By Peet Serfontein & Zimele Mbanjwa
RJF is a leading diversified financial services company based in the United States (US). It provides a wide range of services including investment banking, asset management, financial planning, wealth management, and other services to individuals, corporations, and municipalities.
The company has displayed strong growth over the past five years, with adjusted EPS and revenue climbing ~11% and ~15%, respectively (on a compounded annual basis). This has been aided by the group's multichannel model, higher interest rates and resilient capital markets.
Technically, the price is developing a broadening top pattern (see the black diverging trendlines on the first chart as well as the insert). This pattern, also known as a megaphone pattern, typically signals increased volatility with higher highs and lower lows, often seen during periods of market indecision. This can lead to a bullish outcome if the stock breaks out above the upper resistance line (the higher highs). An increase in volume near the top signals growing buyer interest.
The stock remains just above the 200-day simple moving average (SMA) of $117.20, making for an attractive entry point given the various bullish indicators.
Fading downside momentum according to the MACD indicator as well as upwards movement of the On-balance Volume indicator, supports our bullish stance.
Share Information
| Share Code | RJF US |
|---|---|
| Industry | Financial Services |
| Market Capital (USD) | 24.21 billion |
| One Year Total Return | 13.56% |
| Return Year-to-Date | 6.21% |
| Current Price (USD) | 117.58 |
| 52 Week High (USD) | 131.19 |
| 52 Week Low (USD) | 91.67 |
| Financial Year End | September |
| Performance has been decent so far this year, and various technical indicators are pointing to further upside ahead. |
Consensus expectations
(Bloomberg)
| FY23 | FY24E | FY25E | FY26E | |
|---|---|---|---|---|
| Headline Earnings per Share (USD) | 8.30 | 9.48 | 10.02 | 10.80 |
| Growth (%) | 14.27 | 5.64 | 7.79 | |
| Dividend Per Share (USD) | 1.68 | 1.78 | 1.93 | 2.08 |
| Growth (%) | 5.83 | 8.38 | 7.89 | |
| Forward PE (times) | 12.40 | 11.74 | 10.89 | |
| Forward Dividend Yield (%) | 1.51 | 1.64 | 1.77 | |
| Earnings growth is expected to be strong in the short term but may temper in the medium term. | ||||
Buy/Sell Rationale
Technical Analysis:
Fundamental view:
| Share Name and position | LYB US - Early Exit (Close the position) | CRM US - Stop Loss (Close the position) | GIS US - Buy - BUY (Continue to hold) |
|---|---|---|---|
| Entry | 95.48 | 264.2 | 69.20 |
| Current | 94.23 | 246.12 | 74.51 |
| Movement | +1.3% | -6.8% | +7.7% |
| Due to deteriorating technicals, we suggest an early exit for this trade, avoiding any further downside (the trailing stop-loss level is $92). | The stock reached our stop-loss level, and we exited the trade. |
Price action above major support remains attractive. The stock remains above the 200-day SMA, and upside price momentum is supportive.
Our profit target is $77.00 with a trailing stop-loss at $71.30. Exit the trade by 16 October 2024. |
| Share Name and position | SSY US - Buy (Continue to hold) | BALL US - Buy (Continue to hold) | AVY US - Buy (Continue to hold) |
|---|---|---|---|
| Entry | 75.19 | 61.71 | 212.51 |
| Current | 78.98 | 64.55 | 218.73 |
| Movement | +5.0% | +4.6% | +2.9% |
|
The formation of a symmetrical triangle pattern is attractive. The stock remains above the 200-day SMA. Upside price momentum is supportive.
Our profit target is $84, with a trailing stop-loss of $75.60. Exit the trade by 6 November 2024. |
The development of a broadening bottom pattern remains of interest. The stock remains above the 200-day SMA. Fading downside price momentum supports the trade strategy.
Our profit target is $69, with a trailing stop-loss of $61.50. Exit the trade by 7 February 2025. |
The positive Sharpe ratio trend (improved risk-adjusted returns) is attractive. The stock is trading above the 200-day SMA with fading downside momentum being supportive.
Our profit target is $237, with a trailing stop-loss of $209.00. Exit the trade by 6 December 2024. |
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