IBD 50 Stocks To Watch: Full Service Investment Firm With Record Revenue Nears Buy Point

Among leading growth stocks, our IBD 50 Stocks To Watch pick for today is Stifel Financial (SF). Amid the current stock market sell-off, a few segments remain in a better position than others. One of those is banking, financial and investment services.


Stifel Financial, a St. Louis-based company, refers to itself in its newsletters as the nation’s seventh largest full-service investment firm. The company, which started in 1890, offers securities brokerage, investment banking, trading, investment advisory and related financial services.

So far, the growth stock hasn’t gained sufficient momentum to move into the buy zone of a long consolidation. But shares remain just 4% away from the proper entry. The stock has been forming this consolidation for 21 weeks, or since May. The proper buy point is at 72.30 or 10 cents above the highest point in the base. Investors could also use 71.26 because a short handle is forming.

The stock has climbed a decent 38% since Dec. 31. In 2021, shares have spent most of their time consolidating after a powerful rise from October 2020 through April.

Stifel shares hold an 87 Relative Strength Rating, plenty high for growth stocks. This indicates the growth stock is outpacing 87% of stocks in IBD’s database. The stock also carries a very strong 98 IBD Composite Rating, and a perfect 99 EPS Rating.

Recent Acquisition Of Vining Sparks

Stifel’s Global Wealth Management segment provides securities transaction, brokerage and investment services to clients. Meanwhile, its Institutional Group segment includes research, equity and fixed income trading, investment banking and public finance. The firm noted positive new growth opportunities following its acquisition of Vining Sparks, a fellow institutional fixed income brokerage.

Vining Sparks has averaged $150 billion in annual trading volume and generated average annual revenue of nearly $150 million since 2008.

“Ultimately, we see opportunity to leverage Vining’s core relationships … to further our position as the market leader, and most trusted advisor, in the financial services sector,” said Ronald J. Kruszewski, CEO of Stifel, in a news release following the Sept. 29 announcement.

Growth Stocks: Stifel Earnings

The company reported total record quarterly sales of $1.1 billion, which includes revenues from global wealth management and the firm’s institutional group segment. That was up 29% from a year ago. CAN SLIM investors want to see year-over-year sales growth of at least 25% for top growth stocks. The company also showed a profit of $1.70 a share, representing a year-over-year increase of 65%.

Additionally, the firm touted that client assets reached a record $402.4 billion, increasing by 31% compared with the year-ago period. The firm’s global wealth management segment also notched record net revenues, up 26% year over year. Stifel’s brokerage services segment showed strong growth as well. Brokerage revenues increased 23%, reflecting a rise in client activity.

As for the company’s institutional segment, their investment banking pipeline was at record levels. Investment banking revenues increased 74%.

“We generated consecutive quarters of record net revenue. With both of the firm’s operating segments driving our performance, I am optimistic that these results can be sustained, as illustrated by our increased guidance for the remainder of the year,” Kruszewski said.

The firm forecast full-year revenue of $4.5 billion to $7 billion, up 13% to 18% from the high end of the prior guidance.

As of right now, the stock market remains in a downtrend. IBD’s market outlook was downgraded to “market in correction” last week. It’s best if investors are limited in their market exposure or entirely in cash. If anything, you may consider initiating very small positions in certain sectors that are still performing well. Stifel is a stock for watchlists and may be in a buy zone when the market recovers.

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