In this piece, we will take a look at Goldman Sachs' top 12 growth stock picks. If you want to skip the latest about one of America's most well known banks, then head on over to Goldman Sachs Growth Stocks: Top 5 Stocks.
Investment bank The Goldman Sachs Group, Inc. (NYSE:GS) is making a lot of headlines these days, and not all of these are good. There's turmoil brewing within its walls and its chief executive officer Mr. David Solomon has continued to come under fire from a lot of quarters. 2022 wasn't kind to Goldman, as its revenue and net income dropped annually in the wake of the Federal Reserve's historic interest rate hikes. The bank's revenue for the 12 months ending in December last year stood at $47 billion and marked a sizeable drop of $12 billion. Similarly, its net income also dropped by $10 billion. This necessitated the bank to make some hard changes, one of which was reducing employee compensation.
As you'd likely know if you've been reading Insider Monkey regularly, last year wasn't great for anyone who isn't a multi millionaire or a billionaire. Inflation touched a record high and right during this time, Goldman Sachs' employees also saw their compensation go down - a decision that didn't win Mr. Solomon any fans. At the center of this turmoil is the bank's much hyped Marcus division, which would provide loans to consumers and accept deposits. Goldman's reputation on Wall Street helped with the product launch and the bank soon attracted billions of dollars in deposits. It slowly expanded Marcus to include investment management and advising services. However, this is where the bank made mistakes, as it relied too much on its experience with high net worth individuals to develop profitability models for the Marcus investment division.
Another mistake during this time period was Goldman's acquisition of GreenSky, a buy now, pay later (BNPL) platform. GreenSky is reported to be making hundreds of millions of dollars in losses, adding further to Mr. Solomon's woes. Seems like the Goldman boss really can't do anything right as far as sentiment in some quarters is concerned, with layoffs, Marcus, and GreenSky all heating up the pot against him.
But wait, there's more. A big announcement that was also part of Goldman's push into the consumer world is its partnership with the Cupertino, California consumer electronics giant Apple Inc. (NASDAQ:AAPL). The pair partnered up in 2019 to provide the Apple Card platform, which allowed Apple customers to open savings accounts and conduct other financial actions. However, Goldman has lost billions of dollars from Apple Card, and most of these are believed to come from consumer disputes that have proven to be a bit too much for the investment bank to handle. With Apple Card's losses believed to sit at $5 billion as of late 2023, Mr. Solomon extended the partnership with Apple until 2029 in October 2022, so perhaps some of the ire directed at him does make some sense.
Being on the back foot isn't great, and with August coming to an end, Goldman announced that it is selling its Personal Finance Management (PFM) business division. PFM was a wealth management unit that managed millionaires' money and Goldman's shares gained a couple of dollars on the market when the sale was announced. Year to date though the stock is down 5.35% and represents a cyclical roller coaster track that shows an inherent conflict in investors' minds when it comes to betting about the bank's future.
Thought the bank's troubles were over? Think again as the Financial Times reports that the Federal Reserve has warned Goldman about its business dealings with financial technology and payments firms such as Stripe and Wise.
However, even though it might very well be the case that someone has hexed Goldman Sachs, the fact still remains that its research division is one of the most credible in the world. An analyst's true test comes when he or she stands against the tide, and Goldman has been one of the very, very few in the industry that has been skeptical of a deep recession in the U.S. So, its stock picks still merit a deeper look and today we'll analyze some growth stocks. As a primer, growth stocks are those whose share price diverges significantly from the earnings per share, and if you're wondering why that is, check out 10 Best Inexpensive Stocks To Buy Right Now. Some top stocks in today's coverage are Tesla, Inc. (NASDAQ:TSLA), Zscaler, Inc. (NASDAQ:ZS), and CyberArk Software Ltd. (NASDAQ:CYBR).
Goldman Sachs Growth Stocks: Top 12 Stock Picks
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Our Methodology
To compile our list of Goldman Sachs' top growth stocks, we ranked the top fifty stocks in its portfolio made of 5,730 stocks by the price to forward earnings ratio. The forward earnings ratio was used to pick Goldman Sachs' best growth stocks because it wagers a guess at how they might perform in the future growth wise and also presents an up to date financial picture after the recent earnings season.
