Choosing growth stocks with the potential for significant upside can be a challenging task for investors. However, if you’re looking to uncover tomorrow’s biggest winners from the minds of Wall Street’s top analysts, Goldman Sachs Group, Inc. (GS) has a surprisingly simple approach: the “Rule of 10.” This strategy involves identifying businesses that can consistently increase their revenues by at least 10%. In early 2025, 21 S&P 500 companies met this criterion, including some of the fast-growing corporations we will highlight below.

Goldman Sachs developed the “Rule of 10” as a way to identify the next potential stock market champions. According to this rule, companies must demonstrate a track record of generating revenue growth of at least 10% and show the ability to sustain this growth in the future. As of early 2025, 21 S&P 500 stocks met Goldman’s income requirements, indicating their potential for future growth.

While the “Rule of 10” can be a valuable tool for identifying promising stocks, it should not be the sole factor guiding investment decisions. Other metrics and considerations should also be taken into account when making investment choices.

So, what exactly is the Rule of 10 and how does it work? By studying the success of today’s largest winners – including Alphabet Inc. (GOOGL), Amazon.com Inc. (AMZN), Apple Inc. (AAPL), Meta Platforms, Inc. (META), Microsoft Corporation (MSFT), NVIDIA Corp. (NVDA), and Tesla, Inc. (TSLA) – analysts at Goldman Sachs were able to identify key factors that contributed to their success. Using this information, they devised a screening process to identify companies that have the potential to outperform the S&P 500 in the future.

According to the Rule of 10, companies must meet the following criteria to pass the test:

– Be listed on the S&P 500 Index
– Demonstrate at least 10% revenue growth in each of the previous two years
– Be expected to increase revenues by at least 10% in the current year, the next fiscal year, and the fiscal year following that

By applying these criteria, Goldman Sachs was able to identify a number of companies that showed promise for future growth and outperformance in the stock market.

To find stocks that meet the Rule of 10 criteria, investors can use screening tools that allow them to filter companies based on revenue growth projections. As analysts revise their estimates of income growth over time, the list of companies that meet the Rule of 10 criteria may change. By regularly monitoring these changes, investors can stay informed about which stocks are most likely to outperform the market based on Goldman Sachs’ screening criteria.

While the Rule of 10 can be a useful starting point for identifying potential winners, it is important to conduct further research and analysis before making investment decisions. Additionally, it is worth noting that some popular companies, such as Alphabet, Amazon, Synopsys Inc. (SNPS), Visa Inc. (V), and Intuitive Surgical (ISRG), just missed the mark according to Goldman Sachs’ screening criteria.

In conclusion, Goldman Sachs’ Rule of 10 is a valuable tool for pinpointing potential stock market champions based on historical and future revenue growth. While it is not a definitive list for making investment decisions, it can provide investors with a starting point for further research and analysis. By staying informed and monitoring changes in revenue projections, investors can position themselves to capitalize on the next wave of S&P 500 stocks poised for growth and capital appreciation.