Goldman Sachs' Relative Strength Line At New High
When a stock gets hammered big time, some investors like to see three waves down before they trust the troubles are over.
Investment bankerGoldman Sachs ( GS ) has taken three gut punches. Although the monthly chart shows that the retreats haven't involved lower lows, the sell-offs were sharp enough to test even the strongest holders.
From October 2007 to November 2008, Goldman's stock lost 81% of its value.
From October 2009 to July 2010, the stock sank 33% off its most-recent high.
From January 2011 to October 2011, Goldman slid 52% off its most-recent high.
Considering how hard financials were hit by the recession and the regulatory uncertainty that followed, Goldman's struggles weren't surprising.
The five-year Earnings Stability Factor is 69 on a scale that runs from 0 (calm) to 99 (wild). The three-year Earnings Stability Factor improved to 32.
Circumstances generally are improving for Goldman's Bank-Money Centers industry group. As of Monday's IBD, the group was No. 19 among 197 groups in six-month price performance.
In the past two quarters, Goldman's revenue growth jumped 82% and 39% vs. the year-ago periods. Earnings grew to $2.85 a share in Q3 vs. a year-ago loss and to $5.60 a share in Q4, up 204% vs. the year-ago quarter. After-tax margin was 26% in Q4, the best in 12 quarters.
The Q4 earnings growth trounced the Street's consensus estimate by 48%.
Uncertainties surrounding Goldman are primarily tied to a lack of clarity on regulations. The question marks include the Volcker Rule, Basel 3 capital requirements and Dodd-Frank.
The dividend held steady at 35 cents a share through the recession until early 2012. The payout was raised to 46 cents a share payable in Q2 2012 and boosted to 50 cents a share payable in Q4 2012.
The annualized yield is 1.3%.
The stock's RS line has been rising since July and is at a 52-week high. Goldman Sachs is extended from a first-stage base and has risen in eight of the past nine weeks.