3 reasons to buy Goldman Sachs now
GS shares have been beaten down by the SEC investigation, giving long-term investors a huge buying opportunity.
By Hillary Kramer, InvestorPlace.com
Although Goldman Sachs (GS) was beaten down recently on news of a civil fraud investigation by the SEC, don’t count this Wall Street giant out. The fact is that the bad press has driven down shares to bargain levels, and my proven three-point stock screening system is clearly indicating that long-term investors could make the buy of a lifetime snatching up GS shares at current valuations.
Consider that Goldman is now trading at 1.3 times book with its current price of around $157. GS should trade at 1.6 times book -- putting shares somewhere in the $210 range. That’s a 34% return for anyone with the guts to buy in right now!
Still not convinced that Goldman is a buy? Check out these three reasons that GS stock is likely to surge over the next 12 months:
GS shares are down over 15% since the SEC investigation was announced on April 16, giving them a -7% return YTD. Stock is well below both its 50-day and 200-day moving averages. Goldman has also underperformed both the S&P 500 and the S&P Financials index. And all this because of fraud allegations that most investors don’t fully understand, and claims that don’t even carry criminal penalties!
Goldman said last week its first-quarter net income nearly doubled to $3.29 billion, bolstered by strength in its trading operations that drove up revenue to a stunning $12.78 billion. The earnings of $5.59 a share blew away the average forecast of $4.01. Those aren’t numbers to sniff at while other financial companies are still weighed down by credit woes.
Reason #3 – GS earnings power is intact
This latest blowout report is no anomaly. Goldman’s Q1 profits were its second-best ever … and No. 1 was just a few months ago when the bank earned a record $4.79 billion! This week’s report marks the fourth straight double-digit earnings surprise for GS stock, with the average earnings beat topping Wall Street estimates by over 40%. If you want even more reasons to jump in, click here for my top 5 reasons to buy Goldman Sachs GS stock
Copyright © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
The solid report comes a month after the retailer closed all of its Canadian operations.
VIDEO ON MSN MONEY
Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.
Contributors include professional investors and journalists affiliated with MSN Money.
Follow us on Twitter @topstocksmsn.