12 Most Undervalued Large Cap Stocks to Buy Now

6. Goldman Sachs Group Inc. (NYSE:GS)

Forward Price-to-Earnings Ratio as of March 4: 13.4

Number of Hedge Fund Holders: 81

Goldman Sachs Group Inc. (NYSE:GS) provides financial services across investment banking, asset and wealth management, and platform solutions. Through its three main segments, it offers strategic advisory, trading, and underwriting services, manages assets across various asset classes, provides wealth management and private banking, and delivers digital financial solutions.

The firm’s Asset & Wealth Management managed a record $3.1 trillion in assets in Q4 2024. This segment manages investments and provides financial advice for individuals and institutions to grow their wealth. The segment’s stable fee-based income is crucial for the company’s market valuation. The firm is shifting away from equity and debt investments to focus on capital-efficient and fee-generating activities. To capitalize on the growing private credit market, the company created the Capital Solutions Group. This initiative combines investment banking and market expertise to offer services in financing, origination, structuring, and risk management.

The firm is investing heavily in digital capabilities, scaling fund programs, and developing new wealth client strategies. These efforts are expected to drive high-single-digit annual growth. Additionally, Goldman Sachs Group Inc. (NYSE:GS) is optimizing expenses and using AI and automation to improve efficiency.

Ariel Appreciation Fund is positive on Goldman Sachs Group Inc. (NYSE:GS) due to its strong quarterly earnings, expected benefits from a new political administration’s policies, and the positive outlook on its core businesses and the overall economy. It stated the following in its Q4 2024 investor letter:

Several stocks in the portfolio delivered solid returns in the quarter. Global investment bank, The Goldman Sachs Group, Inc. (NYSE:GS) outperformed on a robust quarterly earnings beat, highlighted by strength across its investment banking, trading and asset management segments. Meanwhile, the U.S. election has been widely viewed as a positive catalyst across the industry. Investors expect the incoming administration to 1 The “Magnificent Seven” are the largest stocks in the S&P 500 Index driving market performance: Apple Inc. (AAPL), Amazon.com, Inc. (AMZN), Alphabet Inc. (GOOGL), Meta Platforms Inc. (META), Microsoft Corp. (MSFT), NVIDIA Corp. (NVDA) and Tesla, Inc. (TSLA). 2 Hobson, Mellody and John W. Rogers Jr. “What the Stock market Taught Us This Year: Don’t Fall for These Investing Traps.” Wall Street Journal, 5 December 2023. emphasize deregulation and exhibit a greater openness to business combinations compared to the prior regime. Hence, management’s positive commentary around the operating momentum of its core franchises, an improving M&A outlook and the resilience of the U.S. economy sent shares higher.