So looking to get your portfolio kick started in 2010, I have just the stock for you. I believe Goldman Sachs (GS)is a high growth stock with strong prospects. So why do I like Goldman Sachs so much? Well in general I feel the financial sector is a bullish market currently and will only continue its dominance within 2010. There are three banks I like, Goldman Sachs, Bank of America, and Citigroup. If your interested in hearing my thoughts on Citi read my past article, $3 Stock with Huge Potential: I Call if Big C. Moving on, why do I like Goldman so much? Here are several reasons:
1. I feel Goldman is a very attractive opportunity right now and it is undervalued compared to what it should be pegged at. I feel that its 12-month price target should be roughly around $250.
2. Goldman’s business ventures should start to take off. We have started to see a pickup in M&A and IPO activity, which should help strengthen their Equity Capital Markets division. With huge M&A backlogs along with a strong demand for restructuring advice and improved IPO markets Goldman will be a big beneficiary.
3. Expect Goldman’s fixed-income, currencies and commodities business to continue to soar. Analysts say these divisions are up 99% year to date, don’t expect them to slow down anytime soon especially in 2010 where we should see a more upbeat, stable market and improved global economy. Expect for equity markets to rebound and for their fixed income market to open up proving for an improved operating environment for Goldman to capitalize on.
4. With recent protest from investors and Washington, compensation expenses will be lower. Bonuses are not being handed out in the form of stock options rather than cash. This is a rather cheap option at 11 times estimates it will be beneficiary. It is now projected that around 42% of revenues will be handed out as compensation against the 46%, which was originally projected. That 4% difference should be a nice bonus to investors.
5. Goldman has an advantage over its peers due to its high stature. Many analysts consider it to be a premium when valued against its peers due to its operating leverage, global power. Strong client relationships, and healthy balance sheet. The fact that it doesn’t carry as much baggage as the other financial institutions and has a relatively clean balance sheet should prove well and allow it to recover faster than the rest.
Some might claim that Goldman is the root of all evil and fear that Goldman has the game rigged, even if no one can ever prove how, not just because of its political connections but also because of its immense size and power. Think what you want but looking at the fundamentals of it all, Goldman is too good of an investment opportunity to pass up. 12 months from now I believe it will be trading at roughly $250 a share, quite a sizeable return. Enjoy!!!