="" /><p><ul><li>Ticker: <a href="https://markets.businessinsider.com/stocks/amzn-stock">NASDAQ.AMZN</a></li><li>Sector: Retailing</li></ul></p><br/><br/><h3>Netflix</h3><img src="https://static6.businessinsider.com/image/60227cb7cca90200129b7282-400-300/netflix.jpg" alt="" /><p><ul><li>Ticker: <a href="https://markets.businessinsider.com/stocks/nflx-stock">NASDAQ.NFLX</a></li><li>Sector: Media & Entertainment</li></ul></p><br/><br/><h3>Gap</h3><img src="https://static4.businessinsider.com/image/60227eb3cca90200129b7283-400-300/gap.jpg" alt="" /><p><ul><li>Ticker: <a href="https://markets.businessinsider.com/stocks/gps-stock">NYSE.GPS</a></li><li>Sector: Retailing</li></ul></p><br/><br/><h3>NIKE</h3><img src="https://static6.businessinsider.com/image/60227f2d67d1e300113c4f4e-400-300/nike.jpg" alt="" /><p><ul><li>Ticker: <a href="https://markets.businessinsider.com/stocks/nke-stock">NYSE.NKE</a></li><li>Sector: Consumer Durables & Apparel</li></ul></p><br/><br/><h3>Twitter</h3><img src="https://static1.businessinsider.com/image/60227fd667d1e300113c4f51-400-300/twitter.jpg" alt="" /><p><ul><li>Ticker: <a href="https://markets.businessinsider.com/stocks/twtr-stock">NYSE.TWTR</a></li><li>Sector: Media & Entertainment</li></ul></p><br/><br/><h3>Rockwell Automation</h3><img src="https://static2.businessinsider.com/image/60228177cca90200129b7286-400-300/rockwell-automation.jpg" alt="" /><p><ul><li>Ticker: <a href="https://markets.businessinsider.com/stocks/rok-stock">NYSE.ROK</a></li><li>Sector: Capital Goods</li></ul></p><br/><br/><h3>Apple</h3><img src="https://static2.businessinsider.com/image/602281f5cca90200129b7288-400-300/apple.jpg" alt="" /><p><ul><li>Ticker: <a href="https://markets.businessinsider.com/stocks/aapl-stock">NASDAQ.AAPL</a></li><li>Sector: Technology Hardware & Equipment</li></ul></p><br/><br/><h3>Qualcomm Inc.</h3><img src="https://static2.businessinsider.com/image/60228252cca90200129b728a-400-300/qualcomm-inc.jpg" alt="" /><p><ul><li>Ticker: <a href="https://markets.businessinsider.com/stocks/qcom-stock">NASDAQ.QCOM</a></li><li>Sector: Semi-conductors</li></ul></p><br/><br/><h3>Sherwin-Williams</h3><img src="https://static6.businessinsider.com/image/60228423cca90200129b728b-400-300/sherwin-williams.jpg" alt="" /><p><ul><li>Ticker: <a href="https://markets.businessinsider.com/stocks/shw-stock">NYSE.SHW</a></li><li>Sector: Materials</li></ul></p><br/><br/><h3>Illinois Tool Works</h3><img src="https://static3.businessinsider.com/image/6022853a67d1e300113c4f58-400-300/illinois-tool-works.jpg" alt="" /><p><ul><li>Ticker: <a href="https://markets.businessinsider.com/stocks/itw-stock">NYSE.ITW</a></li><li>Sector: Capital Goods</li></ul></p><br/><br/><h3>Under Armour Inc.</h3><img src="https://static4.businessinsider.com/image/6022859e67d1e300113c4f5b-400-300/under-armour-inc.jpg" alt="" /><p><ul><li>Ticker: <a href="https://markets.businessinsider.com/stocks/uaa-stock">NYSE.UAA</a></li><li>Sector: Consumer Durables & Apparel</li></ul></p><br/><br/><h3>Xilinx Inc.</h3><img src="https://static3.businessinsider.com/image/6022861467d1e300113c4f5e-400-300/xilinx-inc.jpg" alt="" /><p><ul><li>Ticker: <a href="https://markets.businessinsider.com/stocks/xlnx-stock">NASDAQ. XLNX</a></li><li>Sector: Semi-conductors</li></ul></p><br/><br/><h3>Ingersoll Rand Inc.