Favorable Backdrop and Financials
The latest Federal Reserve meeting indicated that interest rate increases might need to be accelerated while boosting its domestic GDP estimates for 2018 and 2019 alluding to a domestic and global economic expansion. Augmenting this economic backdrop is a record number of IPOs, a record number of global merger and acquisitions, rising interest rates, market volatility, deregulation and tax reform. All of these elements provide an ideal confluence that bodes well for the financial sector. The Goldman Sachs Group Inc. (GS) in particular looks to benefit in unique ways due to the consulting fees regarding mergers and acquisitions, trading around market volatility, launching of its cryptocurrency futures contracts as well as rising interest rates as Goldman Sachs has entered into the commercial banking segment when the bank acquired GE Capital’s savings business in 2016 assuming approximately $16 billion of deposits at the time. JP Morgan (JPM), Citi (C) and Bank of America (BAC) are all poised to benefit from the favorable economic backdrop as well however I feel Goldman is in a unique position to benefit across the board in all business segments. Goldman Sachs is relatively inexpensive based on historical standards after a string of quarterly results that have beat Wall Street’s estimates. Goldman Sachs offers a 1.3% dividend yield that was recently increased and a share buyback program to augment the overall favorable backdrop providing a compelling long-term buy. Continue reading "Goldman Sachs - A Compelling Long-Term Buy"