TD Ameritrade: Buy
The brokerage has beaten Wall Street’s earnings projections for four consecutive quarters. More impressively, AMTD’s client assets have grown for four straight years, and at an enviable rate. On an annualized basis, net new client assets have increased at a double-digit percent pace since 2008.
That’s partly attributable to AMTD’s strength in servicing registered investment advisers and other money managers with relatively small shops. It also helps that the online brokerage is associated with bricks-and-mortar Toronto-Dominion Bank (TD), which affords opportunities to cross-sell products.
Bottom Line: The 60%-plus gain has made the stock look a little pricey, at least on a relative valuation basis. Shares trade at a premium to their own five-year average by forward earnings. But its unmatched ability to bring in new client assets, strong balance sheet and robust cash flow mean the stock has more room to run. That makes AMTD a “buy.”