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4 Investment Management Stocks to Buy Ahead of Q3 Earnings


A gradually stabilizing economy and interest rate hikes are expected to aid the performance of investment managers in the recently concluded quarter.

The investment management industry, which comprises asset managers and brokerage firms, typically benefits from a rising rate environment. As interest rates rise, brokerage firms engage in more investment activities. Moreover, as they earn interest income on un-invested cash in customer accounts, higher rates allow them to make more interest income.

Also, most investment managers have waived off the majority of their fees with the rates rising since last year. This decline in fee waivers is expected to aid the company’s top-line growth in their upcoming results.

Further, the performance of investment brokers is generally measured through monthly average client trades per day that represent the number of trades from which they can expect commission or fees. Per the monthly metrics released by most brokerage firms, the average revenue trades for July and August have witnessed improvement on a year-over-year basis. This should get reflected in their results for the to-be-reported quarter.

Despite inflation-related issues and increasing chances of political uncertainty, most of the asset managers have seen an improvement in their assets under management (AUM) for July and August. Moreover, with expectations of modest volatility, the performance of asset managers is expected to be decent for the to-be-reported quarter.

Hence, it’s a wise idea to bet on a few investment management stocks that are expected to report sequential earnings growth.

Choosing the Right Stocks

With the help of the Zacks Stock Screener, we have shortlisted four investment management stocks whose earnings per share (EPS) for the prior quarter witnessed growth of more than 1% sequentially. Also, these stocks have an estimated sequential EPS growth of 5% or more for the to-be-reported quarter. Further, these stocks carry a Zacks Rank #1 (Strong Buy) or #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Omaha, NE-based online brokerage firm, TD Ameritrade Holding Corporation AMTD, currently sports a Zacks Rank of 1. Its earnings for the previous quarter grew by 10% sequentially. Its estimated EPS growth for the to-be-reported quarter is 8.1%.

Affiliated Managers Group, Inc. AMG, based in Massachusetts, carries a Zacks Rank of 2. It witnessed sequential EPS growth of 3.7% in second-quarter 2017 and has an estimated EPS growth of 38.5% for the third quarter.

BGC Partners, Inc. BGCP, based in New York, provides brokerage services in the real estate markets. The company carries a Zacks Rank of 1. Its earnings witnessed sequential growth of 4.4% in the previous quarter. Its projected EPS growth for third-quarter 2017 is 10.7%.

Stifel Financial Corp. SF, based in St. Louis, MO, provides wealth management and investment banking services to retail and institutional clients. It carries a Zacks Rank of 2 and its second-quarter 2017 EPS witnessed a sequential growth of 21.6%. It has an estimated EPS growth of 9.5% for third-quarter 2017.

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