This company continues to be the gold standard of Wall Street banks and trades at a low 11.5 times estimated 2016 earnings. Goldman Sachs Group Inc. (NYSE: GS) has a gigantic institutional equity, debt and derivatives business, an ultra high net worth clientele, top investment banking and capital markets expertise. The bank continues to be a dominant force around the world and is one of the most sought after in the world. And it is one of the very few that dictate who can be a client at the firm.
In investment banking, the company has the preeminent client franchise. Goldman Sachs advised on more than $1.5 trillion of announced mergers and acquisitions transactions last year, the highest level the bank has ever recorded. It also has maintained a leading market share over the past 25 years. It maintained a market position when merger and acquisition activity was dominated by technology in 1999, by financials in 2008 and by natural resources in 2014. The bottom line is, regardless of where market strength is in any given year, Goldman Sachs is up to the task.
Goldman Sachs also posted stellar second-quarter results, However, some on Wall Street were less than thrilled despite the earnings and revenue beats. While revenues dropped year over year, many feel the bank is poised for a very strong second half of 2016.
Goldman Sachs shareholders are paid a 1.61% dividend. The consensus price target for the stock is $180.57, and the stock closed Wednesday at $161.77.
Morgan Stanley (NYSE: MS) just posted outstanding quarterly results, and it may be among the best buys in the banking and investment arena. It is another one of the white glove Wall Street firms that continues to show tremendous growth, and it is running neck and neck with Goldman Sachs as the bank of choice for high-profile initial public offerings, despite this year’s lack of activity.
Trading at a price-to-earnings multiple of 12.2 times estimated 2016 earnings, that seems extremely reasonable given the 2017 expectations for EPS growth of more than 24%. The company also has $497 billion in cash equivalents on its balance sheet versus $283 billion in total debt.
Morgan Stanley investors are paid a 2.13% dividend. The consensus price objective is posted at $31.37. Shares closed Wednesday’s trading at $28.78.
With all four of these top companies posting strong second-quarter results, investors can feel good about adding positions at current levels.