As the market continues to gain strength, more people are beginning to e (NASDAQ:ETFC)nter the investing world. With financial advisors, hedge fund managers, and other professionals being less trusted than ever, people want to invest on their own. In doing so, chances are they will open an account with one of three companies: TD Ameritrade Holding Corp. (NYSE:AMTD), Charles Schwab Corp. (NYSE:SCHW), or E TRADE Financial Corporation (NASDAQ:ETFC). These have been three of the top performing stocks in the entire market year-to-date, outperforming the S&P 500 by over 10%.
TD Ameritrade Holding Corp. (NYSE:AMTD) is my favorite stock in the space due to their track record of industry-eading customer service, innovative tools and products provided to clients, and competitive pricing. The company offers the ability to invest in stocks, options, futures, forex, bonds, ETFs, CDs, annuities, and mutual funds. By acquiring thinkorswim in 2009, TD Ameritrade became the leader in both stock trades and retail options trades per day. Overall, they are the second largest brokerage in the US, with 5.8 million funded accounts with a total of over $470 billion in assets as of December 2012.
2012 Financial Overview
2012 was a solid year overall, but a bit of a disappointment. Earnings per share dipped 4.5% to $1.06 per share, while revenue fell 4% to $2.64 billion. However, TD did manage to raise their dividend by 20% to $0.24 annually, a positive for investors.
$40.8 billion in new client assets were added in 2012. This showed that growth was still going strong in this aspect of the company, as $33.9 billion was added in 2010 and $41.5 billion in 2011. By continuing to add more assets, TD Ameritrade Holding Corp. (NYSE:AMTD)’s fee structure can come into play and begin to ramp up revenue. The fee structure, by percentage, looks like this:
First Quarter 2013 & Stock Snapshot
As of the close on March 14, TD Ameritrade Holding Corp. (NYSE:AMTD) is trading at $21.13. They reported first quarter earnings on Jan. 22 and beat expectations by 12.5%. Since then, the stock has risen nearly 12%. With earnings per share of $1.06, the stock is trading at a multiple of 19.9, slightly below the industry average of 21.4.
Projections for 2013-2015
Earnings are expected to grow steadily for the next 3 years. Analysts predict a 4.7% growth in 2013, 11.7% in 2014, and 15.3% in 2015. 2013 is not as impressive as I would like, but my main focus is 2015. TD Ameritrade is currently trading at just 14.8 times those earnings, a very cheap multiple in this industry.