Why Goldman Sachs Group, Inc. (GS) Is One of the Best Cheap Stocks to Buy for 2025?

Goldman Sachs Group, Inc. (GS) has been a powerhouse in the financial industry for decades, and its stock has consistently outperformed the market. As we approach 2025, investors are wondering if GS is still a solid investment option. In this article, we'll explore why Goldman Sachs is one of the best cheap stocks to buy for 2025.



Undervalued Metrics

Goldman Sachs Research strategists have stated that they do not recommend a zero allocation to non-US equities, as many world-class companies located outside the US are attractively valued. This suggests that there are opportunities for investors to find undervalued stocks in non-US markets. Additionally, the record cheapness of most non-US equity markets is warranted by the structural weaknesses of the economies of the Eurozone and most emerging market countries. This indicates that there may be undervalued opportunities in these markets as well.



Dividend History and Yield

Goldman Sachs has a dividend yield of 1.8% as of 2025, which is competitive with its peers. The annual dividend per share has increased from $0.50 in 2009 to $8.00 in 2024, representing a compound annual growth rate (CAGR) of approximately 14%. This consistent growth in dividends is a positive sign for investors, as it indicates that the company is generating sufficient cash flow to support and increase its dividend payout.



Key Risks and Challenges

While Goldman Sachs is an attractive investment option, it is essential to be aware of the key risks and challenges facing the company in 2025. These include:

1. US Debt Trajectory: Although the firm believes the US debt trajectory is not a risk for at least the next decade, it is still a potential concern that could impact the firm's outlook.
2. Geopolitical Tensions: Heightened geopolitical tensions, particularly with countries like Russia, North Korea, and China, pose significant risks to Goldman Sachs' outlook.
3. Market Concentration Risks: The increasing dominance of US equities, particularly large-cap stocks, and the concentration of returns in a few tech stocks raise portfolio risk.
4. Reduced Expectations for Interest Rate Cuts: Markets previously anticipated 125 basis points in rate cuts for 2025 but have since scaled back to less than 40 basis points.
5. Correction Risks: With markets already factoring in optimistic growth scenarios, any deviation could trigger a correction.
6. Regulatory Risks: Changes in regulations or increased scrutiny from regulators could impact the firm's operations and profitability.
7. Competition: The firm faces competition from other investment banks and financial institutions.

Conclusion

Goldman Sachs Group, Inc. (GS) is one of the best cheap stocks to buy for 2025 due to its undervalued metrics, attractive dividend history, and consistent growth. While there are risks and challenges facing the company, the potential rewards outweigh the risks. Investors should consider adding GS to their portfolios as a long-term investment opportunity.