Goldman Sachs: Still Best in Breed
Say what you want about Goldman Sachs, but it is still "best in breed" if not "best in show".
And yesterday don't matter if it's gone
And while the sun is bright
Or in the darkest night no one knows
She comes and goes"
--From Keith and Mick
That one goes out to the man, Minyanville's own Charlie Mangano, a member of the best Rolling Stones tribute band on the planet, The Rolling Bones.
And you know what, Mick and Keith were right - yesterday don't matter if it's gone. If you were long stocks yesterday, it was easy to pull the blankets over your head this morning and hide - hoping it was all just a bad dream. But yesterday's market action was very real and for my money very necessary. Nothing goes straight up except for Kei Igawa's ERA, after another strong outing for the lefty from Japan who is now pitching to a nifty 6.79 ERA.
I have seen this movie before by the way - Hideki Irabu. I think yesterday provided traders and investors with great opportunities in terms of entry points in stocks that were just flat taken out back to the woodshed. My good friend Jeff "The Lone Wolf" Macke said on our show Fast Money the other night that $190.00 would be an incredible entry level for Goldman Sachs (GS). Well Jeff was spot on as the stock bottomed out around $189.66 yesterday afternoon before rallying back to $195.00.
I too think we have a pretty easy trade in GS. Current levels seem attractive as long as we remain disciplined with a very tight stop. Say what you want about Goldman Sachs, but it is still "best in breed" if not "best in show". Lloyd Blankfein is one of the great minds on Wall Street and with a bench that includes Jon Winkelried and Gary Cohn, the company's lineup is formidable to say the least. I still think it will earn around $23 a share this year and with a market multiple of about ten, that should get us a $230.00 stock on a benign tape. Any issues it is facing on the credit front should be more than offset by the trading revenue generated by its commodities group, still referred to within the walls of 85 Broad Street as J. Aron.
Remember, it is not like GS is trading around its 52 week high. As a matter of fact, on the extreme sell off yesterday GS was trading some 19% off the high made back in early June. The best trades are sometimes the scariest and this is no exception, but with a tight stop this one seems worth a possible shot to me. As for Kei Igawa, I think he should get long Samsonite because as soon as Phil Hughes is ready Kei will be making his way back to Triple A.
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