The S&P 500 Index ($SPX) didn't have a great month in April, dropping over 4% - its roughest monthly performance since September 2023. This dip came as high wage growth figures made many think the Federal Reserve might keep interest rates high for a while longer. 

At its May meeting, the Fed decided not to change interest rates, but hinted that a rate hike was unlikely to be in the cards. However, Fed Chair Powell was cautious, noting that it's not a sure thing that inflation will keep dropping. So now, investors are scratching their heads, wondering where to put their money. It's like trying to pick the best spot on a crowded beach - not easy!

Goldman Sachs (GS), the big-shot investment bank, has thrown investors a lifeline by spotlighting five quality stocks. By “quality,” Goldman means these companies offer solid fundamentals, steady growth, and can stand tall even when the market throws a tantrum. Let's dive into these five top picks from Goldman Sachs, breaking down why they might just be the smart play in these uncertain times.

1. Alphabet Inc. (GOOGL)

Alphabet Inc. (GOOGL), the powerhouse behind Google and a major player in online ads, is also dabbling in everything from cloud computing to artificial intelligence (AI). Despite the market's ups and downs, GOOGL's stock is doing pretty well. Over the last year, GOOGL is up 57.4%, outpacing the S&P 500's 25.4% gain.

With a whopping market cap of $2.07 trillion, Alphabet's Q1 earnings were a hit, with revenue reaching $80.54 billion and earnings per share (EPS) at $1.89. This financial muscle gives them plenty of room to pump money into AI and continue leading the tech scene.

Looking forward, the forecast for Q2 2024 puts EPS at $1.84, with a full-year consensus of $7.57. 

Currently, 44 analysts have weighed in on GOOGL, with most of them quite bullish: 35 are saying it's a “strong buy,” 3 suggest a “moderate buy,” and 6 are sitting on the fence with a “hold.” The average price target is pegged at $191.15, a premium of 16.7% from current prices.

2. Zoetis Inc. (ZTS)

Zoetis Inc. (ZTS), a big name in the animal health game, produces meds, vaccines, and diagnostic tools for pets and farm animals. 

Despite its clout in the veterinary health space, 2024 has been a bit rocky for ZTS. The shares are down 15% YTD to lag the SPX, which is up 7.6% in 2024.

In a recent move, Zoetis decided to sell its medicated feed additive lineup and some assets to Phibro Animal Health for a cool $350 million. Thanks to their solid cash flows, they're in a good spot to keep rewarding shareholders with buybacks and dividends; the stock currently yields 1%.

The company beat expectations with its Q1 earnings report on Thursday, which featured adjusted EPS of $1.38 and revenue of $2.19 billion. For the full year, Wall Street is targeting bottom-line growth of more than 8%.

Despite the recent stock price wobbles, analysts are still pretty bullish on Zoetis. Out of 13 analysts, 12 are saying it's a “strong buy,” and one leans towards a “moderate buy.” They've pegged the average target price at $217.50, suggesting a hefty 29.2% potential jump from its current standing.

3. O’Reilly Automotive Inc. (ORLY)

O'Reilly Automotive (ORLY), a leading retailer of automotive aftermarket parts, tools, and accessories, has gained a respectable 6.2% on a YTD basis, not far behind the broader SPX. However, with ORLY down 13.7% from its March highs, investors can still buy the dip on this auto parts stock.

O'Reilly's free cash flow remains strong, supporting ongoing expansion. The retailer's Q1 2024 earnings results beat the Street, with a 9% revenue jump to $3.98 billion and an EPS of $9.20 both surpassing consensus estimates. Profit guidance came in light, though that downside surprise may be priced in at current levels.

Analysts maintain a “moderate buy” consensus on ORLY, with 14 out of 22 recommending a “strong buy,” one suggesting a “moderate buy,” and seven advising a “hold.” The mean target price of $1,149.47 implies a potential upside of 13.3% from current levels.

4. Fastenal Company (FAST)

Fastenal (FAST) is a major player in the wholesale distribution of industrial and construction supplies - mainly in the U.S., but also internationally. FAST stock is up 26% over the past 52 weeks, and 5.3% so far in 2024. 

FAST yields 2.3% at current levels, based on the quarterly dividend of $0.39.

In mid-April, Fastenal reported Q1 revenues of $1.9 billion, up 9.2% from last year, and EPS of $0.52, which fell short of analysts' expectations. For the full year, Wall Street is targeting roughly 5% EPS growth to $2.12, followed by nearly 9% growth in fiscal 2025.

Currently, the consensus from analysts is to “hold” FAST shares, with 2 out of 13 analysts recommending a “strong buy,” 9 suggesting a “hold,” and 2 advising a “strong sell.” The mean target price of $69.40 implies a modest upside potential of 1.6% from the current level.

5. Church and Dwight (CHD)

Church and Dwight (CHD), the powerhouse behind household favorites like Arm & Hammer, Trojan, and OxiClean, is outperforming in 2024. The stock has rallied almost 10% on a YTD basis, surpassing the SPX's return.

Church & Dwight pays a quarterly dividend of $0.28, which translates to a yield of just over 1% at current levels.

In Thursday's Q1 earnings report, the company surpassed estimates by reporting adjusted EPS of $0.96 and revenue of $1.5 billion.

Analyst sentiment leans positive, with a “moderate buy” consensus on CHD. Out of 19 analysts in coverage, 7 are really bullish with “strong buy” ratings, but there's also a bit of caution in the air with eight “holds” and three “strong sells.” The average target price of $103.88 implies a potential downside of 1.3% from the current level, though the Street-high target of $120 is a premium of about 14% from here.

Conclusion

Goldman's top picks - Alphabet, Zoetis, O'Reilly Auto, Fastenal, and Church & Dwight - could be smart plays. These big names have strong financials, steady growth potential, and the muscle to weather market storms, making them quality bets in today's uncertain market.