Trade of the Day: Breakout in GS Stock Targets a Double-Digit Run

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Goldman Sachs Group Inc (GS) — This is one of the world’s leading investment banking and securities firms. Favorable trends in the industry and disciplined expense management led the company to report third-quarter earnings of $4.57 per share, which was well ahead of consensus expectations of $3.21.

S&P Capital IQ expects growth to come from investment advisory services where the firm is an established market leader. Its analysts said Goldman Sachs is one of the best-positioned firms to benefit from an upturn in investment advisory services. They also believe Goldman will benefit from a strengthening U.S. economy and market share gains in Europe.

Its analysts estimate operating earnings per share (EPS) will increase 11% this year to $17.15 and 1% in 2015 to $17.25.

Credit Suisse Equity Research has an “outperform” rating on GS stock, noting its “best in class returns,” with an 11% year-to-date return on equity (ROE). However, the firm only has a fundamental target of $200.

Based on technical analysis, the price target is significantly higher. Many technicians, myself included, see GS stock as a major breakout candidate in a group that has generally underperformed throughout 2014.

On Dec. 5, Michael Ashbaugh noted that GS stock had “established a narrow five-week range.” Since then, shares have broken out from that range, targeting a significant move higher.

Three sessions ago, GS stock broke from a support zone at $188 to $193 on high supporting volume and a buy signal from MACD. The target, using both bars and point and figure analysis, is $220, 12% above current prices. Buyers should enter a stop-loss order at $186.

GS Stock Chart
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Article printed from InvestorPlace Media, https://investorplace.com/2014/12/goldman-sachs-group-inc-gs-stock-trade-day/.

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