Goldman Sachs (GS)

If you avoid the noise, it is trading at 8 times earnings. Easily a $250 stock that generates very attractive returns in two years. Yield is 1.8% (Analysts’ price target is $260.00)

A top investment bank in the world. New CEO needs to talk about the company more, but investment banks should do well in volatility. What's hurt Goldman is that its retail side if weak and are only now slowly going into that area and seeing decent growth. Beware: there's a lot of volatility in investment banking and they don't have retail to fall back on. A good brand to own.

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)

(Past Top Pick, June 14, 2017, Up 3%) His favourite US bank is Goldman Sachs. Trading at 10x earnings, at a discount to its peers; their earnings should grow 15%. They follow a well-diversified model. They won't increase share buybacks or capital, because they need the cash because they are growing so fast. Pays a dividend of 1.4%. They make money in difficult times. US banks as a whole have been stuck the past well, but GS has been doing everything right.

When interest rates rise, banks raise their lending rates faster than the deposit rate. Their margins increase. GS has made their money on underwriting and proprietary trading. Inexpensive stock at less than 10x earnings.