Wall Street Addict

Summary: Subprime-leery investors avoid financial/lending stocks lately, especially US-centric ones like Raymond James Financial (NYSE: RJF - News). But RJF has no subprime exposure, has recorded 20% higher net income and a 41% revenue increase in Q2 from rising deposits—not loans. Bank revenue should contribute $0.19/share in 2008 profits, up from a previously forecast $0.12/share, where $0.35/share is expected for 2009. Though RJFs $31 shares trade at a relatively expensive 13.5 P/E or 2.4 book value, that's offset by $3/share in cash and equity. That's roughly 11% of total assets vs. big brokers like Merrill Lynch (NYSE: MER - News) and UBS (NYSE: UBS - News) with just 3%. RJF should actually benefit from Wachovia's (NYSE: WB - News) buyout of rival A.G. Edwards (NYSE: AGE - News) as former AGE brokers go looking for better pay packages, taking their commissions with them. Operational streamlining has led RJFs 4,640 financial advisors to generate 40% more revenues/assets per advisor since 2004. Analysts have largely missed the $3.7 billion cap company's potential as the largest independent brokerage house. CEO Thomas James says RJFs not for sale, but bulls say the stock could reach $37-$38, or even $40 if the buyout price is right.
Published by SeekingAlpha

Labels: AGE, Barron's, MER, RJF, UBS, WB