Invesco: Growth & Income in Asset Management

06/22/2017 2:56 am EST

Focus: FINANCIALS

Crista Huff

Editor, Cabot Undervalued Stocks Advisor

While researching stocks this past weekend, I noticed that the price charts of most asset management companies have turned decidedly bullish, with several breaking out of trading ranges, observes growth and income expert Crista Huff, editor of Cabot Undervalued Stocks Advisor.

This is an opportune time, therefore, to add a strong asset management stock to the Growth & Income Portfolio to capitalize on its immediate price run-up.

Invesco Ltd. (IVZ) is an asset management company based in Georgia, with offices in North America, Europe, the Middle East and Asia.

Invesco has $841.4 billion assets under management (AUM), as of April 30, 2017, up 4.44% in the last six months. AUM includes mutual funds, ETFs, unit trusts, real estate and other financial instruments serving retail and institutional investors in over 150 countries.

Revenue, margins and assets under management (AUM) are expected to increase in both 2017 and 2018, both organically and from a large M&A transaction in Europe.

Wall Street expects Invesco to earn $2.49 per share in 2017 and $2.76 per share in 2018. That represents earnings growth rates of 11.7% and 10.8%.

The earnings estimates have barely budged since January, which is a good indication that Invesco management has a firm grip on their financial outlook, and also a good line of communication with Wall Street.

When viewed in conjunction with the large 3.5% dividend yield, Invesco is a very attractive growth & income stock.

As for the P/E, it’s not often that investors see a P/E range as predictable as IVZ’s. In the years 2012 through 2015, the P/E ranged consistently between 13 and 19, then dipped a bit lower in 2016. The 2017 P/E is 13.2, meaning IVZ is an undervalued stock that’s sitting at the bottom of its P/E range.

Invesco announces annual dividend increases in late April. The current quarterly payout is $0.29 per share, giving the stock a current yield of 3.5%. Share repurchases continue at a modest pace.

IVZ is a large-cap growth & income stock. Financial institutions own 90% of Invesco shares. That means professional investors think IVZ is a very good investment.

chart

IVZ traded near $39 in March 2015, fell in the second half of 2015, and spent the bulk of 2016 bouncing around with the oil-related market correction in February and the Brexit correction in June. The price chart shows steadily upward-sloping trading ranges for a full year now.

The stock appears immediately ready to advance again. Buy this undervalued financial stock now with the expectation that it will rise above $38 in the coming months. Strong Buy.

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