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Annotated article summary from this weekend's Barron's. Receive all our Barron's summaries by signing up here:

Raymond James Financial by Kopin Tan

Summary: Subprime-leery investors avoid financial/lending stocks lately, especially U.S.-centric ones like Raymond James Financial (RJF). But RJF has no subprime exposure, has recorded 20% higher net income and a 41% revenue increase in Q2 from rising deposits -- not loans. Bank revenue should contribute $0.19/share in 2008 profits, up from a previously forecast $0.12/share, where $0.35/share is expected for 2009. Though RJFs $31 shares trade at a relatively expensive 13.5 P/E or 2.4 book value, that's offset by $3/share in cash and equity. That's roughly 11% of total assets, vs. big brokers like Merrill Lynch (MER) and UBS (UBS) with just 3%. RJF should actually benefit from Wachovia's (WB-OLD) buyout of rival A.G. Edwards (AGE) as former AGE brokers go looking for better pay packages, taking their commissions with them. Operational streamlining has led RJFs 4,640 financial advisors to generate 40% more revenues/assets per advisor since 2004. Analysts have largely missed the $3.7 billion cap company's potential as the largest independent brokerage house. CEO Thomas James says RJF's not for sale, but bulls say the stock could reach $37-$38, or even $40 if the buyout price is right.

Related Links: A.G. Edwards: Wachovia's Purchase Has Handsomely Increased Its ValueTrying (and Failing) To Understand Wachovia's A.G Edwards AcquisitionSeven Financial Stocks With Strong Momentum Going Into Earnings

RJF 1-yr. chart:
RJF Investment

Source: Raymond James: No Subprime Exposure and Room For Growth - Barron's