Trade of the Day: Buy RJF Stock on Near-Term Vulnerability

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Raymond James Financial, Inc. (RJF) — This company offers a full range of financial services including brokerage, investment banking, financial planning and investment advisory primarily to retail and small business clients.

The firm ended its fiscal third quarter (June) with $500 billion in client assets under administration, up from $479 billion a year ago, and more than 6,500 financial advisors. Its municipal bond underwriting unit also made it into the top 10 in the industry.

Despite low interest rates, Raymond James’ interest income rose 14% in the most recent quarter, a testament to management’s flexibility in a tough environment and its ability to manage its core business.

Capital IQ forecasts earnings will increase 8% in fiscal 2015 (ending in September) to $3.60 per share and jump another 19% in FY 2016 to $4.30, both recent upward revisions. Its analysts also recently raised their price objective for RJF stock by $3 to $68, applying a forward P/E of 15.8 to their FY 2016 EPS estimate.

RJF stock is trading in a well-defined bull channel with a range of about $58 to $68, and solid support at its 200-day moving average just below $57. However, the recent failure to make a new high at a double-top at about $61.20 and Thursday’s failure to cleanly break through the 50-day moving average at $59.53 make it vulnerable to a pullback and test of support around $57.

Volume has been flat and MACD is weak, which also point to near-term vulnerability. A short-term test could provide an excellent opportunity to buy RJF stock. Therefore, try to purchase shares at $58 for a four-month trading target of $68, which would result in a gain of more than 17%.

RJF Stock Chart
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Article printed from InvestorPlace Media, https://investorplace.com/2015/07/raymond-james-financial-inc-rjf-stock-trade-of-the-day/.

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