The Motley Fool

I reckon it’s not too late to buy this fast growing FTSE 100 success story

Online stockbrokers and wealth managers are seen as a geared play on stock market growth, rising and falling in line with market sentiment.

Ups and downs

These are not the only factors at play though. If they were, all investment platforms would perform roughly the same, and they don’t. For example, Hargreaves Lansdown (LSE: HL) trades 85% higher than it did five years ago, while Charles Stanley Group (LSE: CAY) has fallen almost 30%.

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

Last year, I said Charles Stanley was finally showing signs of recovery, and its stock is up 25% in the last four months. Today, it reported full-year results to 31 March and the share price remains unmoved at 320p. That’s despite a 6.5% rise in discretionary funds to £13.1bn, while revenues rose 2.8% to £155.2m, with growth in all divisions.

Out of breath

Its core business posted profit before tax of £11.6m, a rise of 6%, while pre-tax profit margins improved from 8.8% to 9.2%.

However, with reported profit before tax dipping from £11.4 to £11m, investors remain underwhelmed. The group also warned that given the extent of the equity market rally earlier this year, we anticipate much more modest returns over the remainder of the year.”

It said the long-term prospects remain positive but “equities are likely to pause for breath until evidence of better economic growth emerges.”

Take your time

Charles Stanley has strengthened its balance sheet, boosting its cash position 23.7% to £81.2m, and lifting its regulatory capital solvency ratio from 177% to 214%. Management expects to incur £9.5m in restructuring costs over the next two to three years, which should yield annual savings of more than £4.5m from 2022 onwards.

CEO Paul Abberley said it’s now on track to deliver a medium-term profit margin target of 15%. However, given the downbeat outlook, there’s  a pricey forecast valuation of 18.5 times earnings and okay-but-not-great yield of 3.5%, I’m in no hurry to buy.

Only way is up

Charles Stanley is a £160m minnow compared to £10.5bn FTSE 100 big fish Hargreaves Lansdown. If you’re kicking yourself for not buying Hargreaves Lansdown stock a few months ago, you’re not the only one. It took full-blooded advantage of the year’s surprise stock market recovery to climb almost 40% in a matter of months.

Hargreaves keeps on growing. In the year to 30 April, it won net new business of £2.9bn, attracted 55,000 new clients to lift its total to 1.19bn, and boosted revenues 8% to £395.9m. CEO Chris Hill shrugged off political and macro-economic uncertainty to claim “we are well positioned to deliver attractive growth.”

As you were

City analysts expect Hargreaves Lansdown to post another 4% earnings growth this year, then 10% in the year to 30 June 2020. That will lift the yield to 2.4%, which may appear low, but this is partly due to strong share price growth as management has been progressive. The big concern is it trades at a whopping 36 times earnings, although that’s lower than last year’s 45 times.

The group also enjoys a massive 75.3% return on capital employed. Betting against the Hargreaves Lansdown share price has been a losing play for a decade. The question is, are you are prepared to pay a premium price?

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US $12.3 TRILLION out of thin air…

And if you click here, we’ll show you something that could be key to unlocking 5G’s full potential...

It’s just ONE innovation from a little-known US company that has quietly spent years preparing for this exact moment…

But you need to get in before the crowd catches onto this ‘sleeping giant’.

Click here to learn more.

Harvey Jones has no position in any of the shares mentioned. The Motley Fool UK has recommended Hargreaves Lansdown. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Our 6 'Best Buys Now' Shares

The renowned analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply enter your email address below to discover how you can take advantage of this.

I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement.