The investment brokerage industry has been witnessing steady growth due to the increase in hassle-free e-trading apps by brokerage and fintech firms and rising online platforms. The U.S. securities brokerage market is projected to reach $242.33 billion by 2029, registering a 4.2% CAGR.
Moreover, the global wealth management market is projected to reach $2.68 trillion in 2028, expanding at a CAGR of 7.1%.
Given this backdrop, investment brokerage stocks Piper Sandler Companies (PIPR), Stifel Financial Corp. (SF), and Oppenheimer Holdings Inc. (OPY), which are well-positioned to capitalize on the industry tailwinds, could be smart investments now.
Let's delve into the fundamentals of the three Investment Brokerage stock picks, starting with the third in line.
Stock #3: Piper Sandler Companies (PIPR)
PIPR operates as an investment bank and institutional securities firm that serves corporations, private equity groups, public entities, non-profit entities, and institutional investors in the U.S. and internationally.
On March 15, PIPR paid its shareholders a special cash dividend of $1 per share of common stock and a quarterly cash dividend of $0.60 per share. Its annualized dividend is $2.40 per share, which translates to a dividend yield of 1.21% on the current share price.
Its four-year average yield is 4.01%. Over the past three and five years, PIPR’s dividend payments have grown at CAGRs of 23.5% and 9.9%, respectively.
Additionally, PIPR returned $155 million to shareholders during 2023 through share repurchases and dividends.
PIPR’s trailing-12-month asset turnover ratio of 0.62x is 197.4% higher than the industry average of 0.21x. Similarly, its trailing-12-month cash per share of $25.20 is 299.1% higher than the industry average of $6.31.
Over the past three and five years, its normalized net income grew at CAGRs of 18.6% and 6.9%, respectively, while its common equity grew at 9.4% and 9.9% CAGRs over the same periods.
For the fiscal fourth quarter ended December 31, 2023, PIPR’s adjusted net revenues and adjusted operating income stood at $457.39 million and $99.07 million, up 17% and 31.2% year-over-year, respectively.
For the same quarter, its adjusted net income and adjusted earnings per common share increased 20.9% and 21% from the year-ago quarter to $72.37 million and $4.03, respectively.
Street expects PIPR’s revenue for the fiscal first quarter that ended March 2024 to increase 11.8% year-over-year to $323.22 million. Its EPS is expected to be $2.12 for the same quarter. The company surpassed consensus revenue and EPS estimates in three of the trailing four quarters, which is impressive.
The stock has gained 53.4% over the past nine months to close the last trading session at $198.49. Over the past year, it has gained 46.4%.
PIPR’s POWR Ratings reflect its positive prospects. The stock has an overall B rating, equivalent to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
PIPR has a B grade for Growth and Quality. Within the Investment Brokerage industry, it is ranked #3 out of 20 stocks.
To see additional POWR Ratings for Value, Momentum, Stability, and Sentiment for PIPR, click here.
Stock #2: Stifel Financial Corp. (SF)
SF provides retail and institutional wealth management and investment banking services to individual investors, corporations, municipalities, and institutions in the U.S. and internationally. It operates in three segments: Global Wealth Management; Institutional Group; and Other.
On March 15, SF paid its shareholders a cash dividend of $0.42 per share. Its annualized dividend is $1.68 per share, which translates to a dividend yield of 2.15% on the current share price.
Its four-year average yield is 1.44%. Over the past three and five years, SF’s dividend payments have grown at CAGRs of 45.2% and 34.6%, respectively.
On March 14, SF signed a definitive agreement to acquire Finance 500, Inc. and CB Resource, Inc. (CBR). The addition of Finance 500 and CBR provides SF with a technology-driven platform that will ensure its existing brokered CD funding business and institutional CD investment offerings.
SF’s trailing-12-month gross profit margin of 94.38% is 58.7% higher than the industry average of 59.49%. Similarly, its trailing-12-month cash per share of $33.26 is 426.8% higher than the industry average of $6.31.
