New Trade for November 5th, 2021

Investors were cautiously optimistic this morning ahead of the release of October payroll numbers. We’ll get a glimpse of how the labor market is reacting to the removal of pandemic benefits. October was the first full month of hiring since federal enhanced unemployment benefits expired in September.  The consensus expects that 450,000 jobs were added last month. We’ll see how the numbers stack up.

All three major indices are on track to finish the week higher.  As of Thursday’s close, the Dow was up 0.9%, while the S&P 500 was 1.6% higher, and the Nasdaq Composite was up 2.9% on the week.

Today’s trade alert highlights a compelling choice from the financial sector that garners an across-the-board Buy rating from the Wall Street pros covering the stock.  Market appreciation should contribute to mid to long-term gains, while projected acquisitions could also provide some fuel.  

Focus Financial Partners (FOCS) is a compelling choice from the financial sector right now.  The company invests in Registered Investment Advisors (RIAs). There’s a bevy of acquisitions in the wings that are expected to be lucrative for Focus, such as two upcoming partner firm mergers, which will provide about $7 million in growth. 

Raymond James analyst Patrick O’Shaughnessy recently broke down his bullish standpoint on the financial stock. “Market appreciation and updated margin guidance drive our estimates higher in 2021 and beyond, and with Focus’s leverage trending towards the low end of its targeted range … we could see an acceleration in acquisition activity,” he says. 

The company surpassed revenue and EPS expectations when it reported Q3 earnings yesterday.  Focus reported $454.5 million in revenue for the third quarter and an impressive 28.8% in year-over-year organic revenue growth. Analysts expected FOCS to have generated $445.35 million in revenue during the period.  Analysts were looking for a third-quarter EPS of $0.96, while Focus reported  $0.98.

“We continue to deliver strong growth and financial performance in Q3, and we anticipate that this will continue into 2022 and beyond.  We are uniquely positioned to benefit from the large and growing independent wealth management industry, which according to an investment report, stood at approximately $6 trillion in 2019 in the U.S. alone and is expected to grow to $9 trillion by 2024, expanding at a compound annual growth rate of 10%. According to several sources, the addition of international markets, just in the countries we’re invested in, adds another approximate $4 trillion to this total,” commented Jim Shanahan, Focus CFO.

Focus execs are looking toward a bright future for the company, and so are the pros on Wall Street.  Of the 8 analysts offering recommendations for the stock, all 8 rate the stock a Buy.  There are no Sell ratings for the stock.  The median price target has risen nearly 20% over the past month to $73.00, which would be a 12% increase from the last price. 

Where to invest $1,000 right now...

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