Editor’s note: This column is part of our Best Stocks for 2018 contest. Matt McCall’s pick for the contest is Broadridge Financial Solutions (NYSE:BR).
I don’t mean to toot my own horn, but my pick in the Best Stocks for 2018 contest is up 29% through the first six months of the year. Most stocks don’t return that much in a full year let alone just half.
That kind of performance gets even better when you consider the S&P 500 is up only 1.6% in the same timeframe. And when you add in the fact that financial stocks as a whole are actually in the red, that 29% gain in a stock within that same industry starts to feel like it’s in the triple digits.
Through its technology, Broadridge Financial Solutions (NYSE:BR) provides investor communications and other solutions to the financial sector. It’s actually one of the pioneers in its industry and stands to be a huge beneficiary as blockchain — the technology behind cryptocurrencies — changes the way financial business is conducted.
This $13 billion company has emerged as a standout name in this budding trend, and it has only continued to grow in the three months since we last spoke about it. Part of that is the result of two small purchases it recently made. The first came in May when BR acquired FundAssist to expand its regulatory communications business — a core area for the company — and the second was the buyout of MackayWilliams, a firm that specializes in European fund market and research.
Broadridge is growing both organically and through outside acquisitions, like the two I just described, and as a result it was announced in early June that the stock would become a member of the S&P 500 stock index. BR has officially evolved from a mid-cap to one of the 500 largest publicly traded companies in the United States.
Broadridge Is All About the Blockchain
But the growth doesn’t stop there. The number one reason I have advocated for BR over the last couple of years is its ties to blockchain, and just last month it was announced that the company was granted a patent for a blockchain technology that will enhance the processes for proxy voting and repurchase agreements.
Broadridge has started using blockchain in this area and it is expected that within the next decade it will have completely transitioned to the new technology. Considering the company is already a leader today and is positioning itself to continue to be one in the future, I see a lot of upside growth potential in the years ahead.
Any Weakness in BR Stock Is an Opportunity
The stock did most of its outperformance during the first quarter of the year, but the consolidation we saw in the second quarter still led to a gain of 6.5% and has BR within less than 5% of its all-time high.
From all the signs on the chart and the positive news surrounding the company, the recent selling represents nothing more than a normal and healthy period of consolidation following a rally to a historic high of $119.99 on June 8.
The overall trend still points higher over the long term, and we are here to ride that wave to new heights. Therefore, any and all pullbacks should be considered solid buying opportunities.
Matthew McCall is the founder and president of Penn Financial Group, an investment advisory firm, as well as the editor of FUTR Stocks and the ETF Bulletin. Matt just launched two new investment advisories focused around the “next” generation investing theme. His trademark three-prong investing approach targets the mega-trends old Wall Street is missing out on. Click here for more information on the “NexGen” Experience.
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