Banking

Diversity Initiatives Launch Goldman Sachs Into New Buy Zone

As Wall Street cashes in on bank stocks like Bank of America (BAC), Wells Fargo (WFC) and Morgan Stanley (MS), Goldman Sach (GS) bankrolls a new breakout.




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With a 97 Composite Rating, GS stock and MS tock share top billing among banking stocks in the money-center industry group, topping Bank of America, Wells Fargo and JPMorgan.

Since sinking to a new low during the coronavirus crash in March 2020, the Financial Select Sector SPDR ETF (XLF) has vaulted as much as 119%. Goldman Sachs and the other major banking stocks have ridden similar trajectories.

GS stock and JPM stock have both secured spots on the IBD Breakout Stocks Index as they test new buy points.

Boosted by rising interest rates and a strong economic outlook, a number of leading financial and banking stocks have made appearances on IBD stock lists. Goldman Sachs is on the IBD 50 list of top growth stocks. GS stock and MS stock are both on the IBD Big Cap 20.


Who Joins GS Stock, JPM Stock On The IBD Breakout Stocks Index?


Goldman Sachs Expands Diversity Drive Through ‘Launch With GS’

In March, Goldman Sachs committed an additional $500 million to its Launch With GS initiative, bringing its total investment in the program to $1 billion.

Based on the data-driven thesis that diverse teams drive strong returns, Launch With GS aims to increase access to capital and facilitate connections for women, Black, Latinx and other entrepreneurs and investors.

Goldman Sachs has also pledged to commit $10 billion in direct investment capital and $100 million in philanthropic support through its One Million Black Women initiative. The program will comprise investments focused on key moments in Black women’s lives, from early childhood through retirement.

Investors Bank On Big Growth For GS Stock

On April 14, Goldman Sachs reported 498% earnings growth, marking a second straight quarter of triple-digit gains and a third quarter of acceleration. Sales growth jumped from a 4% decline in Q4 to a 58% gain in Q1.

Analysts expect Goldman Sachs to deliver a 190% EPS increase in Q2 and a 59% jump for the year.

Among other major banking stocks, the 2021 EPS estimates for Goldman Sachs dwarf that of Morgan Stanley (4%) but are similar to JPMorgan Chase (58%) and Bank of America (61%). Wells Fargo leads the group, with analysts looking for a 179% spike in earnings.

Banking Stocks Testing Breakouts: GS Stock, MS Stock, JPM Stock

While Wells Fargo and Bank of America are both extended, Goldman Sachs, Morgan Stanley and JPMorgan are testing new buy zones.

Goldman Sachs broke out past a 356.95 buy point on May 5.

Volume was light on the breakout. But trading picked up as GS stock reached the upper end of its buy zone before coming off its highs this week.

Goldman Sachs closed Tuesday’s session still within buy zone as its relative strength line tries to return to a new 52-week high.

Meanwhile, Morgan Stanley and JPMorgan also formed new chart patterns and are trying to push through new buy zones. Like the major stock market indexes, banking stocks have come under pressure this week.

IBD Breakout Opportunities ETF

The IBD Breakout Opportunities ETF from Innovator Capital Management tracks the IBD Breakout Stocks Index. As with other index ETFs, this allows you to essentially invest in the entire index in addition to or rather than buying individual stocks. Learn more here about the ETF and Innovator funds.

Follow Matthew Galgani on Twitter at @IBD_MGalgani.

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