Raymond James: Beyond New York

02/23/2017 7:00 am EST


Stephen Quickel

Editor, US Investment Report

The daily download of stock market reports brings forth tons of verbiage about New York financial giants like JP Morgan Chase (JPM), Goldman Sachs (GS) and Morgan Stanley (MS), observes Stephen Quickel, editor of US Investment Report.

But you might also take look Raymond James Financial (RJF) of St. Petersburg, FL, which is not exactly a pip-squeak in size and investment attractiveness.

Founded modestly in 1962, not in the 19th century like the New Yorkers, RJF has grown into a diversified global financial holding company with 2,800 locations in the US, Canada, the UK and elsewhere.

The company has client assets of $535 billion in 3 million accounts; and with a market capitalization of $7 billion. It is also a stock especially well-positioned to do well in today’s re-wakened equities market.

Begun as a brokerage firm, Raymond James has blossomed into four investment bank/brokerages in the US, Canada and the UK; four asset management firms; and four other major entities that include a commercial bank and an insurance company.

RJF numbers among the top ten investment banking firms and municipal bond underwriters. It employs over 7,000 financial advisors and its security analysts cover more than 13,000 companies.

As for its own investment merits, its share price, not surprisingly, has tended to trace the same course as the overall stock market. It peaked at $60 in July 2015, plunged to $45 a month later.

In the immediate wake of the November 2016 election, it shot from $58 to $70, slipped back a bit in December, but year-to-date has popped to around $77. Analysts have upped their 2017 and 2018 earnings estimates.

Its valuations are attractive, at a 15.6 forward P/E, well under the current S&P 500 multiple of 18, and its PEG ratio is an alluring 0.89. In an industry group positioned to flourish in a rising stock market, with earnings expected to advance 17% a year, our 6- to 12-month target price is $90.

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