"My top speculative choice for 2008 is E-Trade Financial (NASDAQ: ETFC), a great turnaround story," says Mark Skousen, editor of Forecasts & Strategies and author of the just-published best seller, Investing in One Lesson.
"E-Trade is one of the nation's largest, deep-discount stock brokerages. It provides order placement and execution for stocks, bonds, options, futures, and mutual funds to millions of customers in more than 40 countries worldwide.
"The company has more than $176 billion in customer funds and has won recognition for service, reliability and security.
"Unfortunately, the company recently was caught in the credit crunch, causing its share price to drop 80%. It held billions of dollars worth of risky securities. On November 29, the firm received a $2.5 billion cash infusion from Citadel Investment Group, a hedge fund. (E-Trade CEO Mitch Caplan lost his job as part of the deal.)
"The rescue plan dispelled the worst fears about the company's future. But you wouldn't know it from looking at the share price. E-Trade shares are down more than 30% since the announcement."It's true that E-Trade still is holding billions in mortgage securities. But, as I've written before, only a tiny percentage of all mortgages are in default. And while that number is likely to grow in the months ahead, even a mortgage in default is still worth most of its face value.
"In the meantime, the company has more than 3.7 million customer accounts and healthy operating margins. Sure, shares of E-Trade deserved a haircut. But the stock is trading like it's headed for bankruptcy. It's not. If anything, it's a buying opportunity."
The Wal-Mart Weekly: Examining shareholder resolutions, Part 2
Earnings expectations for JC Penney, Nordstrom, Macy's, Abercrombie and others
Comfort Zone Investing: Financial stocks: Is the worst over yet?
Reader Comments (Page 1 of 1)
12-27-2007 @ 5:30PM
imstewey said...
Love it!! If it isn't going bk..it's a buy.
12-29-2007 @ 1:23PM
Taxstar said...
Just bought 4K of the stocks @ 3.90. I am long on the stock and I expect it to make an exemplarily comeback, ETFC is a great Company with many potential, I have known customers who left it last month during the crises, and are back again due to its unique great brokerage service and quality. I will give it a good 6-9 months to see it go above $10.00 again.
1-01-2008 @ 11:22AM
Greg said...
Steve,
I couldn't agree more, which is why I have purchased over 400 shares in the past few days. Some of the bloggers just blog and don't act on what they say, but I actually have. I have read that when the market was down in the late 80's similar buying opportunities like e-trade were everywhere. Buffet would say that the company has just come to another wall to climb, but it has not lost its momentum and it is still going strong.
--Greg
1-03-2008 @ 12:06AM
JML said...
This is a geat opportunity to get in for the long. ETFC will go back up...my 2cents
1-29-2008 @ 8:55PM
captgary55 said...
I've been out of the market 2 years, and bought ETrade Dec. 3, 2007. My total investment was $24,800. Today I sold the last lot of shares I bought on Dec. 3, and on another day that an analyst report came out on Etrade saying, "The sky is falling.", and people believed him? So I was selling and buying. In two months I have a profit of $13,568. I'm hoping the genius' will sell more of it, because I'm so stupid I'll buy more back again. But what do I know, I barely graduated high school. Remember what the analyst for Citigroup, (Bahailah), said, "The sky is falling, the sky is falling, sell, sell, sell, Etrade." He said Etrade would have a high for the year 2008 of $3.50. He must be smarter then me, cause I barely graduated high school. But today I sold 10,000 margined shares of Etrade for $4.16. Just be glad you ain't got stock in Citigroup. Haaa, ha. With guys like him working there, they'll be lucky to be here by the end of 2008. Bahaliah, from what I'm seeing in Citigroup, I'd say you better start looking for a new place to work. Just hope they don't read analyst reports. Ha ha. Just thinking, you really used to irritate me, but hey, you made me lot's of money. I'm just thinking of all those people who listened to you and lost their, SHIRTS!!!!!!!!!
2-01-2008 @ 8:36AM
Michael Rappaport said...
What do you think the expected turnaround time for the stock to be worth heavy option trading is, unfortunatly 50 years is past my lifetime as the berkshire story read the couple invested in 1957 and now has 300 million. www.aquaticgardensllc.com