Goldman Sachs Utilizes 'Rule of 10' to Identify Non-Software Growth Leaders

Goldman Sachs has implemented a proprietary quantitative framework known as the 'Rule of 10' to isolate high-performing secular growth stocks within the S&P 500. This screening process is designed to identify companies that exhibit exceptionally consistent and high levels of revenue growth over time. While the growth narrative in recent years has been dominated by software and cloud computing, this specific screen targets non-software companies. By filtering for structural growth rather than cyclical spikes, the methodology aims to find businesses with sustainable competitive advantages in their respective industries. The 'Rule of 10' serves as a disciplined filter for institutional investors looking to diversify their growth exposure. By focusing on the S&P 500, the screen ensures that the identified companies possess a baseline of liquidity and market capitalization. For market participants, this approach highlights a shift toward seeking growth in tangible sectors and diversified business models. This strategy allows for the capture of secular trends without the concentrated volatility often associated with the software-as-a-service (SaaS) sector.