A wise investment decision involves buying well-performing stocks at the right time while selling those that are at risk. A rise in share price and strong fundamentals signal a stock’s bullish run.
Here we focus on Broadridge Financial Solutions, Inc. (BR - Free Report) , an outsourcing stock that performed extremely well over the past year and has the potential to carry the momentum forward. Therefore, if you haven’t taken advantage of the share price appreciation yet, it’s time you add the stock to your portfolio.
Why an Attractive Pick?
Share Price Appreciation: A glimpse of the company’s price trend reveals that the stock has had an impressive run on the bourse over the past year. Broadridge returned a whopping 62.9%, which compared favorably with the industry’s 27.7% growth.
Solid Rank & VGM Score: Broadridge has a Zacks Rank #2 (Buy) and a VGM Score of B. Our research shows that stocks with a VGM Score of A or B when combined with a Zacks Rank #1 (Strong Buy) or 2 offer the best investment opportunities for investors. Thus, the company appears to be a compelling investment proposition at the moment.
Northward Estimate Revisions: Three estimates for fiscal 2019 moved north over the past 60 days versus no southward revisions, reflecting analysts’ confidence in the company. Over the same period, the Zacks Consensus Estimate for fiscal 2019 climbed 3.3%.
Positive Earnings Surprise History: Broadridge has an impressive earnings surprise history. The company outpaced the Zacks Consensus Estimate in three of the trailing four quarters, with an average beat of 23.4%.
Solid Growth Prospects: The Zacks Consensus Estimate for fiscal 2019 earnings of $4.65 reflects year-over-year growth of 11%. Earnings are expected to grow 8.8% in fiscal 2020. The projected long-term earnings per share growth rate for Broadridge stands at 10%.
Broadridge’s recurring fee revenues have been growing significantly over the past few years and constitutes majority of its top line. Currently, the company has a large recurring revenue backlog of around $300 million, which provides good visibility on its organic revenues in the near to mid-term.
Broadridge Financial Solutions, Inc. Revenue (TTM)
The company’s capital market business should grow as markets consistently globalize and regulatory changes continue to take place. Its investment management business is benefiting from increase in scrutiny on money movements. Also, growing demand for transparency in corporate governance should drive the governance business.
Increasing adoption of outsourcing in EMEA and APAC should boost Broadridge’s global technology and operations segment. An improving economy should push up demand for the company’s customer communications products.
With increasing demand for technology solutions, Broadridge has ramped up investments in digital, AI, cloud and blockchain particularly via acquisitions. These investments should be beneficial in the long run.
Other Stocks to Consider
Some other top-ranked stocks in the broader Business Services sector include NV5 Global (NVEE - Free Report) , Paychex (PAYX - Free Report) and Convergys , each carrying a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.
The long-term expected earnings per share growth rate for NV5 Global, Paychex and Convergys is 20%, 8.2% and 7.5%, respectively.
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