Looks like the market will pretty much end up even as one of the most turbulent weeks in recent history comes to a close. Hopefully next week will be more stable. In the meantime, one of the stocks in the financial sector that has been badly beaten down in the recent sell-off looks enticing at the these levels.
TD Ameritrade (NASDAQ:AMTD) Holding Corporation, through its subsidiaries, provides securities brokerage services and technology-based financial services to retail investors, traders, and independent registered investment advisors (RIA) in the United States. The company's offerings include TD Ameritrade for self-directed retail investors; TD Ameritrade Institutional, which provides brokerage and custody services to independent RIAs and their clients; Thinkorswim, which offers a suite of trading platforms serving self-directed and institutional traders and money managers; and Investools, which provides a suite of investor education products and services for stock, option, foreign exchange, futures, mutual fund, and fixed-income investors.
(Click chart to enlarge)
8 reasons to like AMTD at under $15 a share:
- TD Ameritrade is selling near the bottom of its five-year valuation range based on P/S and P/B
- AMTD is trading right at long-term technical support ( see chart above )
- A possible combination of TD Ameritrade and ETrade could provide significant cost synergies and the give the combined entity a stronger position in the online brokerage space
- AMTD sells at just under 14 times this year’s expected earnings and around 11 times 2012’s consensus EPS.
- Market volatility is spiking trade volume. TD Ameritrade processed 900K trades this Monday up from an average of 365K/day previously. This additional trade volume is not reflected in the stock price.
- AMTD has a strong A- rated balance sheet and yields 1.4%.
- The stock has sold off around 30% over the last two months and looks to be oversold at these price levels
- It is significantly under analysts’ price targets. Credit Suisse has a price target of $20 on AMTD. S&P has a target of $24 on TD Ameritrade as does BMO Capital and Keefe, Bruyette & Woods.
Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in AMTD over the next 72 hours.