However, Goldman Sachs believes a blue wave might not be such a bad thing for the U.S. economy. “All else equal, such a blue wave would likely prompt us to upgrade our forecasts. The reason is that it would sharply raise the probability of a fiscal stimulus package of at least $2 trillion shortly after the presidential inauguration on January 20, followed by longer-term spending increases on infrastructure, climate, health care and education that would at least match the likely longer-term tax increases on corporations and upper-income earners,” Goldman Sachs economist Jan Hatzius noted. Bearing this in mind, our focus shifted to two stocks flagged by Goldman Sachs as strong value plays.

Running both tickers through TipRanks’ database, we found out what makes each so compelling. General Electric (GE) First up we have General Electric, which has been a pioneer in the transportation, power, environmental and healthcare industries for the last 150 years. According to John Peterman, SVP at Goldman Sachs, the future looks bright for this name. Firm analyst Joe Ritchie tells clients that in the two years since Larry Culp took over as CEO, the company has placed a significant focus on becoming a “leaner, structurally more productive company with better capital discipline.” “While the pandemic has caused delays in the transformation, we believe GE will emerge as a stronger company. Admittedly, we might be a little early on the turn in the stock, but we believe we are at a bottom from both a fundamental and sentiment perspective, and that is typically the best time to own industrial cyclicals.

Our base case assumption is that a vaccine will be mass distributed over the next 12 months and, under this scenario, we believe the second derivative improvement on the resumption of air travel will be significant and many of the underlying concerns on GE’s balance sheet will fall to the background,” Ritchie explained. To this end, the analyst thinks HSD industrial free cash flow margins could be achieved by 2023. However, these expectations could be conservative should commercial aerospace rebound more quickly than Ritchie anticipates. “In the near-term, we believe Industrial FCF bottomed in 1H20 and think GE could generate $1 billion-plus in 2H20 given close to $2 billion in 2H cash actions, high margin outages that were pushed from 1H to 2H, a lower drag from onshore wind installations given the PTC was extended to 2021 and a good recovery in PDx. As a result, we think 2H Industrial FCF could likely surprise to the upside, a potential positive near-term catalyst for the shares,” Ritchie commented.

It should be noted that aviation has been GE’s crown jewel segment, but this sector has been hampered by the pandemic as well as two fatal Boeing 737-Max crashes. That said, Goldman Sachs’ global Aerospace team expects commercial AM trends to return to 2019 levels by 2023. Ritchie added, “We estimate there could be an additional $1.3 billion to our Aviation 2023 EBIT forecast if commercial aftermarket were to rebound to 2019 levels by 2023.”