While many investors are focused on the negative impacts of tariffs and the U.S.-China trade war on corporate profits, they may be overlooking another sizable threat, which is rapidly rising labor costs. The median company in the S&P 500 Index (SPX) pays out 13% of its revenues in the form of employee compensation, and these costs grew by 3% in 2018, the fastest pace during the current economic expansion, which began in June 2009, Goldman Sachs reported this week.

Goldman believes that stocks with lower than average labor costs as a percentage of sales are well-positioned to outperform in this environment. Among the 50 stocks in their low labor cost basket are 10 that have risen by 21% to 62% this year,

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