Opinions
Lorne Steinberg
Goldman Sachs
GS-N
TOP PICK
Oct 02, 2018
Stock price when the opinion was issued
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Of the big banks, they are the most levered to investment banking, including IPOs. He bought it expecting an uptick in IPOs under Trump, but his tariffs have temporarily derailed that. The IPO revival should happen if tariffs don't return. This pulled back hard since mid-February because of those tariffs, down 35%.
Is perfectly positioned for the tailwinds under the Trump presidency. After April's tariffs, corporate boards have been sitting and waiting, reluctant to do deals, but a strong capital market will eventually happen. Pays a good dividend and are very well-capitalized.
(Analysts’ price target is $596.61)The capital markets banks are all performing really well. That tells you something about the rest of the market; if investors are focusing on these banks, then they must have a view that lots of deals will be done and that capital markets provide a good opportunity. He'd buy more.
He's not a good trader. To paraphrase: "There are bull markets and bear markets, but at the end GS wins." We've seen that this quarter with respect to their trading profits. It's been a great way to play capital markets forever, and all the banks' capital markets divisions are doing well.
This is the premier global investment bank. They are the best run bank in this space. They were not damaged in the financial crisis. But Goldman Sachs has suffered along with the other large banks. Investors have the chance to buy it now near 11 times current earnings and perhaps 9 times next year’s earnings. They are the only major investment bank that has fewer shares outstanding now than before the financial crisis. It continues to use its free cash flow to buy back shares. Fewer large banks are involved in trading activities, and margins for Goldman Sachs’ trading continue to be very strong. Goldman has a new CEO, which causes some concern. However, Goldman has a great track record with management transitions; he expects this to go well. Yield 01.4%. (Analysts’ price target $273.72)