Love it or hate it, there's no denying that Goldman is a force to be reckoned with. When these guys predicted that oil would surge to $100 and beyond back in '06, many Fools laughed. The laughing stopped when oil proceeded to do just that. And when Goldman followed up its $100 prediction with a call for $200 oil just two years later, no one laughed -- and investors actually bid up oil futures, helping Goldman to fulfill its own prophecy. (Almost.)
For good reasons or ill, this banker's opinions move markets. Even if you don't agree with Goldman, its activities are worth keeping an eye on.
Goldman fires it up
Earnings season began with a whimper last night, as Alcoa reported its Q1 results. The numbers matched expectations for profits, but disappointed on revenue. Now that the bell has rung, how should you play the rest of earnings season? Goldman has a few thoughts.
First and foremost, the banker sees encouraging signs in both the "aftermarket and original equipment" segments of aerospace. Goldman encouraged investors to board that train early this week, and buy shares of Goodrich and Precision Castparts
While I take issue with that last opinion, I've long argued that valuations in the defense sector look awfully good. I think Goldman's right on the broad theme here. The closer to delivery Boeing
Ringing up bargains ...
According to Goldman, aerospace isn't the only place for value. Last week, the banker stuck its neck out by cautiously recommending AT&T
AT&T and Verizon trade at 12.3 and 23.2 (!) times earnings, respectively, but their profit-growth rates could stay mired in the mid-single digits for the foreseeable future. Neither stock looks particularly "cheap" right now. Then again, dividend yields of 6%-and-change on both stocks may lessen the sticker shock, especially on AT&T.
... and ringing the register
The news is a bit more mixed in retail. Goldman's going with the majority on many retail stocks, telling investors to put their faith in the recovery by buying shares of Abercrombie & Fitch, J.C. Penney, and Urban Outfitters, among others.
But the banker's taking a much more muted stance on some of their peers. Aeropostale, Limited Brands, and Target all receive only neutral ratings from the banking giant. Meanwhile, Goldman sees no sense whatsoever in the sudden enthusiasm for Gap
Moral of the story
In investing, aviation, and aviaries, the early bird gets the worm.