Intuit Inc. (NASDAQ:INTU) is a software company that provides its customers with a platform that enables them to manage payroll and conduct other financial operations. It's been having a great time on the earnings front lately, by beating analyst EPS estimates in all four of its latest quarters.
As of June 2023, 86 out of the 910 hedge funds part of Insider Monkey's database had bought Intuit Inc. (NASDAQ:INTU)'s shares. Out of these, the firm's biggest stakeholder is Ken Fisher's Fisher Asset Management since it owns 2.6 million shares that are worth $1.2 billion.
Along with Zscaler, Inc. (NASDAQ:ZS), Tesla, Inc. (NASDAQ:TSLA), and CyberArk Software Ltd. (NASDAQ:CYBR), Intuit Inc. (NASDAQ:INTU) is a top Goldman Sachs stock pick.
Mastercard Incorporated (NASDAQ:MA) is a financial services and payments platform company. Rumors in the market suggest that it is considering an increase in its credit card fees, and the shares are rated Strong Buy on average.
During this year's second quarter, 139 hedge funds among the 910 polled by Insider Monkey were the firm's shareholders. Mastercard Incorporated (NASDAQ:MA)'s largest shareholder is Charles Akre's Akre Capital Management through a stake worth $2.3 billion.
Costco Wholesale Corporation (NASDAQ:COST) is a global consumer defensive retailer. It is a crucial stock to watch as the holiday season approaches as the company has been doing well in the sales department recently, aided by an attractive product and subscription model.
Insider Monkey scoured through 910 hedge funds for their Q2 2023 investments and discovered that 67 had bought a stake in the company. Costco Wholesale Corporation (NASDAQ:COST)'s biggest hedge fund investor is Ken Fisher's Fisher Asset Management since it owns $1.4 billion worth of shares.
Splunk Inc. (NASDAQ:SPLK) is a cloud and software firm that provides cybersecurity and other products. Like Intuit, it's also benefiting from the strong performance of the enterprise computing segment by having beaten analyst EPS estimates in all four of its latest quarters.
50 out of the 910 hedge funds part of Insider Monkey's database had invested in Splunk Inc. (NASDAQ:SPLK) as of June 2023. Jeffrey Smith's Starboard Value LP is the company's largest stakeholder through a $431 million stake that comes courtesy of 4 million shares.
Merck & Co., Inc. (NYSE:MRK) is a global pharmaceutical firm that is one of the largest of its kind. The firm scored a win in August when the European Union approved its gastric cancer drug making it the first of its kind in the region.
By the end of this year's second quarter, 78 out of the 910 hedge funds polled by Insider Monkey had bought the firm's shares. Merck & Co., Inc. (NYSE:MRK) 's biggest hedge fund shareholder is Ken Fisher's Fisher Asset Management through its $1.4 billion stake.
American Tower Corporation (NYSE:AMT) is a telecommunications property management firm structured as a real estate investment trust (REIT). Turmoil in the telecommunications industry this year and an inflationary and high interest rate environment have affected its income statement, as the company has missed analyst EPS estimates in three of its four latest quarters.
As of June 2023, 60 hedge funds among the 910 part of Insider Monkey's research had invested in the company. American Tower Corporation (NYSE:AMT)'s largest stakeholder is Charles Akre's Akre Capital Management since it owns $1.3 billion worth of shares.
NVIDIA Corporation (NASDAQ:NVDA) is the darling of the technology industry this year. Its artificial intelligence products are seeing a lot of orders, with Tesla alone using 10,000 NVIDIA GPUs for its full self driving algorithm training.
175 out of the 910 hedge funds part of Insider Monkey's database have bought NVIDIA Corporation (NASDAQ:NVDA)'s shares. Rajiv Jain's GQG Partners is the company's biggest investor in our database through its $5.8 billion investment.
Tesla, Inc. (NASDAQ:TSLA), NVIDIA Corporation (NASDAQ:NVDA), Zscaler, Inc. (NASDAQ:ZS), and CyberArk Software Ltd. (NASDAQ:CYBR) are some top growth stock picks on Goldman Sachs' radar.
