We recently compiled a list of the 8 Cheap Jim Cramer Stocks to Invest In. In this article, we are going to take a look at where The Goldman Sachs Group, Inc. (NYSE:GS) stands against the other cheap Jim Cramer stocks.
On a recent episode of Mad Money, Jim Cramer criticized the semiconductor sector’s performance on Tuesday, particularly in light of a significant sell-off in semiconductor stocks following disappointing earnings from ASML, which wiped out over $50 billion from its market capitalization. Cramer argued that many on Wall Street fail to grasp the enduring significance of advanced graphics chips in artificial intelligence. He emphasized that as long as innovations and new applications for computing power continue to emerge, the demand for these chips will persist.
“I don’t think the need for speed is going away. In fact, it’s only going to increase, especially when tech companies and utilities are fiercely trying to put up nuclear power plants to meet the energy demands.”
Cramer expressed frustration at how quickly some investors rushed to declare the semiconductor sector in decline.
“There were many money managers and writers falling all over each other just at the close of yesterday, at the closing bell, to write the definitive obituary for this group, even as it’s less of a group than more of like a parliament of owls that’s somehow been combined with a pride of lions, two very different beasts. As I watched and listened, I said to myself, this terrible miss by some abstruse Dutch outfit is going to make people miss out on what could be the next leg of a powerful, semiconductor rally fueled by the wall of worry and skepticism that’s being built right in my face.”
He also pointed out that various industries are only beginning to experience “AI-powered revolutions.” He explained:
“… As Jensen told me, software never dies. As long as there are new inventions and new uses for computer power, there will be more need for these chips. And you can attach them to the software, no matter what the iteration. You just have to keep buying them because you have to keep up. Right now we have revolutions just starting in healthcare, manufacturing, climate change, cybersecurity, autonomous driving, and even robots.”
He further talked about how the current bull market could gain momentum if the tech sector maintains its strength. Cramer highlighted analysis from Jessica Inskip, noting that both the S&P 500 and the Nasdaq-100 are showing promising charts. He pointed out that the market has expanded significantly compared to six months ago, but for this upward trend to persist, Inskip emphasized the need for substantial engagement from tech stocks.
Cramer discussed the weekly performance charts of the Nasdaq 100, which features some of the largest technology companies. Although the index remains in a positive trading cycle, it has not reached new highs like the S&P 500. Inskip mentioned that while the Nasdaq 100 is moving in a favorable direction, it must surpass its July peaks to stimulate a broader market rally. While Cramer acknowledged that tech might not need to lead the market, it still must closely follow the stronger sectors.
Our Methodology
For this article, we compiled a list of nearly 80 stocks that Cramer was bullish on during episodes of Mad Money aired in October. We narrowed the list to 8 stocks that had a forward price-to-earnings ratio of under 15 and were most widely held by institutional investors. We listed the stocks in ascending order of their hedge fund sentiment as of the second quarter, which was taken from Insider Monkey’s database of more than 900 hedge funds.
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)
Forward P/E: 14.40
Number of Hedge Fund Holders: 68
Before The Goldman Sachs Group, Inc. (NYSE:GS) released its earnings report, Cramer said:
“As for Goldman Sachs, where I did work at one point, I think it’s going to blow away the numbers and the stock goes higher.”
Goldman Sachs (NYSE:GS) is a leading financial institution known for its diverse range of services, particularly in investment banking and wealth management. On October 15, the company released its third-quarter earnings, revealing a significant year-over-year increase in earnings per share, which rose by 53%. Total revenue for the quarter reached $12.70 billion, reflecting a 7% growth despite the challenges posed by fluctuating market conditions.
Within the company’s Global Banking & Markets segment, revenue also saw a positive trajectory, increasing by 7% from the previous year to hit $8.55 billion. The growth can be attributed to strong performance in equities, which played a key role in driving results for the segment.
On the same day, the company declared a quarterly dividend of $3, payable by December 30 to the shareholders of record on December 2.
From an operational perspective, Goldman Sachs (NYSE:GS) improved its cost efficiency, reporting an 8% decrease in operating expenses compared to the previous year, totaling $8.32 billion. The efficiency ratio, which serves as an indicator of expense management and operational effectiveness, also showed favorable developments. Additionally, targeted capital allocation allowed the firm to return $1.98 billion to shareholders through a combination of dividends and stock buybacks.
Overall GS ranks 2nd on our list of the cheap Jim Cramer stocks to invest in. 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.
Read Next: $30 Trillion Opportunity: 15 Best Humanoid Robot Stocks to Buy According to Morgan Stanley and Jim Cramer Says NVIDIA ‘Has Become A Wasteland’.
Disclosure: None. This article is originally published at Insider Monkey.
