3. Goldman Sachs
Shares of Goldman Sachs (GS - Get Report) closed at $90.10 Friday, declining 46% year-to-date. Based on a quarterly payout of 35 cents, the shares have a 1.55% dividend yield. Based on a mean price target of $135.72 among analysts polled by FactSet, the shares have 51% upside.
Goldman is facing some serious headwinds, with the ongoing battle over the Federal Reserve's implementation of the Volcker Rule, a feature of the Dodd-Frank Wall Street Reform and Consumer Protection act -- signed into law by President Obama in July of last year -- that is supposed to ban proprietary trading by banks.Regulators have headed back to the drawing board, as the public commentary period following the draft proposal on implementing Volcker that was issued in October, ended on Friday. The 300-page draft proposal failed to define the short-term "proprietary trading" that the regulator is required to ban. In his report last week lowering earnings estimates for several large banks for a "weak and messy" fourth quarter, Atlantic Equities analyst Richard State last Thursday cut his fourth-quarter earnings estimate for Goldman by 60% to 90 cents, "driven by lower revenue across all business against a relatively fixed cost base." Staite has a neutral rating on the shares, and estimates the company will achieve a decent return on tangible equity of 9.4% in 2012, "on the assumption that revenues improve in both Investment banking and in the Investing and Lending division." Staite also believes that Goldman "has the potential to increase market share as competitors, particularly European banks, drop out," although "near term trading revenue