Wednesday, April 18, 2007

Discount Brokers Continue to Struggle

TD Ameritrade (AMTD) and Etrade (ETFC) gave disappointing guidance this week. Both will need to make acquisitions to grow earnings. The discount brokers face significant challenges with Wells Fargo, Bank of America, and Zecco offering free equity trades. Etrade has diversified away from stock commissions with banking and futures trading. An acquisition of a derivative focused broker would make the most sense for Etrade or TD Ameritrade.

Three Acquisition Targets

OptionsXpress (OXPS) - Recently expanded futures trading with the purchase of online broker Xpresstrade. OXPS trades at 14x forward earnings. Etrade and TD Ameritrade trade at 11x forward earnings. OXPS has better growth prospects than ETFC and AMTD.

GFI Group (GFIG) is in the sweet spot of the derivative market. GFIG is estimated to grow earnings at 20% per year for the next five years. GFIG provides brokerage services for credit derivatives and energy products. Currently trades at 20X forward earnings.

FCStone (FCSX) - Recent IPO not yet covered by any brokerage house. Provides commodity risk management.


Blogger Chris said...

Almost purchased some OXPS today. But I'm getting greedy, I want the price to go down even more.

I use TDAmeritrade for my brokerage accounts and love them.

4/23/2007 6:59 PM  
Blogger fancy smancy said...

Do you have any other articles or info on credit derivatives pricing or trading? I found some interesting information on the following sites:

4/24/2007 8:34 AM  
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4/26/2007 9:18 AM  
Anonymous Anonymous said...

Having done some research into living conditions I have made the decision to move to the US! Apart from the medical care (which having just watched the film Sicko I am slightly concerned about) I have decided that there are more positives then negatives and am therefore very excited about the prospect of moving.
However I am concerned with purchasing a house, are mortgages over there the same as there are here? Do I need a large deposit and having spoke to a few people online I am concerned I wont be able to find a company to give me mortgage broker bonds.
and if I cant can I buy a house? Also I am familiar with the term surety bond so is a mortgage bond just a guarantee I will pay on time or is it more?

4/30/2008 5:55 AM  

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