Goldman Sachs Group, Inc. (GS: chart, web, Y!) is in the business of providing investment banking, and investment management services, primarily to corporations and financial institutions.

Goldman has been one of the few big investment banking and financial services firms that has actually held up well through the the fallout of the credit crisis and the housing slump. It’s low involvement in small residential mortgages and favorable short trades among the rest of the sector has worked in its favor.

The black sheep mentality compared to the rest of the sector has held the stock price around $200, and it even saw $250 per share back at the end of October.

Is the other shoe about to fall?

Goldman has insulated itself against residential mortgage problems, but it does have some hefty exposure to corporate debt; a topic that has yet to make its way into the headlines, but fear it will has dragged GS down considerably.

Goldman has been on the receiving end of some critical analyst reports during the last week, all conveying the fear that the company will miss earnings in mid March.

Analyst Jeff Harte of Sandler O’Neill said Goldman’s share price will likely be hit harder than its competitors’ since it has been trading at a “considerable premium over peers for the firm’s apparent ability to outperform in a difficult environment.”

The day before, Deutsche Bank analyst Mike Mayo said he expected Goldman to bring in only $2.63 per share in the first quarter, down from $4.64 per share. He expects Goldman to take a nearly $3.5 billion writedown due to leverage loans and other investments.

Earlier this month, Meredith Whitney of Oppenheimer downgraded Goldman to perform, from outperform, citing the 40% premium its shares were trading at compared with its peers. -Source

The earliest downgrade by Meredith Whitney requires some clarification however:

“Goldman’s franchise remains well ahead of its peers with respect to market share but most importantly execution, and none of that has changed, in our opinion,” she writes. “We simply believe there is more probability of multiple contraction than multiple expansion in the current environment of weak/low margin capital market conditions.” -Source

I tend to agree with her. Goldman is probably the smartest and most savvy of the big boys on Wall Street. They’ve avoided the most volatile hot spots in the financial sector, and bet against their peers when thing really went south in the credit sector.

I’m looking to pick up some Goldman Sachs, but I think I’ll have to wait till it finds a bottom. I agree with Ms. Whitney that the premium in price has put a target on the companies back, and the reaction to any speculative bad news will be grounds for over reaction.

It will be interesting to see how the stock fairs after earnings, and I think we’ll gain some insight into whether the second shoe representing corporate credit problems will bear the weight of a work boot or a flimsy flip-flop.

How well will Goldman weather the second front in the credit storm?

Does GS make for a good buy here?

Banking, Finance, Stock Thoughts Credit, Goldman Sachs, housing, investment banking