Banking, finance, and taxes
The 2016 Bullish and Bearish Case for Goldman Sachs and JPMorgan
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As 2015 has turned into 2016 faster than most could imagine, 24/7 Wall St. wanted to see what the strategists and analysts on Wall Street expect for the stock market in 2016. The bull market took a surprise turn and was interrupted in 2015, as the Dow Jones Industrial Average closed out the year at 17,425.03, down 2.2% for the year. That may be hardly a reason to call a bear market ahead, but it is after six straight years of gains.
While the index performance of the Dow does not account for individual stock dividends, the returns from individual stocks do account for dividends on a total return basis. If analysts end up being correct in 2016, the bank holding company stocks could bring double-digit gains in the year ahead. Rate hikes are viewed with mixed fanfare by investors and analysts alike, and much may depend upon how high the Fed really takes rates up.
Goldman Sachs
Goldman Sachs Group Inc. (NYSE: GS) closed out 2015 at $180.23, for a loss of 5.8%, including its dividend adjustments. For the year ahead, the consensus analyst price target from Thomson Reuters is $208.92. If the analysts are correct, the expected total return for Goldman Sachs would be 17.4%, if you include its dividend yield of 1.4%.
What may matter now is that 2016 has gotten off to a very bumpy start. Goldman Sachs shares were trading at $170.69 after just a few days of trading.
One problem that Goldman Sachs has experienced over the years is that its growth has been relatively stagnant in the long term. Sure there have been peaks and troughs, but the prices virtually average out to the current price level looking back as far as 2011. So the outlook for growth is not necessarily strong, not to mention this company has the third lowest dividend yield out of all Dow stocks — returns are questionable as well.
The question might not be “What have you done for me?” but really “What have you done for me lately?” or “What will you do for me tomorrow?”
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