The gravy train is going to stop eventually. It's been one heck of
a ride so far. I'm not saying it ends today, but it's going to end
one day. This market has nearly tripled off the bottom in March
2009, screaming higher every day. It seems like the term "All-time
high" gets said every single day.
Many companies have been able to cash in on the success of the
stock market. Some have done so more than others. In a great
trading environment like this you'd think that the
age business is the place to be. So when I see a company not
flourishing in what is a great environment, it makes me a bit
nervous. That's the current situation we have with our Bear of the
We've all seen the commercials with the hilarious talking baby.
This cute little guy amuses us with his mix of investing knowhow
and infant problems. Getting a baby's perspective on his crib is
one of the funnier commercials in the series.
What's not so funny is E*Trade's Zacks Rank #5 (Strong Sell)
rating. Two analysts have revised their current year earnings
targets to the downside over the last month. This pessimism has
brought consensus down from $1.06 to $1.02 per share for the
current year and down from $1.24 to $1.16 for next year.
E*Trade is facing increased competition online from the likes of
ScottTrade, Interactive Brokers, and others. When it comes down to
it, the commission per trade is beginning to be the only thing that
sets these online brokers apart. You could argue that the platforms
are different but having tried several myself I find there is a
great deal of similarity. After all, there are only so many ways
that you can set up a computer screen for trading stocks.
In a mad dash to get rollover monies from the burgeoning baby
boomer retirees, E*Trade has aggressively been incenting new
customers to come over. Some of these incentives are straight cash
rewards while other are no commission trades for a period of time.
After reaching a high of $25.58 in March of this year, E*Trade has
struggled to keep its head above the $20 mark. It has seesawed back
and forth at that level several times. Now you have a stock that is
nearing the bottom end of a trading range while trading below its
40 day moving average. That could spell the onset of a downtrend
coming for E*Trade.
If you're looking to cash in on the brokerage business, a better
idea may be to go with one of the older, established full-service
brokerage firms. For example, Piper Jaffray (
) is currently a Zacks Rank #2 (Buy) that may be an attractive
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