(By Rich Bieglmeier) Investment firms made our emerging bull list in the weekly sector analysis review. TD Ameritrade Holding Corporation
) is our favorite, short-term pick from the sector following iStock's chart and fundamental reviews.
As you probably know already, AMTD provides securities brokerage services and technology-based financial services to retail investors, traders, and independent registered investment advisors (RIAs) in the United States.
With today's "European Central Bank will engage in unlimited bond buying" induced rally, the broker's stock advanced beyond its 200-day average for the first time since Independence Day, and smashed through a top of resistance that's held the stock back for the past month.
In our view, the combination of technical buy signals could help propel the stock to $19-$19.50 dollars if the market continues to roll on higher. According to StockChart.com's free point & figure analysis, Ameritrade has a bullish price objective of $24.50.
Any day now, management should give investors an update on some of the company's key metrics from August. The street will be interested in seeing if the broker can maintain a bump in July positives.
Much like the overall market, Ameritrade has suffered from the dramatic fall in volume; less volume means fewer trades and lower commissions. That's partly why the stock has fallen from a March 2012 high of $20.59 to a July low of $15.09.
According to the most recent update, July averaged 332,000 client trades per day, down 9% from July 2011; however, the metric rose 1% month-to-month (MOM) from June 2012. There is room for continued improvement as total client assets as of July 31, are up 9% percent year-over-year (YOY) and up 1 percent from a month ago.
Additionally, the company's less volatile fee-based business is growing handsomely, with an average fee-based balance of $90.7 billion, up 8% YOY and MOM. If the trend continues in August, then iStock expects to see the street react positively to the news.
This time of years happens to be a good time for investors to enter AMTD. In 9 of the last 10 years, Ameritrade has bottomed sometime between mid-July and as late as mid-November and rallied thereafter. 2009 was the only exception as the stock price was trading at a high as the autumn approached.
2012 looks more like the nine winning years as July marked TD Ameritrade Holding Corporation (AMTD) at a low point of 2012. Typically, shares rally for a couple of months after u-turning off the mat.
Fundamentally, AMTD is somewhat expensive relative to the peer group. As a result, iStock sees the financial company as more of a short-term, seasonal opportunity than a long-term, core holding.