U.S. stocks could deliver big gains in 2019 if history is any guide, and some companies have more potential to outperform than others, according to Goldman Sachs Group Inc. (GS.N)

The S&P 500 typically rebounds after declining 20 per cent within a quarter, and historical precedents of policy concerns and late-cycle drawdowns show potential for major upside, Goldman strategists led by David Kostin wrote in a note dated Jan. 11. The U.S. benchmark came to the brink of a bear market late December before ending 2018 down 6.2 per cent after two years of gains.

Companies with high and stable gross margins would be one area to consider, as with strong pricing power may be better able to withstand rising input costs, the report said. Such firms would include National Instruments Corp., Waters Corp., VMWare Inc. and Idexx Laboratories Inc.

Stocks forecast to boost margins by 50 basis points annually would also be attractive, the reports said. It added that such firms are scarce due to late-cycle dynamics, but they would include Netflix Inc., TripAdvisor Inc., Expedia Group Inc. and Chipotle Mexican Grill Inc.

High-quality stocks would also be good, according to the strategists, who bestow that label on equities with a superior return on equity versus the S&P 500, low drawdown risk and strong balance sheets. Alphabet Inc., Comcast Corp., PepsiCo Inc., Halliburton Co., BlackRock Inc. and Wells Fargo Corp. are among companies making the cut in that list.

Goldman also noted that stocks exposed to U.S.-China trade have lagged, including Micron Technology Inc., Corning Inc. and MGM Resorts International.