We recently published Jim Cramer’s Exclusive List: 10 Stocks to Monitor Closely. In this article, we are going to take a look at where Goldman Sachs Group, Inc. (NYSE:GS) stands against the other stocks Jim Cramer recommends to monitor closely.
On a recent episode of Mad Money, Jim Cramer emphasized the risks of straying too far from technology stocks, particularly the dominant tech companies, in today’s market. He pointed out how JP Morgan, despite being one of the best-performing banks, caused a stir by cutting its forecast, warning that estimates might be overly optimistic. This news hurt the broader market, dropping it by 93 points, although the S&P 500 saw a slight rise of 0.54%, and the tech-driven NASDAQ gained 0.84%.
“In this market, every time you stray too far from technology, especially the tech titans, you ultimately get slapped in the face by reality. That’s what happened today when the largest, and arguably best-performing, bank in the world, laid a huge egg with its forecast. They told us the estimates are too high, maybe way too high. That spoiled a big chunk of the market, ultimately dipping 93 points. The S&P inched up 0.54%, but the tech-heavy NASDAQ still gained 0.84%.”
Cramer explained that since the Federal Reserve gave positive signals, investors had shifted away from tech into other areas of the market. This shift was part of the “broadening out” that many investors had been waiting for, as it was believed to signal a healthier market. Financial stocks, which make up around 13.3% of the S&P 500, had been a source of excitement for those tired of relying on the leading tech stocks.
“For the past couple of months, ever since the Fed gave us the all-clear signal, we’ve seen money flow out of tech into long-neglected regions of the stock market. This is the fabled “broadening out” that people spent all year clamoring for. When we bring in more groups of winners, we’re supposed to have a much healthier market, at least that’s what they say. There are tons of financials in the S&P 500, about 13.3% of the index and the strength in those stocks was a source of much joy for everyone who had gotten sick of The Magnificent Seven.”
However, as Cramer noted, economic uncertainty and disappointing forecasts from bank companies disrupted this broader market strength. Daniel Pinto, the bank company’s COO, dashed hopes by signaling that the outlook for the bank wasn’t as strong as expected. The key issue was that net interest income, a critical measure for banks, was projected to miss expectations due to reduced capital market activity. For Cramer, this underperformance highlighted the danger of moving away from tech stocks too soon.
“But a funny thing happened on the way to that broadened-out market: we got economic choppiness. Or to use a more accurate phrase, we got guide-downs that were intolerable to any of the leaders, and the kiss of death to the stock of the bank. You can’t be a leader when you’re slashing your forecast for H2. That’s when the shareholders kick you to the curb and find someone new to follow.
But today, Daniel Pinto, the bank’s President and Chief Operating Officer, lowered the boom on the optimists who desperately wanted to buy something other than tech. The big bank told us that things are less bullish than we thought. There isn’t as much capital markets activity as we’d hoped this quarter, and most importantly, the estimates for next year are too high because of a likely miss on net interest income.”
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Goldman Sachs Group Inc. (NYSE:GS)
Number of Hedge Fund Investors: 68
Jim Cramer believes that the stock price of Goldman Sachs Group, Inc. (NYSE:GS) is currently overvalued. He’s concerned that the lack of IPOs and mergers and acquisitions (M&As) might be due to the upcoming election, which could be freezing business activity. He’s waiting for other companies to release their financial results before making a significant investment in Goldman Sachs Group, Inc. (NYSE:GS), even though he admires the company.
“I want to wait till numbers come down from others. I was a little surprised that Goldman Sachs didn’t see more capital markets activity. I got to tell you, David Faber and I were talking about where are the IPOs? It’s September. Where are the M&As? I think that maybe the election has everything frozen. But that means Goldman Sachs’ stock numbers are too high, and therefore I don’t want to make a big commitment to the stock right here, even though I love the company.”
Goldman Sachs Group, Inc. (NYSE:GS) is a strong investment choice based on its recent performance and future plans. In Q2 2024, Goldman Sachs Group, Inc. (NYSE:GS) achieved significant financial results, with revenue hitting $12.63 billion and net income rising to $3.32 billion, a 15% increase from the previous year. This growth is largely due to Goldman Sachs Group, Inc. (NYSE:GS)’s success in investment banking and asset management. Goldman Sachs Group, Inc. (NYSE:GS) is also expanding its reach into digital banking and fintech, particularly with its growing Marcus platform. This expansion is positioning Goldman Sachs Group, Inc. (NYSE:GS) to benefit from the increasing demand for digital banking services.
Moreover, Goldman Sachs Group, Inc. (NYSE:GS) has shown strong resilience during recent market fluctuations, thanks to its well-diversified business and solid risk management strategies. The decision to boost its share repurchase program by $2 billion further demonstrates Goldman Sachs Group, Inc. (NYSE:GS)’s confidence in its financial health and future prospects. Overall, these factors point to a positive outlook for Goldman Sachs Group, Inc. (NYSE:GS), suggesting it has strong potential for continued growth and profitability.
Overall GS ranks 7th on our list of exclusive stocks Jim Cramer recommends to monitor closely. While we acknowledge the potential of GS as an investment, our conviction lies in the belief that under the radar 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.
