An ETF With Strong Balance Sheet Stocks, Long-Term Opportunities

In this market environment, investors of all stripes should be prioritizing companies with strong balance sheets. For those with longer time horizons, evaluating some beaten-up names with disruptive growth traits could be rewarding.

Some exchange traded funds provide market participants with avenues to both varieties of equities. Enter the Goldman Sachs Innovate Equity ETF (GINN). GINN follows the Solactive Innovative Global Equity Index and holds 468 stocks — a deep enough bench to ensure that investors gain exposure to both strong balance sheet names as well as futuristic, innovative companies.

An example of a disruptor in the GINN portfolio is crypto exchange giant Coinbase (NASDAQ:COIN). The stock is being punished this year amid the “crypto winter,” and while that’s a test for digital assets and crypto-correlated equities, it doesn’t necessarily mean that the long-term thesis for assets such as Coinbase is dead.

“Confidence in the platform is still required to support an investment in COIN shares, but we note that the company is incredibly liquid one of the best houses on the block in an uncertain time & we currently believe COIN remains well positioned to weather a very challenging moment in market & potentially even pick up market share from weaker competitors that are underprepared for a market downturn,” according to JMP Securities.

Regarding individual stocks with sturdy balance sheets, GINN has plenty of those as well, including Google parent Alphabet (NASDAQ:GOOG) and semiconductor maker Micron Technology (NASDAQ:MU). UBS analyst Tim Arcuri recently reiterated Micron as a top pick.

“Amid macro concerns, we believe investors continue to overlook several key factors,” Arcuri wrote. “Although end market weakness in PC/smartphones is weighing somewhat on near term DRAM ASPs, we see very strong pricing support heading into C2023 as the industry growth in bit supply is set to compress significantly.”

As for Alphabet, its cash as percent of enterprise is currently 7.2%, and its cash flow is expected to surge over the next two years, according to CNBC.

Other companies with impressive balance sheets that also reside in GINN include Arista Networks (NASDAQ:ANET) and blue chip pharmaceuticals behemoths Johnson & Johnson (NYSE:JNJ) and Merck (NYSE:MRK), both of which are members of the Dow Jones Industrial Average.

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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.