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Broker-Dealer Stocks: Few Beat S&P in 2010

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The majority of broker-dealer stocks have not outperformed the Dow Jones and S&P indexes year to date as of Wednesday, though there are some notable exceptions.

The NYSE ARCA Securities Broker-Dealer Index (^XBD) is up about 5% so far in 2010 vs. 10%-plus gains in the major market indexes.

Several brokers, though, have significantly beaten the returns of the broker-dealer index, such as Ameriprise Financial (AMP) and Raymond James Financial (RJF). Many BDs, though, are lagging the industry index.

The best performing broker-dealer to date in 2010 is Investors Capital (ICH), which is up more than 200%. It started the year at about $1.55 per share and now trades at roughly $4.50.

Another stock trading under $10, Citigroup (C), has moved up about 44%, from roughly $3.40 in early January to $4.73 today.

Stocks Above $10

For stocks trading above $10 a share, Ameriprise tops the list. It has improved about 50% to trade near $58.

Raymond James, which released its November operating results on Wednesday, is up about 40% so far this year and is trading at $33.

Wirehouse broker-dealer Wells Fargo (WFC) is trading above $31, a jump of about 15%, putting it ahead of the Dow and S&P. Rival UBS, which trades at $16.54, has risen about 5% this year – putting it on par with the broker-dealer index.

Negative Returns

Stocks in the broker-dealer arena that have fallen the hardest include Bank of America-Merrill Lynch (BAC), down about 14% so far in 2010, and Morgan Stanley (MS), off 10%.

Charles Schwab (SCHW) is also down roughly 10%, while rival T.D. Ameritrade (AMTD) is off 3%.

The Royal Bank of Canada has fallen about 5% and JPMorgan some 2%.

LPL Financial

LPL Financial (LPLA) began trading on Nov. 18 and has ticked up about 6% in the past month.

In the last 30 days, though, its stock has been outpaced by Citi, Raymond James and Ameritrade, as well as by the broker-dealer index, which is up some 8% since Nov. 22.

If the markets continue to improve in 2011, some of the larger broker-dealers could generally be positioned for a better year, as they put problems like mortgage-backed securities further behind them.


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