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).
Three months ago, I was impressed with my Best Stocks for 2018 contest pick’s 26% climb through the first six months of the year. Fast forward to three months later and it turns out that return was nothing. As we move into the fourth and final quarter of the year, my pick is now up 48%.
Yes, you read that correctly. In the last three months, Broadridge Financial Solutions (NYSE:BR) has nearly doubled the performance it put together through the second quarter of 2018. When you compare that to the S&P 500’s 9% gain and the less than 1% climb we’ve seen in the financial sector, BR stock’s trajectory stands out even more.
As a quick refresher, Broadridge, through its technology, provides investor communications and other solutions to the financial sector. It’s actually one of the pioneers in its industry and stands to benefit greatly as blockchain — the technology behind bitcoin — changes the way financial business is conducted.
Currently valued at around $15.4 billion, the company has emerged as a standout name in this budding trend, and nothing has changed in my long-term outlook as it maintains its dominance as a global FinTech leader.
Earnings Lead the Rally for BR Stock
BR stock released its fiscal-fourth-quarter results at the end of August, and while the headline numbers missed the consensus, I was pleased to see record closed sales of $215 million, which were up 14% year-over-year. Adjusted earnings of $1.86 a share missed expectations by 2 cents but were up from last year’s $1.71 a share. Revenue of $1.32 billion fell short of estimates of $1.33 billion and was also down from $1.29 billion a year ago. For the full year, the company earned $3.56 a share on revenue of $4.33 billion.
I liked that the board of directors approved a 33% increase in the company’s dividend, boosting the annual payout from $1.46 a share to $1.94. The stock went ex-dividend on Sept. 17, so the next quarterly payment of $0.485 a share will hit shareholders’ accounts on Oct. 3.
To top it all off, management also provided strong guidance. BR is looking for diluted earnings per share growth of 12%-16% and adjusted earnings per share growth of 9%-13% in fiscal 2019.
Overall the results were strong, and after briefly dipping below their 50-day moving average (the blue line) at the end of July, the shares took off following the quarterly release. They traded up to fresh all-time highs and peaked at $138.24 on Sept. 14.
BR stock pulled back a bit in the last two weeks of the third quarter, but looking at the stock’s trend over the last year and beyond, it’s clear that this breather is just part of the cycle.
The long-term uptrend remains strong, and each and every pullback in BR stock has proven to be a great buying opportunity. I don’t anticipate that changing anytime soon.
Matthew McCall is the founder and president of Penn Financial Group, an investment advisory firm, as well as the editor of Investment Opportunities and Early Stage Investor. He has dedicated his career to getting investors into the world’s biggest, most revolutionary trends BEFORE anyone else. The power of being “first” gave Matt’s readers the chance to bank +2,438% in Stamps.com (STMP), +1,523% in Ulta Beauty (ULTA), +1,044% in Tesla (TSLA), +611% in Liquefied Natural Gas Limited (LNGLY), +324% in Bitcoin Services (BTSC), just to name a few. If you’re interested in making triple-digit gains from the world’s biggest investment trends BEFORE anyone else, click here to learn more about Matt McCall and his investments strategy today.
