Harvey Jones weighs up Hargreaves Lansdown (LSE: HL.).
It's time to go shopping for shares again, but where to start? Smoker's friend British American Tobacco (LSE: BATS)? Recovering bank Royal Bank of Scotland (LSE: RBS)? Or maybe out-of-favour fashion giant Burberry (LSE: BRBY)?
There are plenty of great stocks to choose from, and I'm enjoying doing some window shopping. So here's the question I'm asking right now. Should I buy Hargreaves Lansdown (LSE: HL)?
It ain't personal
First, I've got an interest to declare. I've been dealing with Bristol-based investment management company Hargreaves Lansdown for years, both professionally and privately.
As a financial journalist, I've regularly interviewed the company's analysts, and I also have money invested in the fund supermarket's low-cost Vantage account. The one thing I have never done, though, is buy any of the company's shares. So do I want to add Hargreaves Lansdown to my portfolio?
Hargreaves Lansdown went public in May 2007, shortly before the market meltdown. That might have destroyed a lesser company, but it has thrived, breaking into the FTSE 100 (UKX) in March 2011 after several years of strong profitability.
That's a bullish run in bearish times, although the spectacular rally since March 2009 no doubt helped. Who said you can't make money from the stock market anymore?
Its run of success has continued in 2012. Hargreaves Lansdown Is Up 50% This Year, making it one of the best performers in the FTSE 100. The company's revenues increased by 15% from £208 million to £239 million in the year to June 2012, beating analyst expectations.
The firm also added another 45,000 customers to its Vantage platform, taking the total to 425,000. Hargreaves Lansdown hiked its dividend by 20%, and the shares now yield 2.5%.
I'm not surprised by its success. Hargreaves Lansdown has shown far more oomph than most investment management companies I've interviewed. It now boasts 500,000 clients worldwide with £26 billion worth of assets under administration. Not bad for a business founded in Peter Hargreaves' bedroom in 1981.
Can it maintain this momentum? Co-founder Stephen Lansdown finally steps down in November, although he remains a major shareholder, with a 20% stake in the company. So his departure might be one concern.
Some fear the latest regulatory overhaul of financial advice, the Retail Distribution Review, which bans advisers from charging commission, could make life harder for Hargreaves Lansdown.
But the company has already shown that it can adapt, and I wouldn't bet against it emerging on top in the brave new fee-charging advisory world.
Further stock-market storms could imperil its share price, but my biggest worry is that Hargreaves Lansdown is looking expensive. I prefer to invest in stocks before they have risen 50%, not afterwards. And on a price/earnings ratio of 22, it's just too expensive for me right now.
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> Harvey Jones holds shares in Royal Bank of Scotland. He doesn't own Hargreaves Lansdown or any other share mentioned in this article. The Motley Fool holds shares in Hargreaves Lansdown and has recommended shares in Burberry.