Hargreaves Lansdown (LSE:HL) shares were the biggest gainers on the FTSE 100 on Monday. The stock was up 9% by midday and that compounded gains of 4.5% on Friday.
But the Bristol-based financial services firm has been one of the biggest losers over the past year. In fact, it was down 45% over 12 months before the start of trading earlier today.
I see Hargreaves Lansdown as one of the best buys on the FTSE 100 right now. And there are several reasons for this. Let’s take a look at the company’s performance, outlook and why I’d buy more of this stock today.
Performance
So, if I’d invested £1,000 in Hargreaves Lansdown shares a year ago. At the live price, I’d have £660 plus dividends — around £30. That’s obviously not a great return.
But this is also why I think now is a good time to invest.
The stock gained massively during the pandemic because many people had little else to do and started investing. According to research from Lloyds, one in 10 Britons has started investing since the start of the pandemic.
But unsurprisingly, the growth rate experienced by Hargreaves Lansdown and its platform — essentially a supermarket for funds and shares — wasn’t sustainable. As life has returned to normal, people are investing less.
However, last week (and as I forecast) it turned out that Hargreaves was growing faster than many analysts had predicted. It recorded £5.5bn of net new business, alongside a 92,000 increase in active clients and revenue of £583m for H1. This took place during a period when many other firms saw a net outflow of capital.
These positive were somewhat hidden by negative headline data, including a 37% fall in net new business year on year, an 8% fall in revenue, and a 9% drop in assets under administration. However, none of these were surprising as the pandemic was a truly exceptional period for the group. It’s also hardly surprising that assets under administration fell given the downward trend of the market this year.
Outlook
There are several reasons why I’m positive on the firm’s prospects.
First, it’s my investment platform of choice. Hargreaves provides me with a easy-to-use mobile app, real-time streaming data and shortlisted advisor picks, as well as research articles. If I think it’s the best platform, I’m sure others will too.
Second, the firm is investing £175m over five years to update its technology and provide new forms of insight for clients. Staying ahead of the trends and providing in-demand services will be important in retaining its position as the UK’s leading investment platform.
Finally, more and more people are looking to take control of their money, and Hargreaves Lansdown provides them with the opportunity to do this. One of the main reasons for doing this is reportedly the poor returns offered by savings accounts.
However, I appreciate there are a number of risks. Some people might invest less if the cost of living crisis gets worse, and the £175m investment in updating its tech could be seen as something of a risk.
But on the whole, I’m backing Hargreaves Lansdown to continue growing, and at a rate in excess of its peers. That’s why I’d buy more shares today.
