5. The Goldman Sachs Group, Inc. (NYSE:GS)
Forward P/E Ratio: 13.47
Earnings Growth This Year: 60.40%
Number of Hedge Fund Holders: 68
The Goldman Sachs Group, Inc. (NYSE:GS) is one of the leading investment banks in the United States of America. It operates through the following business segments Global Banking and Markets, Asset and Wealth Management, and Platform Solutions.
The bank is a leader when it comes to equity, mergers, and acquisitions advising, debt underwriting, and wealth management. It also has a huge trading desk and lends and manages trillions of dollars for corporate giants.
It is also one of the cheap blue chip stocks to invest in now as it is trading at only 13 times its forward earnings with analysts expecting its earnings to grow more than 60% during the year.
The Goldman Sachs Group, Inc. (NYSE:GS) is a blue chip stock for a reason, the first being its huge market capitalization of more than $157 billion. The other reason is its strategic moat of being profitable during some of the toughest conditions. During the 2008 and 2009 market crash when other companies were struggling to keep their heads out of water, The Goldman Sachs Group, Inc. (NYSE:GS) had one of its best years ever in terms of profitability. Its revenue was close to being an all-time high whereas it maintained a 22.5% return on equity during the recession years.
Speaking of the present times, the second quarter earnings release highlighted continued revenue and net income growth for the bank. It generated more than $12.7 billion in revenue, a 17% increase year-over-year. Whereas, its net earnings skyrocketed 150% during the same time to reach $3.04 billion.
Management is focused on improving the overall returns of the company and to do this it is reducing its headcount and diminishing focus on consumer banking. The stock has remained popular amongst institutional holders. It was held by 68 hedge funds in Q2 2024, with total stakes worth $5.48 billion.
Ariel Appreciation Fund stated the following regarding The Goldman Sachs Group, Inc. (NYSE:GS) in its Q2 2024 investor letter:
“Shares of global investment bank, The Goldman Sachs Group, Inc. (NYSE:GS), also rose in the period following solid earnings results, highlighted by strength in fixed income, currencies 1 Sindreu, Jon. “The Second Quarter Split the Market.” The Wall Street Journal, July 1, 2024, p. B9. and commodities (FICC) as well as equities trading and better-than-expected investment banking fees. Meanwhile, GS continues to successfully execute on its strategic initiatives to improve the overall return of the company. It is right sizing headcount and narrowing its ambitions in consumer strategy through divestitures and working to improve profitability in Platform Solutions by 2025. With the possibility of increased capital requirements from its regulators, GS plans to reign in buybacks over the short-term but maintain its dividend. Looking ahead, we continue to view the near and long-term outlook for Goldman as attractive, given favorable business trends, continued positive momentum on strategic initiatives and active expense/capital management programs.”
