New Trade for December 2nd, 2021

Yesterday afternoon, reports of the first confirmed case of the new variant in the U.S. inspired an abrupt move downward that erased morning gains and left stocks deep in the red for the day.  During regular trading yesterday, the Dow lost 1.34%, the S&P 500 dropped 1.18%, and the Nasdaq slid 1.83%.  This morning stocks seemed ready to recover some of those losses as dip buyers flocked back into battered reopening stocks.  

“It feels as though the market was wondering when, not if, there was going to be this new variant on our shores,” said Art Hogan, National Securities chief market strategist. “I think we’re at a place now where we understand there’s a diminishing impact with new waves and new variants with this virus,” he said. 

Today’s trade alert highlights a compelling choice from the financial sector that garners a Buy rating from the Wall Street pros who offer recommendations.  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 organic 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.  

Focus surpassed revenue and EPS expectations last month when it reported Q3 earnings. The consensus was looking for $0.96 EPS and $445.35 million in revenue for the quarter.  The company delivered, reporting $0.98 EPS and $454.5 million.

. “Our third-quarter results reflect the strong performance of our business, and we have continued to build momentum into the fourth quarter. Our financial performance exceeded our expectations on all measures, positioning us for another record year.  We have a long track record of acquiring excellent firms that are value accretive, capitalizing on a growing market that is also consolidating quickly. Our pipeline is a testament to the attractiveness of our business model in a market where sellers have many choices.  We manage our business and growth in a disciplined way and have a substantial market opportunity ahead of us, in both the United States and internationally,” said CFO Jim Shanahan.

Of the 8 analysts offering recommendations for the stock, all 8 rate the stock a Buy.  There are no Hold or Sell ratings for the stock. A median 12-month price target of $74.50 represents a 20.63% increase from the most recent price.

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