Federated Investors is ready to go up

Exchange: NYSE

Sector: Asset Management

Industry: Financial

Entry strategy

Price: $26.5-27.5

Stop-loss: under $24.6

Take profit: $28.8, then $32

Investment horizon: until the middle of 2019

Company details

Federated Investors, Inc. is a government-owned holding, one of the largest international asset managers. The company provides a wide range of trust management and investment advisory services in various segments of the global financial market.

Founded in 1955, the corporation is based in Pittsburgh, Pennsylvania with additional offices in New York and the United Kingdom.

Key stock features:

Key indicators for Federated Investors, Inc. ($FII). Source: Yahoo Finance

The fundamental description of the idea

The beta of this stock — the correlation between the dynamics of its price and the movement of the market — is quite low, less than 0.5. Hence, we may shift the focus of attention from the broad market to the investment history of this issuer.

The company’s financial results for the fourth quarter and the whole 2018 are worse than for the same periods of the previous year, but better than analysts’ expectations. Earnings per share of the company amounted to 61 cents for the 4th quarter of 2018 and $ 2.18 for the full year 2018.

Quarterly and annual financial results of the company:

In mid-February 2019, the stock is not too expensive relative to the securities of competitors. The price to earnings ratio (PE) of the company has dropped to about the level of the beginning of 2018 — 12.77. The current levels of other Federated Investors value indicators:

Value indicators of Federated Investors, Inc. ($FII). Source: Simply Wall Street

Consensus forecasts and recommendations of analysts over the past month have shifted in a positive direction.

Analysts’ forecasts and recommendations for Federated Investors, Inc. ($FII). Source: MarketWatch

Trading plan

    The idea is mainly based on technical analysis signals:

  • In June 2018, a large volume of purchases was made for this stock on the market. Since then, the «Double Bottom» pattern has been formed and the share price has increased by more than 15%.
  • At the end of 2018, the pattern «Symmetrical Triangle» was formed which signals of the trend continuation. The went up from this pattern too.

We expect that this trend will continue within the boundaries of a wide side move, which is viewed on a monthly chart in the range of $22–36. Growth may not be limited to the marked goals. The price may reach the marks of the beginning of 2018, which is about $35–36.

Technical analysis of Federated Investors, Inc. ($FII). Source: TradingView