The stock market can be a daunting place for investors looking to identify growth stocks with significant upside potential. However, Goldman Sachs Group, Inc. (GS) has developed a simple yet effective approach known as the “Rule of 10” to help investors identify the next potential stock market champions. This rule revolves around seeking out businesses that have demonstrated a consistent ability to increase their revenues by at least 10% over time. In early 2025, 21 S&P 500 companies met Goldman’s income requirements, demonstrating their potential for future growth.
The “Rule of 10” was created by Goldman Sachs to identify companies that have the potential to experience significant growth in their stock value. In order to pass the test, companies must show consistent revenue growth of at least 10% over the past two years and be projected to continue this growth trend in the upcoming fiscal years. By applying this rule, Goldman Sachs analysts are able to identify companies that are positioned to outperform the broader market and become the next stock market champions.
The success of today’s largest stock market winners, such as Alphabet Inc., Amazon.com Inc., and Apple Inc., served as a model for identifying companies that have the potential to outperform the S&P 500 index. By analyzing the strategies and performance of these top companies, Goldman Sachs analysts can apply their findings to create a screening tool to identify future market leaders.
Companies that meet the criteria of the “Rule of 10” are required to be listed on the S&P 500 index and demonstrate a consistent revenue growth of at least 10% over the past two years. Additionally, these companies must be projected to continue this growth trend in the current fiscal year and the two subsequent fiscal years. By focusing on these key criteria, investors can identify companies that have the potential to deliver strong returns and outperform the broader market.
To find companies that meet the criteria of the “Rule of 10,” investors can use screening tools to filter through the S&P 500 index and identify companies that are projected to have at least 10% revenue growth in the coming years. By entering the specified criteria into these screening tools, investors can identify potential stocks that align with Goldman Sachs’s approach to identifying future market leaders.
While the “Rule of 10” provides a helpful framework for identifying potential stock market champions, it is important for investors to consider other factors when making investment decisions. By conducting thorough research and analysis, investors can gain a better understanding of individual companies and their potential for future growth. Additionally, seeking guidance from financial professionals and utilizing reliable sources of information can help investors make informed decisions about their investment strategies.
In conclusion, the “Rule of 10” offers a valuable tool for investors seeking to identify growth stocks with significant upside potential. By focusing on companies that demonstrate consistent revenue growth of at least 10%, investors can identify companies that have the potential to outperform the broader market and deliver strong returns. While the “Rule of 10” is a useful screening tool, investors should also consider other factors when making investment decisions to ensure a well-rounded and informed approach to investing in the stock market.
