New Leadership Can Revitalize Even a Top Company

Company leadership changes over time. New leadership can bring about fresh energy, new ideas, and potentially find new ways to grow a business.

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  • Such leadership doesn’t always have to come from the CEO seat as well. That could be the case with Goldman Sachs (GS), which just announced a new CFO to replace the retiring one after a three-year tenure.

    Shares have had some strong performance over the past three years, rebounding strongly from the pandemic to new highs. The investment bank has seen shares more than double with a 107 percent return in the past year alone.

    Even with those returns, the bank’s increased revenues and profitability still leaves the bank trading at 11 times forward earnings. And the company’s recent acquisitions into the fintech space also point to the need for younger leadership to maintain growth in the years ahead.

    Action to take: The bank’s 37 percent profit margin indicates that growth is strong without compromising earnings. Investors who buy here can also lock in a growing dividend near 2 percent right now, with the likelihood of further increases in the future.

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  • Traders may like the January $420 calls. The strike price is right at the company’s 52-week (and all-time) high, and the option has a bid/ask spread near $18.75. On a move higher through the end of the year, investors can likely nab mid-double-digit profits or better.

     

    Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.