TD Ameritrade Holding (AMTD) provides brokerage services and related technology-based financial services to investors, traders, and registered investment advisors in the U.S. The company is based in Omaha, Nebraska and was founded in 1971. The company’s products include its website tdameritrade.com which serves as a web platform for self-directed retail investment accounts.
The company also offers thinkorswim which is a desktop platform for traders.
Earnings grew by 85% on the quarter while sales grew by 48%.
Earnings have grown at an annual rate of 22% over the last three years while sales have grown at a rate of 14% during that period.
The company sports a return on equity of 15.9%, a profit margin of 41.5% and an operating margin of 40%.
Even with the strong fundamental performance from AMTD, there is a degree of pessimism toward the stock.
The short interest ratio is at 4.76 and the analysts’ rating show nine “buy” ratings and nine “hold” ratings.
AMTD gained almost 150% from its low in June ’16 to June ’18 before it had a small pullback. The stock has formed an upwardly-sloped trend channel over the past few years and the stock bounced off of the lower rail recently. The lower rail is also just above the 52-week moving average and the stock hasn’t closed below that trendline in two years.
Suggested strategy: Buy AMTD with a maximum entry price of $60. I would set a target of at least $90 over the next 12 months (for a potential return of 50%-plus from current prices). I would suggest a stop loss at the $54 level.
— Rick Pendergraft
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