</h3><img src="https://static1.businessinsider.com/image/6022869dcca90200129b7295-400-300/ingersoll-rand-inc.jpg" alt="" /><p><ul><li>Ticker: <a href="https://markets.businessinsider.com/stocks/ir-stock">NYSE.IR</a></li><li>Sector: Capital Goods</li></ul></p><br/><br/><h3>United Parcel Service</h3><img src="https://static3.businessinsider.com/image/602286f167d1e300113c4f60-400-300/united-parcel-service.jpg" alt="" /><p><ul><li>Ticker: <a href="https://markets.businessinsider.com/stocks/ups-stock">NYSE.UPS</a></li><li>Sector: Transportation</li></ul></p><br/><br/><h3>Texas Instruments</h3><img src="https://static2.businessinsider.com/image/6022878acca90200129b7298-400-300/texas-instruments.jpg" alt="" /><p><ul><li>Ticker: <a href="https://markets.businessinsider.com/stocks/txn-stock">NASDAQ.TXN</a></li><li>Sector: Semi-conductors</li></ul></p><br/><br/><h3>Fastenal Co.</h3><img src="https://static3.businessinsider.com/image/6022898bcca90200129b729f-400-300/fastenal-co.jpg" alt="" /><p><ul><li>Ticker: <a href="https://markets.businessinsider.com/stocks/fast-stock">NYSE.FAST</a></li><li>Sector: Capital Goods</li></ul></p><br/><br/><h3>W.W. Grainger Inc.</h3><img src="https://static2.businessinsider.com/image/60228a6667d1e300113c4f6a-400-300/ww-grainger-inc.jpg" alt="" /><p><ul><li>Ticker: <a href="https://markets.businessinsider.com/stocks/gww-stock">NYSE.GWW</a></li><li>Sector: Capital Goods</li></ul></p><br/><br/><h3>Ecolab Inc.</h3><img src="https://static3.businessinsider.com/image/60228ac067d1e300113c4f6d-400-300/ecolab-inc.jpg" alt="" /><p><ul><li>Ticker: <a href="https://markets.businessinsider.com/stocks/ecl-stock">NYSE.ECL</a></li><li>Sector: Materials</li></ul></p><br/><br/><h3>Maxim Integrated Products</h3><img src="https://static5.businessinsider.com/image/60228c2467d1e300113c4f72-400-300/maxim-integrated-products.jpg" alt="" /><p><ul><li>Ticker: <a href="https://markets.businessinsider.com/stocks/mxim-stock">NASDAQ.MXIM</a></li><li>Sector: Semi-conductors</li></ul></p><br/><br/><h3>Facebook Inc.</h3><img src="https://static1.businessinsider.com/image/60228c93cca90200129b72ad-400-300/facebook-inc.jpg" alt="" /><p><ul><li>Ticker: <a href="https://markets.businessinsider.com/stocks/fb-stock">NASDAQ.FB</a></li><li>Sector: Media & Entertainment</li></ul></p><br/><br/><h3>Expedia Group Inc.</h3><img src="https://static1.businessinsider.com/image/60228cf7cca90200129b72b2-400-300/expedia-group-inc.jpg" alt="" /><p><ul><li>Ticker: <a href="https://markets.businessinsider.com/stocks/expe-stock">NASDAQ.EXPE</a></li><li>Sector: Retailing</li></ul></p><br/><br/><h3>Booking Holdings</h3><img src="https://static1.businessinsider.com/image/60228d4e67d1e300113c4f76-400-300/booking-holdings.jpg" alt="" /><p><ul><li>Ticker: <a href="https://markets.businessinsider.com/stocks/bkng-stock">NASDAQ.BKNG</a></li><li>Sector: Retailing</li></ul></p><br/><br/><h3>V.F. Corp.</h3><img src="https://static6.businessinsider.com/image/60228dae67d1e300113c4f78-400-300/vf-corp.jpg" alt="" /><p><ul><li>Ticker: <a href="https://markets.businessinsider.com/stocks/vfc-stock">NYSE.VFC</a></li><li>Sector: Consumer Durables & Apparel</li></ul></p><br/><br/><h3>Old Dominion Freight Line</h3><img src="https://static3.businessinsider.com/image/60228e0067d1e300113c4f7a-400-300/old-dominion-freight-line.jpg" alt="" /><p><ul><li>Ticker: <a href="https://markets.businessinsider.com/stocks/odfl-stock">NASDAQ.ODFL</a></li><li>Sector: Transportation</li></ul></p><br/><br/>
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