We recently compiled a list of the Jim Cramer Talked About These 16 Stocks. In this article, we are going to take a look at where The Goldman Sachs Group, Inc. (NYSE:GS) stands against the other stocks Jim Cramer was talking about.
Jim Cramer, host of Mad Money, shared his thoughts on the market’s reaction to the election results. He noted that the trading session on November 6 was largely influenced by a collective sigh of relief from traders who were glad the election was over. With President-elect Donald Trump set to take office, many were preparing for the shifts his administration could bring. Cramer pointed out that the market responded positively to Trump’s victory, stating:
“The market likes Donald J. Trump and it loves a peaceful transition to the next president. We got both and we had a monster-buying celebration. It was a bull jailbreak and the bears never knew what trampled them.”
Cramer reflected on the uncertainty leading up to the election, with many investors fearing a prolonged and contentious process. But with the winner now clear, Cramer argued that the market is better off knowing what lies ahead. He remarked:
“Let’s understand that many people thought we’d have a contested election, which would cause tremendous uncertainty. The fact that we already know the winner is a huge win for the stock market in itself, which makes it a magnet for new money. This election, with its vicious maelstrom of hate and fear, is finally over.”
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One of Cramer’s main focuses was Trump’s proposed tax cuts, which he believes will have a substantial impact on corporate profits. Cramer emphasized that the tax cuts are expected to boost earnings, particularly by lowering corporate tax rates, which would directly increase profit estimates and earnings per share. Cramer also highlighted the importance of maintaining low interest rates for these benefits to materialize.
He cautioned that while the current environment might feel like a party, there could be risks down the line, especially as debt continues to grow. Despite these concerns, Cramer seemed optimistic, suggesting that the market could continue to rally as long as interest rates stay low and corporate tax cuts come to fruition.
However, Cramer also pointed out a potential complication and commented:
“We also have to accept that we will have another earning season right at the time of the inauguration. So we’ll have to worry about those earnings too, but not yet.”
Additionally, Cramer suggested that there could be more significant market moves in the near future, especially if President-elect Trump makes comments about the Federal Reserve that investors find unsettling. He said that such remarks could trigger a negative reaction from the market, potentially leading to a downturn before things settle again.
Our Methodology
For this article, we compiled a list of 16 stocks that were discussed by Jim Cramer during the episode of Mad Money on November 6 and listed the stocks in the order that Cramer mentioned them.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A close-up of a financial advisor giving advice to a customer, demonstrating the importance of consumer and wealth management.
The Goldman Sachs Group, Inc. (NYSE:GS)
Cramer noted that while banks like The Goldman Sachs Group, Inc. (NYSE:GS) saw rapid stock movements due to tough regulation under the Biden administration, they may benefit from looser rules under a Trump administration, potentially leading to higher dividends, buybacks, and more mergers.
“The banks, especially investment banks, these stocks had gigantic moves. Moves that would normally take weeks or even months to occur and instead they happened in a handful of hours. The banks have been pushed down for ages because the Democrats have tough, relentless regulators who love to go after the industry. Hey, you may hate the industry, you might want that. You may love it and say… enough. The regulators have crushed their earnings power and their dividend giving and their buyback ability. That, in turn, really obliterated the price-earnings multiple of the cheapest stocks in the entire market. Now though, the banks could be unfettered, they might be able to merge again, reward investors with much higher dividends, and buyback even more stock.
More importantly, the investment banks can advise on many more mergers and there will be many more mergers because the regulators will look the other way and we’ll get more IPOs too. It’s hard to convey how much antipathy there was between bankers and the Biden administration, they were oil and water. That’s it. The banks have now run a lot. You got my blessing though, to buy them… For the Charitable Trust, we actually sold some of our shares. These became some of our largest positions ’cause they went up so much… Overall, the group is still cheap. To go parabolic, it will come down, you can buy.”
Goldman Sachs (NYSE:GS) is a leading global financial services firm known for its expertise in investment banking, wealth management, and a range of other financial services. In the third quarter, it returned $2 billion to its common shareholders. This amount included dividends totaling $978 million and stock repurchases of $1 billion. On October 11, the firm announced a dividend of $3.00 per common share, set to be paid on December 30, to shareholders of record as of December 2.
The financial environment has played a significant role in Goldman Sachs’ (NYSE:GS) recent performance. In recent years, the Federal Reserve’s interest rate hikes had a chilling effect on M&A and IPO activity, making it a challenging period for many financial institutions. However, as interest rates have begun to decline, the economic conditions have started to improve for firms like Goldman Sachs.
Advisory fees surged by 27% in the third quarter compared to the previous one. While the IPO market remains slow, the bank is positioning itself for a potential rebound when market conditions fully stabilize.
Overall GS ranks 3rd on our list of the stocks Jim Cramer was talking about. While we acknowledge the potential of GS as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than GS but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.