GS is one of the brokers that has hung in fairly well during the recent market decline. Do I dare mention that it is cheap on a PE basis as it trades with an anticipated E of $16 to $18 for the year ending in November. If the E comes to pass, the P/E becomes around 8 on a current basis and I can't see why that is not considered cheap. Of course the markets could tank big and the E for 2007 could fall off the table. There is however some margin of safety as GS has a book value of about $62, and with earnings at these levels the book value grows at about 25% per year.

A few months ago, Jimmy Cramer set his price target of $225 on GS when it was trading higher and the earnings for the year were thought to be lower ($15). Jimmy reasoned that the P/E for GS should be 15 and with earnings of 15, the stock should trade in the $225 area.

The stock peaked when Jimmy wrote the column (shocking) but for longer term investors it looks like a good buy at these levels. The 200 day SMA will probably continue to be a primary area of support with resistance at the 50 day level and if the markets ever have another up day, the shares of GS will probably outperform.


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