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6 pts

Opinion on  Raymond James Financial Inc. (RJF)     Sector: Financial  >  Industry: Investment Services
The company is well positioned to continue to outperform the industry."

May 04, 2008 09:19 AM GMT
Astukphoto
Return Risk
-19.04% MID
Sr. Associate

Favorable/Unfavorable Valuation  

The subprime mortgage meltdown and resulting credit crisis have slammed financial stocks recently. But there are still some diamonds in the rough.

http://money.cnn.com/galleries/2008/pf/0805/gallery.financial...
Let's face it, financials have seen better days. Banks, investment banks and insurers were booming as recently as the beginning of last year. But the S&P Financial sector has fallen 28.5% in the past 12 months and 9.3% so far in 2008.

So we looked for financial stocks that don't, er, stink. We screened for large cap companies with strong earnings, low debt, few write-offs, and minimal subprime exposure. We also only included companies that haven't seen their earnings estimates trimmed by analysts in the past month.
Market capitalization: $3.5 billion
Write-offs since 2005: 0%
Debt to capital ratio: 11%
<!-- /DATA FIELDS -->
We weren't sure we'd be able to find an investment bank for our list, but the fact that Raymond James was the only brokerage that made it through our screens is a testament to how unusual the company is.

Raymond James, based in St. Petersburg, Fla. is one of the few remaining regional brokerages in the United States. The company also owns a commercial bank, and its conservative lending approach helped them through the mortgage crisis, as they had virtually no subprime exposure. And their large network of independent financial advisors has brought the company success, so they haven't been compelled to move into riskier parts of the market.

"Raymond James is a good buy," said South Street Advisors chief investment officer Tom Carhart, who runs a mutual fund that holds a large stake in the company. "The company is well positioned to continue to outperform the industry."

The stock was punished earlier this year after reporting estimates that missed by 19% in the fiscal first quarter, which ended in Dec. 2007. But after beating analysts' estimates by the same amount in its fiscal second quarter, the stock rebounded by jumping nearly 20% in one day.

And though the stock, trading at nearly 15 times fiscal 2008 earnings estimates, may seem a bit pricey when compared to other larger investment banks, the stock may have room to grow. It may deserve a premium because of the lower risk. Plus, Raymond James still hasn't climbed back to the price at which it was trading before it missed forecasts in the first quarter. http://astuk-virtuallystocks.blogspot.com/

RJF:  This call was made on 05/04/08 @ $30.07
Rating:   Positive   $30.07 (05/04/08)
Gain/Loss:   -16.83% in 572 days
Target:   in > one year
Allocation:   0.7% of portfolio


Comments (1)

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Locationh   61%     1 point   commented 572 days ago reply

Look at your charts before pumping RJF. Only a 1.40% dividend? Also a gap between 24 and 26 dollars to fill? Here 52 week high is around 37 and yes she does have options but a low dividend and negative earnings last quarter or two? Also it's current projected 52 week high is 32 not 37. Better fish in the ocean is all I am saying.
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Astukphoto
Armin Stuk   22%     2 points   commented 571 days ago reply

Locationh,
First, thanks for your technical comment on RJF!
Second, in fact, i fish in the ocean and it isn't necessarily a bad strategy.
Third, be sure before saying about pumping, analyze my selection and picks over long period of time and you will well see that I don't dump it at all.
Fourth, you can ask me about my selection criteria whether in 20 years from now or what has been already for several years if you will.
Finally I well know that I am not able to be right all the time but trying to be bellow 60% and still perform if anything.
My strategy is intended to be for long term investors, trying to identify stocks that are likely to outperform the S&P 500. Importantly the whole portfolio should do the same.
Look at your charts before pumping RJF.
......................................................
Why should I; many times I don't care about it.
Thanks again.

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