The Goldman Sachs Group, Inc. (GS) Is Ripe For A Higher Valuation, Says Jim Cramer

We recently published 11 Stocks Jim Cramer Discussed As He Revealed How To Become ‘King’ Of AI. The Goldman Sachs Group, Inc. (NYSE:GS) is one of the stocks Jim Cramer recently discussed.

The Goldman Sachs Group, Inc. (NYSE:GS)’s shares have gained 25% year-to-date due to greater deal-making activity and IPOs. One recent catalyst for the stock was the bank’s earnings report, which saw its equities revenue of $4.3 billion beat analyst estimates of $3.6 billion and its investment banking fees jump by 26% annually to touch $2.19 billion and surpass analyst estimates of a 10% growth. Despite the relatively strong share price performance, Cramer believes The Goldman Sachs Group, Inc. (NYSE:GS) has further room to grow:

“Goldman, Goldman and Morgan. I think that Goldman stock has been elevated because of things I guess. Now see, Goldman’s only at [inaudible] it’s got a parabolic move. But it sells at 16 times earnings. That is a candidate to be revalued up to 18, 19 times earnings.”

Here’s what he said about The Goldman Sachs Group, Inc. (NYSE:GS) after its earnings:

“The single best report of the big banks came from Goldman Sachs, another Charitable Trust holding… really bailed me out on this one… They changed the… CEO of this today… Goldman blew away the numbers. I think they may have had the best quarter ever…

Big story though, right now, is the return of M&A as M&A advisory revenue grew a staggering 71% year over year, 48% just versus the previous quarter… In the end, the stock rallied more than six bucks today. I think it’s going to be up much, much more. You know why? Because it is just the cheapest when it comes to EPS…

…The craziest thing is that Goldman, a fabulous firm, trades at a big discount to the average stock in the S&P 500 because its earnings used to be so episodic… This quarter showed how the company’s become much more of a well-oiled machine where you’re going to get a number that doesn’t swing wildly good, bad, or indifferent. I think this is the beginning of when the stock gets reevaluated upward and the multiple has a giant upward revision, and that’s going to propel the stock much higher….

When I saw Goldman down six, I said if someone wanted to buy a hundred shares, buy 25 now, buy 25 a little bit lower, and then buy 50. That’s called pyramid style buying, gradually getting… bigger as it goes down… When a stock starts to go lower, it will often keep going lower until all the people who don’t know anything are done selling, and you get a terrific price from their ignorance. We saw that with Goldman today, as the stock eventually rebounded and finished the session up more than six bucks. This was their best trading quarter in history, and it’s a great trading firm, very strong wealth management, beginning of a turn in M&A and IPOs.  That’s really all you can ask for from Goldman, and it’s the stuff that’s going to make the stock a much higher multiple stock, and I like that.”

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Disclosure: None. This article is originally published at Insider Monkey.