"A stock that should do well in 2011 is Ameriprise Financial (AMP); the company offers financial planning, asset management, and insurance products," says dividend reinvestment specialist Chuck Carlson.
The editor of The DRIP Investor explains, "The company's product focus on meeting the retirement needs of 'mass affluent individuals.'
"The company has broadened its asset-management services with the acquisition of Columbia Management. The deal establishes Ameriprise as one of the ten largest managers of long-term mutual fund assets in the U.S.
"Ameriprise has put up nice profit numbers in recent quarters, and top- and bottom-line growth should continue in 2011.
"The company is playing some strong demographic trends, including an aging investor populace focused on retirement. With approximately 10,000 people in the U.S. turning the age of 60 every day, the firm should ﬁnd plenty of demand for its services.
"The bounce in the stock market in 2009 and this year has helped revive the company's proﬁts. Indeed, after a miserable 2008 in which the company lost $0.17 per share, proﬁts jumped to $2.95 per share in 2009.
"The consensus earnings estimate for this year is $4.42 per share, and that may prove conservative. Indeed, Ameriprise crushed the consensus earnings estimates in each of the last two quarters.
"For 2011, proﬁts should top $5.20 per share. Based on the 2010 earnings estimate, the stock trades at less than 12 times earnings. That seems a reasonable valuation given the company's sharply rising bottom line.
"I expect dividends to grow at a 5% to 10% rate in 2011. The stock will be dependent to a certain extent on the overall market trend but offers an attractive way to play a bull market in 2011.
"Finding quality plays in the ﬁnancial sector is not so easy right now. Ameriprise offers a nice solution for investors who want exposure to financial stocks but don't want the risks that many ﬁnancials, especially the banks, pose at this time.
"Ameriprise's Quadrix scores are outstanding, with an Overall score of 97 (out of a possible 100) and excellent scores in such important categories as Value (87), Momentum (96), and Performance (78).
"Note that Ameriprise Financial offers a direct-purchase plan whereby any investor may buy the first share and every share of stock directly from the company. Minimum initial investment is $1,000."
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