Two Broker Stocks That Are Poised to Run Higher
As the stock market continues its assault on all-time highs, there has been a strong influx of investment by individual retail investors. These individual investors typically utilize online platforms to buy and sell stocks, and statistically, come into equities during the mid-way point of a market rally.
While this trend has been good news for a number of companies in the space, two behemoths in the industry look to be in prime position to benefit; E*Trade (ETFC - Analyst Report), and TD Ameritrade (AMTD - Analyst Report). Both of these companies currently have a Zacks Rank #1 (Strong Buy), and are seeing a surge in growth levels due to this increased retail investment activity.
Analysts are also hoping on board this trend, as many have been raising their estimates for these stocks in recent weeks, suggesting that both companies are poised for sustained growth over the next 6-12 months.
E*Trade in Focus
E*Trade has seen significant EPS estimate upgrades over the past 60 days, with Q1 2014 estimates jumping from $0.19 to $0.22. This would indicate an 82.14% year over year growth rate. Furthermore, estimates for 2014 and 2015 have increased as well; $0.87 to $0.91, and $1.08 to $1.16, respectively.
Moreover, the covering analysts have all increased their EPS estimates for Q1 2014, through 2015. This shows that there is 100% agreement by analysts that ETFC will continue to see solid growth out to 2015. Finally, this company has an average (last 4 quarters) Positive Earnings Surprise of 61.54%, so it has had no trouble in beating estimates either.
TD Ameritrade Estimates
TD Ameritrade has seen almost unanimous analyst upgrades over the past 60 days (only 1 out of the 12 coverage analysts has not increased their estimates), with Q1 2014 estimates rising to $0.32 from $0.31 (23.08% year over year growth).
Also, estimates for Fiscal Year 2014, and 2015 have risen from $1.34 to $1.41, and $1.61 to $1.70, respectively. Furthermore, TD Ameritrade has had three consecutive positive earnings surprises, with an average positive surprise of 6.13%.
Overall, the Finance-Investment Brokers industry is currently ranked #34 out of 265, putting it in the top 13% of all industries, so clearly the trend is pretty widespread across the space. In fact, amongst the companies within the industry, we also have Piper Jaffray (PJC - Snapshot Report), Gain Capital Holdings (GCAP - Snapshot Report), and Investment Tech Group (ITG - Snapshot Report) as Zacks Rank #1 Strong Buys.
This suggests that this retail investor trend is looking pretty promising and that many stocks in the space could benefit from the surge in investing interest. So if you are looking to play this trend from an investing perspective, either ETFC or AMTD could be excellent picks in the near term, and especially so if robust trading volumes continue to help push earnings estimates higher for these discount broker giants.
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