BGC Partners (BGCP) operates as a brokerage company servicing the financial and real estate markets worldwide. The company is headquartered in New York and was founded in 1945. The company primarily serves banks, broker-dealers, investment banks, trading firms, hedge funds, governments, corporations, property owners, real estate developers, and investment firms, as well as institutional clients.
BGCP has seen tremendous growth over the past few years.
The company’s earnings have grown at a rate of 16% per year over the last three years and the sales have grown at a rate of 19% over the same time period.
In the most recent quarter, sales grew by 22% and EPS was up by a whopping 39%.
Analysts are projecting earnings growth of 12.5% per year over the next five years.
In addition to the tremendous growth, BGCP rates very highly in the management efficiency measures.
The return on equity is 55.6% and the profit margin is 17.1%.
The company also pays a hefty dividend with a yield of 6.1% presently.
The chart for BGCP shows how the stock jumped sharply from November ’16 through November ’17 with the stock gaining almost 120% from the low to the high. The stock has since pulled back and made a 50% retracement off the high. The weekly bar from two weeks ago was of particular interest to me as it is what is called a “long-tailed bottom”. This pattern happens when a stock opens the time period at a specific price, drops sharply below the opening price, and then rallies back to the opening price. This is usually a sign that a pullback is over.
Suggested strategy: Buy BGCP with a maximum entry price of $12.50. I would set a target of at least $18 over the next 12 months (for a potential return of 50%-plus from current prices). I would suggest a stop loss at the $10.50 level.
— Rick Pendergraft
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