Stocks were under pressure again this morning after yesterday’s afternoon decline. Fueling yesterday’s sell-off was the Fed announcement that it would move up its time line for rate hikes. The central bank also raised its projected rate of inflation to 3.4% this year.
As inflation rises, interest rates rise, and that’s good for banks, which make more money along with the expansion of the spread between rates they pay on deposits and rates they charge on loans. Which means the financial sector will likely continue to benefit. But the firm featured in today’s trade alert has a couple things going for it aside from being in the right sector.
What makes Goldman Sachs (GS) stock so appealing is that it trades for just nine times earnings despite analysts expecting almost 17% EPS growth annually over the next five years. That makes for a price-earnings growth ratio of just 0.55, reflecting extreme value. GS is holding a forward P/E ratio of 8.6, a discount when compared to the industry average forward P/E of 12.29
Plus, while many large banks pay high dividends, Goldman pays a modest 1.4% and uses just 12% of earnings to do so, meaning it has ample room to grow its payout in the years to come.
Of 25 analysts offering recommendations for GS stock, 16 rate the stock a Buy and 7 call it a Hold. Only 2 of the Wall Street pros covering the stock give it a Sell rating.
Jefferies Financial Group analyst Daniel Fannon recently initiated coverage of Goldman Sachs with a Buy rating as he sees more durable revenue streams and more efficient internal capital allocation driving higher returns and multiple expansion. Fannon set a $450 price target for the stock, implying upside potential of around 22% from yesterday’s close. The target assumes an 11x multiple on 2023 EPS, consistent with its five-year average. “With all of its business segments either producing outsized returns or in the process of scaling and generating an improving return profile this multiple could prove conservative,” Fannon wrote in a note to clients.
Should you buy Goldman Sachs right now?
Before you consider buying Goldman Sachs, you'll want to see this.
Picture the perfect stock for a moment.
What would it look like?
No doubt it would have hundreds of billions in revenue – more than tech giants like IBM, Facebook and Google.
It would probably be a leader in cutting-edge technology like smartphones, robotics, e-commerce and medical equipment.
It would have tens of thousands of unbreakable patents.
It would pay an enormous dividend.
It would be on the verge of dozens of blockbuster announcements that would send the stock higher and higher.
And most of all…
It would trade ultra-cheap – less than $3.
It seems crazy that such a stock exists.
And you’ve likely never heard of it.
Why?
Because it trades under a secret name.
Seriously, it’s true.
Stock-picking legend Alexander Green – just gave the most shocking live presentation regarding this “perfect stock.”
He says this single stock alone could pay for your retirement.
