Nov. 10 (Bloomberg) -- Laszlo Birinyi said Goldman Sachs Group Inc., the most-profitable Wall Street firm, is his top stock pick and that investors should favor retailers other than Wal-Mart Stores Inc.

Goldman Sachs has more than doubled in New York Stock Exchange trading this year after reporting record quarterly profit of $3.44 billion and beating the average analyst earnings estimate for three straight periods. The shares fell 6 cents to $176.51 today.

“They have a great ability to make money,” Birinyi, founder of Westport, Connecticut-based research and money- management firm Birinyi Associates Inc., said in an interview today. “It’s also a company where the management and employees have a significant share, and that’s always one of the things people like.”

Financial companies have led the Standard & Poor’s 500 Index’s 62 percent rally since March after the U.S. government lent, spent and guaranteed $11.6 trillion to end the worst economic contraction since the Great Depression. The S&P 500 Financials Index had plunged 84 percent since February 2007.

Walmart Drops

The S&P 500 Retailing Index jumped 44 percent in 2009 through yesterday, compared with the 7.2 percent decline by shares of Walmart, the world’s largest retailer. Expedia Inc., the biggest Internet travel agency, has done best, rising 192 percent. Department-store chain Nordstrom Inc. has added 164 percent, while Amazon.com Inc., the largest Internet retailer, has increased 147 percent.

“If you’re going to save money, where’s the first place you’re you going to go? Allegedly you’re going to Walmart,” Birinyi said. “Well, that doesn’t seem to be happening because it’s not reflected in the company. So it tells me today that the consumer is in better shape than we think he is.”

Investors are better off buying individual companies rather than purchasing baskets of stocks such as exchange-traded funds, Birinyi said.

“This is a market of stocks,” Birinyi said in a separate interview with Bloomberg Radio today. “Everyone wants to talk about ETFs and shortcuts and groupings but we’ve done really well this year just buying stocks, and I’m not sure they have a common denominator.”

‘No Historical Precedents’

Birinyi declined to make a prediction for the S&P 500. In May, he said U.S. stocks are “in a bull market” that might carry the benchmark index to between 1,500 and 1,700 within three years should the same rate of advance be preserved. The gauge climbed 21 percent since then, data compiled by Bloomberg show.

“It wasn’t really so much of a forecast, it was a suggestion that if the market continued at the rate it was going it would reach that level,” Birinyi said today. “Our methodologies depend a great deal on historical precedent and parameters and this market is totally unique in that respect. There are no historical precedents.”

This year’s rebound in equities has been faster than recoveries in 1990 and 2003, he said. It took the S&P 500 more than three years to climb from 295.46 in October 1990 to its 1994 high of 482. The gauge advanced 39 percent from March 11, 2003, to the end of that year, data compiled by Bloomberg show.

“I can’t make a forecast because the things I use are totally off the charts,” he said, adding that his observations about the rate of change are a “working parameter” that may be achievable for an investor who bought the right stocks. “We don’t want to make a forecast because it’s not defensible. I’m not trying to weasel out of it.”

To contact the reporters on this story: Jeff Kearns in New York at jkearns3@bloomberg.net; Thomas R. Keene in New York tkeene@bloomberg.net.

Last Updated: November 10, 2009 16:15 EST