Over the past three and five years, its revenue grew at CAGRs of 5.2% and 7.5%, respectively, while its common equity grew at 7.6% and 8.8% CAGRs over the same periods.
For the fiscal fourth quarter ended December 31, 2023, SF’s net revenues increased 2.2% year-over-year to $1.15 billion, while income before income taxes stood at $206 million.
For the same quarter, its non-GAAP net income available to common shareholders and non-GAAP earnings per common share available to common shareholders stood at $166.59 million and $1.50, respectively.
Street expects SF’s revenue and EPS for the fiscal first quarter that ended March 2024 to increase 4.3% and 5.6% year-over-year to $1.15 billion and $1.48, respectively.
The stock has gained 34.3% over the past nine months to close the last trading session at $78.17. Over the past year, it has gained 33.1%.
SF’s POWR Ratings reflect this promising outlook. The stock has an overall rating of B, which indicates Buy in our proprietary rating system.
SF has a B grade for Stability. Within the same industry, it is ranked #2. Click here for SF’s other ratings (Growth, Value, Momentum, Sentiment, and Quality).
Stock #1: Oppenheimer Holdings Inc. (OPY)
OPY operates as a middle-market investment bank and full-service broker-dealer in the Americas, Europe, the Middle East, and Asia. The company’s segments include Private Client; Asset Management; and Capital Markets.
On March 4, OPY’s Board of Directors approved a share repurchase program that authorizes the company to purchase up to 518,000 shares of the company's Class A non-voting common stock, representing approximately 5% of its 10.36 million currently issued and outstanding shares of Class A non-voting common stock.
This authorization will supplement the 120,155 shares that remain authorized and available under the company's previous share repurchase program, covering up to 543,000 shares of the company's Class A non-voting common stock, which was announced on December 14, 2022, for a total of 638,155 shares authorized and available for repurchase.
Its annualized dividend is $0.60 per share, which translates to a dividend yield of 1.50% on the current share price. Its four-year average yield is 2.84%. Over the past three and five years, OPY’s dividend payments have grown at CAGRs of 7.7% and 6.4%, respectively.
OPY’s trailing-12-month gross profit margin of 90.15% is 51.5% higher than the industry average of 59.49%. Similarly, its trailing-12-month asset turnover ratio of 0.42x is 101.3% higher than the industry average of 0.21x.
Over the past three and five years, its tangible book value grew at CAGRs of 5.9% and 10.3%, respectively, while its common equity grew at 4.8% and 7.7% CAGRs over the same periods.
For the fiscal fourth quarter that ended December 31, 2023, OPY’s total revenue and pre-tax income stood at $308.29 million and $17.83 million, respectively. For the same quarter, its adjusted net income attributable to OPY and adjusted earnings per share stood at $16.10 million and $1.42, respectively.
The stock has gained 6.2% over the past six months to close the last trading session at $39.92. Over the past month, it has gained 5.2%.
OPY’s robust prospects are reflected in its POWR Ratings. The stock has an overall B rating, equivalent to a Buy in our proprietary rating system.
OPY has a B grade for Value, Stability, and Sentiment. It is ranked first within the Investment Brokerage industry. Click here for the additional POWR Ratings for OPY (Growth, Momentum, and Quality).
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SF shares were trading at $77.29 per share on Monday afternoon, down $0.88 (-1.13%). Year-to-date, SF has gained 12.39%, versus a 10.20% rise in the benchmark S&P 500 index during the same period.
About the Author: Neha Panjwani
From her school days, Neha harbored a profound fascination for finance, a passion that steered her toward a career as an investment analyst following the completion of her bachelor's degree in commerce. Currently enrolled in the CFA program, Neha is dedicated to further enriching her comprehension of investment fundamentals. Neha's primary objective is to aid retail investors in discerning optimal investment opportunities by diligently evaluating crucial aspects of financial instruments, with a primary focus on stocks and ETFs. Her commitment lies in empowering individuals to make informed and strategic investment decisions in the dynamic world of finance.
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